Fri, March 24th, 2017
'Facing the right way' in a post-brexit world
Sometimes major events come together with great timing.
At the end of this month Prime Minister Theresa May will trigger Article 50 and start Britain’s withdrawal from the European Union.
The vote in favour of leaving the EU in last summer’s referendum was met with dismay by many in the business world - but challenges quickly become opportunities.
‘Facing the right way’
As this process was going on Peel Ports was putting the final touches to its £400m deep-water container terminal, Liverpool2.
The Seaforth facility means, according to Liverpool & Sefton Chamber chief executive Jenny Stewart, that Liverpool is “facing the right way for the first time in decades”.
Leaving the EU and the customs union will mean Britain is free to strike its own trade deals with the rest of the world, with the North American market particularly in its sights.
Liverpool2 is equipped to handle 95% of the world's container ships and its opening has the potential to revolutionise the logistics market in the UK and turbo-charge the Liverpool city region economy.
Gary Hodgson, chief operating officer at Peel Ports, has said that the current UK logistics model was “broken” and was a “busted flush”.
The logistics model of the UK came about in the 1970s when Britain manufactured and exported much more than it does now.
This led to the creation of many warehouses in the Midlands. Products would be made and then distributed.
Then, the landscape changed with volume manufacturing increasingly disappearing overseas. However, the logistics hub remained in the Midlands.
So the current model sees containers come in through southern English ports such as Felixstowe, Southampton and London Gateway.
They are taken to the Midlands, emptied, and then distributed. The first leg of that journey is wasted because the container goes in full and out empty.
It means 94% of containers come into the South of England but more than 50% have to get to Birmingham and to the North.
As Gary Hodgson points out: “That cannot be a logical way of running a supply chain.”
Within a 70-mile radius of the Liverpool city region there are 13m people. Within 70 miles of Southampton there are 7m and within 70 miles of Felixstowe there are 4m.
So, under the current model, the UK’s major ports are in the wrong place.
Peel believes it can grab a huge slice of that logistics market and Brexit, and the subsequent opening up of new markets, could accelerate this process.
In anticipation of this the company is creating hundreds of thousands of pounds of warehouse space at Liverpool and at Port Salford, at the other end of the Manchester Ship Canal.
A survey by the Institute of Export & International Trade revealed many firms saw the extension of overseas markets as the “single biggest opportunity”.
Citing Liverpool & Sefton Chamber’s most recent quarterly economic survey, Jenny Stewart said Merseyside firms were “more optimistic than they have ever been”.
It is not hard to see why.