Collaboration instead of competition the proposition for Thames Freeport

The boardroom at DP World’s London Gateway headquarters offers an absorbing panoramic view of the Thames estuary and its immediate low-lying hinterland. To the left sits a row of warehouses sporting logos that look like a logistics postcard; to the right is London Gateway terminal, a ship is in and several of grey cranes have their booms down and spreaders swinging into holds; further along the brown river’s muddy shore a huge bank of sand has been levelled and construction of the port’s fourth berth is under way; and lying alongside the nascent dock is an old converted tanker bearing a shipment of ZPMC quay cranes.

The port and its adjacent logistics park are one of three key sites of the Thames Freeport, which stretches from London Gateway eastwards to include the port of Tilbury and Ford’s Dagenham production plant and riverside docks, almost underneath the Queen Elizabeth bridge.

Inside the room sit three of Thames Freeport’s board members – DP World UK chief financial officer Alan Shaoul, Port of Tilbury commercial director Peter Ward and Thames Freeport chair Ruth Kelly, the ex-Labour MP who served a stint as transport minister in Gordon Brown’s government.

Ruth Kelly

It is now just under two years since the Thames region was designated as one of the UK’s new eight freeport sites, and in that relatively short space of time the freeport proposition has changed, particularly since last autumn’s budget announcement that freeport regulatory advantages – zero business rates, reduced national insurance contributions and tax relief on plant and machinery investments – was to be extended for five years beyond the deadline of 2026.

“That decision made a huge difference,” Ms Kelly tells The Loadstar. “Five years simply wasn’t enough – it takes time for companies to put together the investment proposal, to select the site, to build out etc… extending that period to 10 years makes a huge difference.

“The freeport proposition to investors has changed as well,” she adds, “from being only about logistics and perishables we are now getting quite a lot of interest from light manufacturing and value-added logistics – two light manufacturing companies are taking occupancies, and it gives us the initial case to make the investment in further port infrastructure.”

However, the proximity to the Greater London market, around 18m consumers, clearly remains a huge draw for prospective freeport tenants, and the impending move of London’s Billingsgate, Smithfield and New Spitalfields markets to a new site near Tilbury means foods and perishables will be an important commodity at the freeport and place a greater emphasis on the partners working together.

Mr Shoaul elaborates: “The creation of the freeport has definitely accelerated the collaboration between our ports, but also with the local authorities.”

Alan Shaoul

The freeport has ushered in a period of cooperation between previously fiercely competitors Tilbury and Gateway, and the area is emerging into a larger Thames port complex.

“Tilbury is much now a shortsea port as well as an EC-facing ro-ro port,” Mr Ward says.

“We can’t handle the deepsea ships in the way London Gateway can, and which has far more global connections. But that means that there are more synergies between the two ports – for example, one of the companies DP World owns is P&O Ferries, which uses Tilbury as one of its main hubs.

Peter Ward

“There are many containers that come to London Gateway and are then trucked to Tilbury to be devanned there, because multiple customers and occupiers are being fed through their warehouses around Tilbury, and really that’s not much different to the big continental ports, such as Antwerp and Rotterdam, where there are multiple shortsea, deepsea and multipurpose facilities. You have to view the whole Thames as single logistics complex and, as such, the two ports have a lot of shared interests, like how the rail network works.”

Rail access remains a major issue for the freeport and the respective ports’ users.

“Both Tilbury and Gateway want more rail, our customers want to use rail more and the power of one combined port in terms of lobbying for that is far greater than if I sit in a meeting on my own. Because we need to get more capacity into the network,” says Mr Ward.

“The problem is there’s very little competition,” Mr Shaoul adds.

Around 20% of Gateway’s cargo moves by rail, while Tilbury’s is at “a slightly lower level, but it will grow” – but the main obstacle is still capacity.

“We do have capacity, we can incrementally add trains that operate during nights and don’t interrupt passenger services, but realistically, we are never going to have purpose-built freight corridor,” Mr Shaoul says.

However, the participation of Ford as the third founding partner of Thames Freeport may help free-up further capacity, Ms Kelly suggests: “Accessing that is also about coming together with Ford, where a lot of the tracks are sited. Under the Thames Freeport we are able to develop a much more coherent strategy.”

She adds that Ford “would bring the tech, which will be important as some of the other freeports have tech partners which are good at filtering out prospective investors that may not fulfill the freeport requirements.”

During the government’s public consultation on freeports, fears that they would be used for tax evasion or money laundering were repeatedly voiced.

Thames Freeport runs from London Gateway to Ford’s Dagenham plant

In terms of road infrastructure, the freeport board is pinning its hopes on the government giving the go-ahead to the proposed £10bn Lower Thames Crossing, a tunnel linking the north and south banks of the river, with the northern entrance right beside Tilbury.

“It will put us right in the middle of a north-south-east-west road crossover, and the current road access can be very congested at times,” Mr Ward says.

A five-strong team of independent inspectors are currently writing their recommendation to the government, with a final decision expected in late June.

As with other freeports, there is also an energy angle, in this case last year’s formation of a joint-venture between Tilbury, Japanese engineering firm Mitsui and German power company RWE, with the long-term ambition to build a 100 megawatt hydrogen power station on the site of an old coal-fired plant on Tilbury’s estate.

A small scale ‘proof of concept’ demonstrator project to produce green hydrogen to power port equipment is under way, and “by the end of this year, the fork-lifts that operate our paper terminal will be powered by hydrogen”, says Mr Ward.

“We think this could be a really smart investment, because of the way the car industry is developing – everything is about electric vehicles at the moment, but there are issues over resources like lithium and cobalt for batteries, and we believe the future beyond EVs will involve hydrogen as a fuel,” adds Ms Kelly.

In the shorter term, the chief uncertainty is the UK’s chaotic political scene, a massive challenge to the “business needs certainty” credo, with an election looming and looking increasingly likely to herald a change of administration.

The Thames Freeport team is clearly preparing to engage with a new team in government, but appears to remain largely positive over initial talks with Labour politicians.

“We have hosted [shadow chancellor] Rachel Reeves in Tilbury a couple of times, and she seemed very supportive of the work we are doing,” says Mr Ward.

“Every indication so far has been that a Labour government would continue with this policy,” Ms Kelly says.