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Gloves come off in battle for Britain’s shippers

Posted to Far East Maritime (by on August 13, 2013

The boxes have yet to start flowing but already the challenger is squaring up with the established champ.

The battle for the hearts and minds of shippers has begun as two port-operating giants compete for Britain’s containerised trade.

Felixstowe, owned by Hutchison Port Holdings, has been a long established hub and the busiest, and biggest, port in the UK. To the south in the Thames Estuary is the new US$2.32 billion deepwater port of London Gateway, operated by DP World and coming on stream in November.

The competition between the established player and the new upstart has been professional up to now but the depressing trade volumes between Asia and Europe are sure to spice up the tussle for customers.

London Gateway has certainly managed to get under the skin of its larger rival recently, surprising when one considers that Felixstowe handled 42 percent of the UK container traffic while London Gateway has yet to handle a single box.

The new DP World facility maintained in a report that by using London Gateway, companies would be able to completely re-evaluate their supply chains. Marks & Spencer obviously subscribed to that and announced plans to build a giant distribution centre at the facility.

A selling point of the new port and its business and logistics park is the proximity of London, home to 30 percent of the UK population. This, it believes, gives it an advantage over Felixstowe.

In response to the London Gateway claims, Felixstowe commissioned a study that showed the inland distribution of cargo was based on the location of large warehouses and not on population. Most of those big warehouses were located north of London and therefore in prime Felixstowe country.

The study also found Felixstowe had an overall cost advantage of $40.22 per container over its Thames rival and that London Gateway would face extra costs through road congestion around the city.

London Gateway hit back in the UK media, asking importers and exporters to have a look at Google maps and they would see that the port is closer than Felixstowe to two thirds of the UK market. Closer means cheaper, a port spokesman said.

If this is an indication of how the battle for Britain’s gateway port is going to play out, it is definitely worth watching. Ports compete in many areas but seldom are they so close together and going directly head to head.

Will there be one winner? It is not a zero sum game, despite the way it is portrayed by both port operators, and when Europe emerges from its economic winter there should be enough business to go around. But until that happens we are freshening our drinks and settling down for a mouthwatering clash between the reigning champ and the hungry challenger. Bring it on.

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