Sunday, 13 January 2008

A real contender on the waterfront
By Gavin Stamp
Business reporter, BBC News, Liverpool

Staring at a huge pile of lumpen metal, you could be forgiven for thinking you were in the middle of a giant scrap merchant's yard.

But the scene is actually the Port of Liverpool on the banks of the Mersey.

The scrap is just one of a wide range of goods - including steel, grain, whisky and clothes - which pass through its docks on a weekly basis.

Liverpool is the UK's sixth-largest port for freight and the fourth-largest for container traffic.

As the UK's main gateway for cargo trade with North America, its horizons are truly global. But it didn't always have the luxury of being so outward-looking.

Its very survival was in doubt for much of the 1970s and early 1980s as a wave of damaging strikes, on the top of profound economic and technological changes, crippled its business.

Bad old days


The port has bounced back from
the dark days of the 1970s

When the Royal Seaforth Dock was built in 1969, the port handled 29 million tons of cargo a year. Yet by 1983, this had shrunk to nine million.

Propped up by weekly government handouts, the port was - in the words of its now marketing director, Frank Robotham - facing an "abyss".

That it emerged from that dark period intact was due as much to the strength and initiative of its management as the political support it received at both a local and national level.

Compromises on both sides ushered in a new, more constructive era of industrial relations which strove to put the needs of the port's customers at the heart of the business.

The legacy of the last outbreak of labour unrest in the mid-1990s was the introduction of flexible working practices, which Mr Robotham believes are now the envy of many rivals.

"The way we can allocate resources to vessels is based on their arrival, not based on how we set our working practices," he says of current shift patterns.

As well as buying shipping lines and investing in roll-on, roll-off capacity to boost its market presence, the port's recovery over the past 20 years was built around rebuilding and nurturing customer relationships.

Supporting industry


"We don't have the luxury
of people knocking on our
door every day wanting to
come to Liverpool. For us to
get business, we have to go
out and sell it"
Frank Robotham, marketing
director Peel Ports

It started by trying to attract smaller, independent shipping lines, which it felt might be inclined to favour Liverpool.

In recent years, the port has become more aggressive, targeting firms within a 70-mile radius.

It seeks to convince them of the merits of using the Port of Liverpool, rather than incurring increased costs by transporting goods from the South Coast.

"One thing we had to do is show that we could provide a service to industry in the North West to make it competitive," Mr Robotham says.

"I think we lost that connection in the 1970s, whereby people who were local to you didn't want to support you, because of what you were doing to yourselves."

Recent successes have included Cadbury's switching its cocoa imports - processed in North Wales - back to Liverpool after more than 10 years.

The stakes are high. The port knows that it has to outperform its main rivals - in terms of efficiency and cost - if it is to retain and win new business.

"We don't have the luxury of people knocking on our door every day wanting to come to Liverpool," Mr Robotham acknowledges.

"For us to get business, we have to go out and sell it. People could lose their job if we screw up. We always saw it from that perspective and we still do."

New dimensions


The onset of larger vessels is
causing problems for many ports

Seismic changes in the global shipping industry are now presenting Liverpool with a fresh commercial challenge.

For many years, the standard size of container vessels has been dictated by the width of the Panama Canal, the world's largest shipping thoroughfare.



But the Canal itself is now expanding and much larger "post-Panamax" ships, as they are known, are already a reality.

In response, the port is embarking on its largest expansion for 40 years, which will see it spend £90m on building another deep-sea container facility by 2011.

Neither the port's customers nor its backers saw the status quo as an option.

Liverpool's 1930s entrance is built to "Panamax" dimensions, but rival ports such as Felixstowe and Southampton are already equipped to receive the larger vessels.

Liverpool's core North American market is also rapidly moving in that direction, with New York set to upgrade its facilities by 2010.

"If they had not secured this extension, there would have been a very serious question mark over its future as a deep sea port," says Ian Wray, chief planner at the Northwest Regional Development Agency.

"They had to get it to stay in the game."

Asian promise


The lucrative Chinese market is
currently beyond Liverpool's reach

There is already concern that the port is unable to cater for direct trade from China, India and other Asian markets, which have shipping lines using the larger vessels.

Not only is Asian trade four times the size of North America in volume terms, but it offers access to the riches of China and India, whose rapid industrialisation has poured cheap goods into Europe and sucked huge amounts of raw materials in the other direction.

"It is a bit of a frustration to us," Frank Robotham says, "because Liverpool has the oldest Chinese community in Europe, we are twinned with Shanghai, and the North West most probably consumes the second-largest volume of Chinese products outside London."

But the port will quickly win business after its expansion, he believes, with the number of Indian-owned firms operating in the vicinity offering "fantastic" opportunities.

"The advantage for any shipping company coming here would be that they have a far greater percentage of exports compared to running it through the South Coast ports."

The port's expansion is good news for manufacturers in North-west England. It is also likely to boost jobs in other maritime sectors, such as shipbroking and freight forwarding, which already support more than 25,000 jobs in Merseyside.

Staying British



In the global industry that is shipping, Liverpool is an increasingly rare phenomenon - a British-owned port.

The recent sale of P&O and Associated British Ports saw the likes of Southampton pass into foreign hands, while Felixstowe is owned by Hong Kong's Hutchison Whampoa.

The Port of Liverpool was bought in 2005 by Peel Holdings, which also owns the Manchester Ship Canal and Liverpool's John Lennon airport. It has since sold a minority stake to Germany's Deutsche Bank.

But despite these global connections, the port remains firmly rooted in the North West and, Ian Wray believes, its fortunes and those of the city will always be closely intertwined.

"The port has always been been a driver for recovery and growth in Liverpool."

Source: BBC NEWS | Business