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Consultants say Felixstowe will be cheaper than London Gateway

Consultants say Felixstowe will be cheaper than London Gateway

Due to open in November 2013, London Gateway has made much of locating a shipping terminal and adjacent business park so close to London but Felixstowe, the UK’s busiest container port, which handled 42% of total UK container traffic last year, contends it is still a more cost-effective option — a position backed by the study.

The consultants found that “considering both inland and maritime costs together, Felixstowe has an overall cost advantage of £26 (US$40) per container”.

The consultants said “the inland distribution of import cargoes is based upon the location of large warehouses and not population”, with most of the big warehouses located in the Midlands or the North. London is effectively served via warehouses that themselves can lie up to 200km north of the capital” MDS found, adding that the new port faced extra costs from road congestion around the capital.

Felixstowe, which last year handled 3.67m teu (to rank 36th in CM’s World Top Container Ports) has a further advantage, MDS said, in that it can offer economies of scale for onward transport by rail, via which a third of containers are distributed.

Such scale, MDS found, also increases the chances of a haulier picking up an export load for the return leg — an issue for UK ports, which are dominated by import containers.

Taken together, the consultants calculated that inland transport costs from Felixstowe per one-way container were £312 (US$482) versus £321 (US$496) via London Gateway and £322 (US$497) via Southampton — Britain’s second biggest container port.

To that £9 (US$14) differential, the consultants added another £17 (US$26) for the “diversion costs” to London Gateway from the key Benelux shipping lanes — an extra 76 miles (47.5 km), according to MDS.

In terms of maritime access, the consultants said: “We estimate that Felixstowe offers a £17 advantage per container handled over London Gateway and a £7 (US$11) advantage over Southampton.”

Clemence Cheng Felixstowe’s CEO said, “The evidence MDS Transmodal has gathered clearly demonstrates that the Port of Felixstowe’s location, scale and rail connectivity provides a significant cost advantage for importers and shipping lines over all the other container ports in the South East of England.”

But a spokesman for London Gateway, whose first shipping lines are due to call in November, hit back saying: “London Gateway is closer to two thirds of the UK market. Importers and exporters only need to search using Google maps and see how much closer London Gateway is to the main population centres of Manchester, Birmingham and London. If you are closer, then you are cheaper in terms of transport costs and time to market. No amount of spin can take away that reality.”

Shipping lines expect a fierce battle between the two ports, with container traffic still below pre-recession levels.