1 INTRODUCTION
2008 2022 Coal (without CCS) 32% 21%
Coal (with CCS) - 2% Oil 1% - Gas 44% 19% Nuclear 13% 14% Renewables 6% 38% Imports 3% 4% Storage 1% 1% Total demand (Twh) 362 313
Source: DECC Electricity Generation Projections, 2009 Central Price, Central Policy, Central Growth Scenario
Under this “central” projection, total demand for electricity falls by 14%. Assuming there are no efficiencies in the operation of coal-fired powers stations (leading to reduced volumes of coal to generate the same amount of electricity and there is no change in stocks), then the volume of coal required would fall by 38% between 2008 and 2022 due to a switch of generating capacity away from coal and gas to renewables.
Furthermore, Government projections of the requirement for coal imports indicate that the percentage of steam coal that will be imported up to 2022 will fall from 71% of requirements in 2008 to only 39% in 2025.
Table 4.16: Forecast coal traffic for Liverpool Docks to 2030
Thousand units 2008 2020 2030 Growth 2008-30 CAGR 2008-30 Central Forecast 1,775 934 604 -66% -4.8% High Scenario 1,775 1261 846 -52% -3.3% Low Scenario 1,775 747 484 -73% -5.7% Source: MDS Transmodal
The Central Forecast has been produced based on the DECC’s Central Price, Central Policy, Central Growth Scenario up to 2022, with no change assumed between 2022 and 2030. This leads to an average annual decline in coal imports of 4.8% up to 2030.
The High Scenario has been produced based on the DECC’s Baseline, which assumes that no new policy measures are introduced and existing trends continue. This may not be regarded as a valid scenario by the DECC because it assumes no change, but probably represents the most positive scenario for coal volumes through Liverpool Docks unless the port can secure significant volumes of additional traffic from competitor ports. This leads to an average annual decline in coal imports of 3.3% up to 2030.
The Low Scenario has been produced assuming that 20% lower volumes are achieved than in the Central Forecast, due to the loss of market share to competitor ports. This leads to an average annual decline in coal imports of 5.7% up to 2030.
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A view has been expressed by an industry consultee that coal-fired power stations, such as Fiddlers Ferry, have a long-term future because it may be difficult for Government targets for carbon dioxide emissions to be achieved through lower demand for electricity and a switch to renewable sources of electricity.
4.6 Agricultural products: cereals and animal feedstuffs/biomass
Description/definition of traffic
The DfT Maritime Statistics commodity classification “agricultural products” includes several different types of traffic passing through Liverpool Docks, including grain, animal feedstuffs and biomass as feedstock for Fiddlers Ferry Power Station.
Grain through Liverpool Docks comprises imports of wheat for milling and maize for processing in
on-site and regional mills. Though not strictly a grain, soya beans are imported through the Royal Seaforth Grain Terminal for the adjacent crushing plant and refinery. Royal Seaforth Grain Terminal has a total silo capacity of 168,000 tonnes with direct conveyor belt feeds into customer’s on-site mills, as well as facilities for transhipping grain to smaller coastal vessels and barges for onward movement to mills further inland in Manchester (via the Ship Canal) or round the coast.
Animal feedstuffs (AFS) are imports of a range of different commodities from grains and palm
kernels to olive residues. It is increasingly not clear whether some of these commodities are destined for the animal feed compounders and blenders or for co-firing at Fiddlers Ferry power station. The cargoes are imported in bulk carriers and discharged by grab or suction/screw equipment and stored in a flatstore.
The traffic types reflect the strength of the food processing and manufacturing industries in the North West and the importance of cattle rearing (rather than arable farming) in the super-regional hinterland of the port. By comparison, ports on the GB east and south coasts tend to exporters of grain and importers of fertilisers because of their arable agricultural hinterland.
Key customers
Liverpool benefits from having customers for grain imports with dockside plants that bring their raw materials in through the grain terminal then feed by conveyor directly into the processing plant. These are customers are:
• Cargill, which is the largest user of the Grain Terminal importing soya beans for its crushing plant and oil refinery located in the port estate;
• Dacsa imports maize for processing at the dockside corn mill, which produces maize grits and semolina for cereal manufacturers and other food processors;
• ADM Millers UK has the third on-site mill and produces wheat mainly for bread makers and bakers;
• Millford Grain is one of the significant grain traders importing through the port on behalf of its end user customers.
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Key customers for AFS imports are:
• Arkady Feed UK brings in significant volumes of animals feedstuffs, some of which commodities (biomass) are co-fired with coal in the nearby power station.
• Cargill is the other significant animal feed importer into Liverpool.
Historic traffic volumes
Table 4.17 below shows that traffic volumes of agricultural products have tended to fluctuate, but there is an overall upward trend. Liverpool plays an important role at a national level, handling between 16% and 21% of all bulk agricultural port traffics during the period 2002-08.
Table 4.17: Agricultural products via the Port of Liverpool, 2002-08
Thousand tonnes
2002 2003 2004 2005 2006 2007 2008 Port of Liverpool 2,361 2,378 2,325 2,295 2,462 2,698 2,482 UK major ports 13,061 14,752 12,925 13,608 13,095 12,746 13,978 Liverpool share % 18.08 16.12 17.99 16.87 18.80 21.17 17.76 Source: DfT Maritime Statistics
Table 4.18 shows that some 1.0 million tonnes of AFS was imported from non-EU countries, mainly from the Americas and South East Asia.
Table 4.18: Imports of AFS through the Port of Liverpool, 2006-08
Thousand tonnes 2006 2007 2008 Market Share 2008 ARGENTINA 258 433 310 30% INDONESIA 119 94 238 23% BRAZIL 81 75 233 23% USA 368 148 133 13% URUGUAY 0 0 40 4% MALAYSIA 290 169 27 3% PERU 21 14 15 1% CHINA 0 3 7 1% CANADA 11 4 7 1% SOUTH KOREA 0 0 6 1% OTHER 4 2 5 - 1,170 992 1,021 100%
Source: HM Revenue & Customs; analysis by MDS Transmodal
Given that AFS is generally imported through Liverpool from non-EU countries, the volume of grain handled through Liverpool was in the region of 1.4 million tonnes in 2008.
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Key economic drivers
The economic drivers for grain and soya through Liverpool are the population’s consumption of the food products manufactured from products made at the dockside plants. Its success is directly related to the food manufacturers ability to maintain and grow their own market shares in markets such as breakfast cereals and breads. The global price of grain will have an important effect, which in turn is driven by the annual harvests of the grain producers and the growth in demand from emerging economies.
The main economic drivers for the volume of AFS are the global price of commodities, the demand from the livestock industry and more recently the demand for biomass from power generators. There are suggestions that the future for livestock rearing in the UK is somewhat less certain because of the issue of genetically modified cereals in animal feeds. The EU is believed likely to harden its policy and restrict their use. The livestock industry fears that cheaper meat will be imported from countries not bound by the same restrictions and that this would thereby damage the livestock industry and lead ultimately to less requirement for importing animal feeds.
Apart from the demand for biomass for co-firing, the imports of agricultural products through Liverpool are related either directly or indirectly to the consumption of food by regional and national populations.
Competition
Liverpool was ranked as the most important port for the handling of agricultural products in 2008, according to DfT Maritime Statistics (Table 4.19).
Table 4.19: Agricultural products by UK major port, 2008
Port 2008 Market share
Liverpool 2,482 18%
London 2,313 17%
Grimsby and Immingham 1,736 12%
Belfast 1,387 10%
Ipswich 894 6%
Rivers Hull and Humber 819 6%
Bristol 810 6%
Southampton 762 5%
Hull 428 3%
Boston 343 2%
All above ports 11,974 86% Other major ports 2,004 14% All major UK ports 13,978 100% Source: DfT Maritime Statistics; analysis by MDS Transmodal
The east coast ports, such as Grimsby and Immingham, Ipswich, the wharves on the Rivers Hull and Humber, Hull and Boston are mainly export ports for the GB harvest and import ports for fertilisers and so are not in direct competition with Liverpool. There is, nevertheless, competition between the
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major ports for storage of grains where commodity traders are buying and selling rather than as the raw materials for plants located within the port.
Grain is handled at other ports around the UK, which, like Liverpool, have dockside or nearby milling or other processing facilities. AFS is a cargo that is handled at a large range of ports because it can be stored in a flatstore or port shed and often does not require special facilities such as silos. It is also relatively straightforward to handle the cargo as it does not require specialised equipment. However, due to the cost of inland distribution by road, the hinterland of even the deep sea ports are largely regional, with Liverpool serving the North West and the West Midlands and Avonmouth, for example, serving mainly the South West. Immingham’s prominence (ranked number 3 in Table 4.20) may partly be due to its role in handing fuel for coal-fired power stations.
Table 4.20: Non-EU imports of animal feedstuffs, 2008
Thousand tonnes
Port Thousand tonnes Market share
LIVERPOOL 1,021 29% BELFAST 763 22% IMMINGHAM 493 14% AVONMOUTH 341 10% SOUTHAMPTON 288 8% LONDON 217 6% HULL 160 5% OTHER PORTS 259 7% TOTAL 3,541 100%
Source: HM Revenue & Customs; analysis by MDS Transmodal
Inland distribution
Much of the grain into Royal Seaforth Grain Terminal is bound for the adjacent plants and, as far as we are aware, the processed products are distributed inland by road. Any grain for third parties moves by road or, in the case of the Rank Hovis mill in Manchester, by barge. Small seagoing vessels also ship some grain coastwise.
AFS is transported by road to regional compounders and processors or farm cooperative organisations. Biomass is currently transported by road from the port to Fiddlers Ferry; in theory rail should be an option given the bulk nature of the commodity but only if rail reception facilities for the biomass are constructed at the power station.
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SWOT analysis
Strengths Weaknesses
• Large capacity grain silo, with rapid handling capability and direct conveyor connection from terminal to adjacent processors
• On-site cereal processing activities and food manufacturing in the immediate hinterland of the port
• Ability to accommodate panamax vessels which are the largest presently used by grain and AFS traders
• West Coast location: much of the
imported grain and AFS is sourced in the Americas
• Recent investment in large scale AFS storage facilities with direct conveyor from the berth
• Strong companies with large UK market shares as customers
• Cereal imports dependent to great extent on continuation of dockside processing, which is capacity constrained
• Ship size limited to panamax
Opportunities Threats
• Potential expansion of existing customers’ activities
• Potential competition from other ports with more space that can build large scale dedicated storage facilities • Competition from other ports
• Increasing vessel sizes beyond panamax • Livestock numbers decrease dramatically
as a response to EU policy towards genetically modified animal feedstuffs
Forecasts to 2030
The forecasts assume that about 1.4 million tonnes of cereals and 1.0 million tonnes of AFS were handled through Liverpool Docks in 2008. Of the AFS, we have assumed that about 0.2 million tonnes of the AFS was biomass for co-firing at Fiddlers Ferry power station, which represents about 10% of the total fuel requirement.
The Central Forecast assumes that the volume of cereals and AFS (not biomass) will increase in line with projections by the Office for National Statistics up to 2030 for the total UK population shown in Table 4.21. Volumes of biomass for co-firing at power stations imported through the port are assumed to vary in line with total volumes of coal imported through Liverpool Docks.
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Table 4.21: Projections for the UK’s population 2009-30
Year UK Population (millions)
2008 61.4 2010 62.2 2015 64.4 2020 66.5 2025 68.6 2030 70.5 Source: ONS, national population projections (October 2009)
Table 4.22: Forecast agricultural products traffic for Liverpool Docks to 2030
Thousand units 2008 2020 2030 Growth 2008-30 CAGR 2008-30 Central Forecast 2,445 2,539 2,650 +8% +0.4% High Scenario 2,445 3,047 3,180 +30% +1.2% Low Scenario 2,445 2,031 2,120 -13% -0.6% Source: MDS Transmodal
The Central Forecast results in an average annual increase in total agricultural products imports of 0.48% up to 2030.
The High Scenario has been produced based on the assumption that Liverpool Docks is able to attract additional market share from other ports and leads to an average annual increase in traffic of 1.2% up to 2030.
The Low Scenario has been produced assuming that 20% lower volumes are achieved than in the Central Forecast, due to the loss of market share to competitor ports. This leads to an average annual decline in agricultural products traffic of 0.6% per annum up to 2030.
4.7 Other dry bulks: steel scrap
Description/definition of traffic
Scrap metal (included in the “other dry bulk” category within maritime statistics) handled in Liverpool Docks consists of recycled metals, mainly ferrous but also non-ferrous, in small pieces and compressed blocks or bales that is processed by a fragmentiser and then baled. It is sourced from around the North West region and the West Midlands, and further afield (Scotland, Wales and parts of the South West), from waste consumer goods such as cars and white goods, as well as construction and demolition waste.
Non-metallic waste material that cannot be exported is distributed inland to landfill or waste recycling facilities. One of the two operators at Liverpool Docks has plans to build a thermal plant on the dock estate that will chemically decompose this waste to produce a gas that can be burnt to generate power. This will significantly reduce the volume of non-metallic waste that would be transported inland from the port in the future.
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Key customers
The main operators of scrap terminals in Liverpool Docks are S Norton & Co and European Metals Recycling (EMR). EMR is the largest metal recycling company in the UK, handling over 6 million tonnes of scrap annually, with sites all over the country and exporting terminals at Ayr, Cardiff, Glasgow, Great Yarmouth, Liverpool, London, Manchester, Newhaven, Sharpness, Shoreham, Southampton, Sunderland and Tyne; within Liverpool Docks the company has three storage facilities at Seaforth, Gladstone and Alexandra Docks. S. Norton is a major UK metals recovery company with a number of sites around Liverpool and Manchester. Both companies have invested significantly in their Liverpool sites.
Historic traffic volumes
There are no public domain port statistics giving the volumes of scrap handled at each port. Apart from anecdotal evidence from publicity material, the most useful source of information is trade statistics. Table 4.23 shows Liverpool’s non-EU ferrous scrap exports over the past three years. Trade statistics suggest that in 2008 exports of ferrous scrap from Liverpool to non-EU countries represented a little under half of total UK metal exports, which demonstrates the importance of Liverpool in this trade at a national level.
Table 4.23: Ferrous scrap exports from the Port of Liverpool to non-EU markets, 2006-08
Million tonnes
2006 2007 2008
Ferrous scrap 2.16 1.16 1.39
Source: HM Revenue & Customs
Key economic drivers
Steel scrap is used to feed electric arc furnaces that are used to produce steel. The key driver of volumes of scrap through Liverpool is therefore the global demand for steel, which in turn drives the price of scrap. There is only enough domestic demand for around one-third of the scrap produced in the UK, which is why it is exported in large quantities to feed electric arc steel furnaces, especially to the Far East. Another key factor is the availability of scrap metal arisings in the UK.
Competition
Scrap has always traditionally been handled close to its point of origin because of the cost of inland transport, but when export markets in the Indian subcontinent and Asia opened up there was a need to consolidate very large volumes of scrap and export in large deep sea vessels. The large ports with deep water such as Liverpool therefore had a competitive advantage over smaller rivals with less depth of water.
Table 4.24 shows the share of non–EU (i.e. deep sea) exports of ferrous scrap by port as an indicator of Liverpool’s significance in this market. The volume through Felixstowe will be containerised as a backload for all the otherwise empty import containers returning to the Far East.
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Table 4.24: Market shares of ferrous steel scrap exports to non-EU countries, 2008 Bristol 8% Felixstowe 21% Liverpool 7% Newport 7% Southampton 6% Tyne 5% Total above 86%
Source: HM Revenue & Customs, analysis by MDS Transmodal
Since trade statistics tell us that exports of ferrous scrap to EU countries is a slightly higher volume than the total exported to non EU countries, it is clear that the list of ports exporting scrap is quite a bit longer than the table above might suggest because the ship sizes are likely to be smaller in the UK- Continent trades and so smaller ports on the east and south coasts will be involved in the trade.
Inland distribution
About 87% of the steel scrap is transported from around the North West region and the West Midlands to Liverpool Docks by road. Some 8% is transported to the port by rail and a further 5% is transported coastwise from Scotland. The EMR facility in Alexandra Dock is rail-connected, but there is no connection to the rail network for the Norton facility in Canada Dock.
SWOT analysis
Strengths Weaknesses
• Very strong companies as customers who have made significant capital
investments in facilities and equipment in Liverpool Docks
• Deep water for exports to deep sea markets
• Large urban population within natural hinterland
• Regeneration leading to construction and demolition activity in the North West • Rail served (EMR only), which extends
natural hinterland
• Limited space for expansion of activities with larger capacity equipment
• No rail connection for Norton in Alexandra Docks
Opportunities Threats
• Expand recycling operations by
extending hinterland through use of rail and coastwise shipping
• Rapid recovery in global steel market, with demand increasing at pre-recession rates
• Rail link to Canada Dock to assist Nortons in extending the facilities’
• Slow recovery from recession in global steel-making