Liverpool is the North’s safe haven


The UK’s financial landscape might be experiencing some uncertainty, Liverpool’s Mark Whitworth has big plans for the city’s port regardless. And he’s right to think so.

In an interview with the Telegraph, the chief executive of Peel Ports Group shared his optimism for the times ahead of us and explained why his £300m project to build a new container terminal at Peel’s Port of Liverpool headquarters is one of the best things that could’ve ever happened to the city.

Liverpool2, or L2 in short, will be able to berth the world’s largest container ship and will double the amount of containers the port can handle. The extension to the port is an integral piece of George Osborne’s vision of a Northern Powerhouse.

Chief executive Whitworth explains that the reasoning behind the decision to go ahead with the plans for the new port is a lot simpler than the recent referendum results. Britain is and will remain a substantial consumer market. “Ports have a natural and reconfigurable balance of business between imports and exports”, he says.

“If we take a step back and look at the market drivers which are behind the rationale, it would be fair to say that with Liverpool2 we never committed to the investment on the basis of market growth,” says Whitworth.

“The rationale for this is much simpler. The reality is that 90pc of the containers that come into the UK come in via southern ports. In excess of 60pc of them end up closer to Liverpool than any other port.”

“It’s less expensive to bring a container from China to the UK than it is to take it from a southern port to the North.”

“About 65pc of the UK population resides closer to Liverpool than any other port. It is too easy to only look south. Logic tells you that we have a very strong market on our doorstep which today we are not exploiting.”

Historic and technical elements both play their part in need to deliver L2, Mancunian born Whitworth says. Being located on the River Mersey means the Liverpool dock is entered via lock gates designed and built in a different era.

Before the new terminal existed, Liverpool’s capacity to accommodate container vessels used to max out at 5% of the world’s container fleet. Fitting more containers through deeper shipping lanes was made possible after £35m Regional Growth Funding was awarded by the Government.

Historically, Liverpool could only accommodate vessels of up to 4,500 TEU, however, up to 18,000 TEU ships are favoured by container lines and their customers seeking economies of scale.

“L2 addresses that problem front-on,” Whitworth says. “We could accommodate any of the vessels in the world’s fleet. If we were handling two at any one time, it would move down to around 95pc of the world’s fleet. It really is a game-changer.”

But will the Brexit vote damage demand, even domestically? “We have a very strong natural hinterland. We extend our capability by a variety of means. We have road, rail and water connectivity. We own the Manchester Ship Canal, which enables us to trans-ship containers coming in to Liverpool on to our smaller vessels and move them to the heartland of the North West of England.”

“We have just enjoyed our busiest year ever with container volumes moving along that route, so I think there is a strong case to underpin my statements. Can we anticipate clearly the consequence of Out? There’s also a strong claim for ‘steady state’, in terms of our business.”

“If we are going to be penalised by trading in Europe, one would argue that trading with the US may be more beneficial and there is probably no better port within the UK to serve the US transatlantic markets.”

L2 is touted by Whitworth as more than what he calls a “single-dimensional container facility”. He underlines advantages in connecting multiple modes of transport while reducing road miles. “Our model is very different,” he says.

“Once containers have arrived into Liverpool, we will continue to extract value from them. If containers are going to be trans-shipped to another port, perhaps in Ireland or in Scotland, in many cases we can use our own shipping business, BG Freight Line [based in Rotterdam and part of Peel Ports Group], to trans-ship those. It’s a pretty substantial feeder business.”

A key part to this vision is the Port Salford Tri-Modal Distribution Park, situated just west of Manchester. The park opened less than two months ago and is triggering additional investment from third parties as well as future custom for L2.

The Peel Ports Group identifies the uniqueness of the £138m facility through its accessibility by three motorways, the Manchester Ship canal and rail.

Whitworth has had major success with the Peel Ports Group ever since joining it in 2010. In the just over five years since he’s joined, the company’s annual profits have risen from £119m to £210m.

The company is part of the Peel Group, formerly Peel Holdings, of which 75% are owned by property tycoon John Whittaker. Other trophies in Whittaker’s repertoire include Liverpool’s John Lennon International Airport and a 25% share hold of intu, which owns Manchester’s Trafford Centre.

Whittaker is overall known as a stimulant for growth. But parts of the question of why to expand Liverpool’s port so drastically still remain.

Whitworth is insistent that his investment makes sense. “The truth is logistics flows haven’t changed yet to reflect just how we serve consumption in the UK. I’d like to think that as we move forward, port-centric distribution will become increasingly important and a bigger factor for our business. For all ports, quite frankly.”

“In the past three years we have spent £650m in Liverpool alone. Look at the maths. Today it is less expensive to bring a container from China to the UK than it is to migrate it from one of the southern ports to the North. “It is the land-based leg that’s costing a lot of money and ultimately that problem is not going to change easily. It (the North) is where the population resides.”

“We re-presented our (rolling) five year plan quite recently to our shareholders and we had a vision of delivering around of £650m of investment – a similar figure to that which we’ve already spent – in the next five years. Much of that, if it’s not in direct support of L2, will be in supporting the businesses that are by-products of its existence.”

“When you start to look at the story around critical mass, the market is there, the population is there, the consumers are there. The distribution centres to feed the consumers are there. I think the story starts to become quite compelling. That’s why we have confidence.”

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Liverpool is the North’s safe haven

Liverpool is the North’s safe haven


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