EXECUTIVE SUMMARY

1 INTRODUCTION ... 5

2 OVERVIEW OF PORT TRAFFICS... 7

3 PORTS POLICY ... 13

4 PORT TRAFFIC FORECASTS ... 24

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EXECUTIVE SUMMARY

Chapter 1 Introduction

The key objectives of Working Paper 1 are to:

• Develop forecasts for future growth in port traffic through Liverpool Docks up to 2030; • Define the potential for modal shift of port-related traffic to and from Liverpool Docks from

road to more sustainable modes of transport (rail and waterborne transport).

For the purposes of forecasting both traffic volumes and modal split the base year is 2008 and the forecasting time horizon is 2030, with an interim forecast for 2020.

This draft report has been produced by MDS Transmodal, with input from Ekosgen on the significance of Liverpool Docks for the regional economy in section 3.5.

The results included in this Report have been validated with Peel Ports and some shippers of bulk cargoes through Liverpool Docks.

Chapter 2 Overview of port traffics

For statistical purposes, Liverpool Docks form only part of the Port of Liverpool, which also includes traffic passing through Tranmere and Birkenhead. For this reason the volume of port traffics passing through Liverpool Docks were estimated based on the consultants’ market knowledge, any available industry statistics and discussions with Peel Ports.

We estimate that in 2008 Liverpool Docks handled the following traffics across the quays:

Inwards Outwards

Traffic Inland by road Traffic Inland by road

Containers 203,000 units 84% 211,000 units 83%

Roll-on Roll-off freight units

115,000 units 100% 113,000 units 100%

Passenger cars 5,000 cars 100% 6,000 cars 100%

Bulk tonnes 6.1 million tonnes 65% 2.8 million tonnes 87% Source: Estimates by MDS Transmodal

The main function of Liverpool Docks in 2008 in the bulk markets was as a location for the import (mainly in large ships), storage and (where appropriate) processing of bulk cargoes prior to inland distribution; about 60% of Liverpool Docks’ non-unitised cargoes handled across the quay in 2008 were imports. The major import cargoes were cereals, AFS and coal. The major high value imported non-unitised cargoes were paper products and steel, with the port also acting as a storage point for non-maritime cargoes that were received at the port by rail. For maritime import cargoes, rail had a 30% market share for inland distribution – due to the distribution of steam coal to inland power stations by rail; small volumes of steel scrap were imported from GB coastal locations by sea, stored and then re-exported in larger vessels with no impact on the inland road and rail networks.

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Liverpool Docks’ major bulk export trade was scrap metal, transported in deep sea vessels. The scrap metal was received at the port by rail and sea but mainly by road. For export cargoes by sea, rail had an 8% market share for inland distribution, due to the distribution of some steel scrap to the port by rail.

Liverpool Docks handled all of the Port of Liverpool’s container traffic in 2008 and a significant proportion of its RoRo traffic. The Docks handled 414,000 containers in 2008 and the modal split for container distribution was 2% by rail, 14% transhipment and 84% by road. Liverpool Docks also handled an estimated 219,000 RoRo freight units in 2008, 72% of which were unaccompanied trailers.

Chapter 3 Ports policy

The DfT’s ports policy maintains the status quo in that Government does not intend to indicate where and how much additional port capacity is required. These decisions will be left to the mainly private sector port operators and the planning system. The Government believes that the diverse ownership of ports in the UK serves the country well and does not need to change. The Draft Ports NPS places a strong emphasis on planning, with the potential for fast-tracking some port developments where they are regarded as being strategic in nature, and (wherever possible) on greater use of sustainable distribution for inland distribution.

In relation to the Port of Liverpool itself, there is broad support for the further development of the port within the context of sustainable development at a national, regional and sub-regional level.

Chapter 4 Port traffic forecasts

This chapter provides analysis of the prospects for each traffic type, concluding with forecasts up to 2030. For the unitised market sectors, the methodology is based on trend analysis (while taking account of the economic recession), while for the bulk sectors it is based on establishing the key economic drivers for the individual trades. This methodology follows that used to develop national port traffic forecasts in 2005-07 for Great Britain as whole, while taking account of recent events.

Summary of Central Forecasts for Liverpool Docks to 2020 and 2030

Million units/tonnes Broad traffic

category

Broad commodity 2008 2020 2030 CAGR 2008-

30

Unitised Containers 0.41 0.76 0.98 +4.0%

RoRo freight units 0.22 0.34 0.47 +3.5% RoRo passenger cars 0.01 0.02 0.02 +1.3% Cruise passenger cars 0.01 0.01 0.01 -

Dry bulk Coal 1.78 0.93 0.60 -4.8%

Agricultural products 2.45 2.54 2.65 +0.4%

Other dry bulks: scrap metal 2.80 3.44 3.44 +0.9% Other dry bulks: aggregates & construction

materials

0.65 0.65 0.65 -

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Other Steel 0.55 0.63 0.63 +0.6%

Forestry products 0.25 0.30 0.30 +0.8%

General cargo 0.01 0.01 0.01 -

Source: MDS Transmodal

Most growth in traffic is forecast to be in containers and RoRo freight units, relatively slower growth is forecast for most non-unitised traffics apart from coal; this latter traffic is forecast to decline significantly based on UK Government projections for the use of coal for the generation of electricity up to 2030. As well as these existing traffics, future scenarios for new traffic development could lead to an additional:

• 270,000 HGV movements (in and out) and 12 trains in each direction per day generated by the development of port-centric distribution on a site of 50 hectares;

• 30-40,000 freight RoRo units per annum on Atlantic Arc RoRo services;

• Inbound waste material by road for onward shipment by barge to the Ince Resource and Recovery Park on the Manchester Ship Canal.

Chapter 5 Economics of inland distribution

There is an array of policy support for the further development of sustainable distribution for the inland distribution of cargo between ports and inland origins and destinations and the Draft Ports NPS states that the Government “wishes to see port development wherever possible by:

• supporting sustainable transport by offering more efficient transport links with lower environmental disbenefits;

• providing a basis for trans-modal shifts from road transport to shipping and rail, which are generally more sustainable…”

However, despite policy support and some limited grant funding for sustainable distribution services, the relative transport economics of sustainable distribution compared to road freight distribution is the major determinant of modal split for inland distribution between Liverpool Docks and its hinterland. Another key factor is the availability of origins and destinations that are connected to the rail and waterborne freight networks (e.g. the Port Salford development, which will be rail and water-connected) facilitated by the planning system which only allows large distribution parks to be developed on green belt when they are accessible by rail and/or water.

Road freight transport is highly cost effective because it is internally competitive due to the industry’s low barriers to entry. Nevertheless fuel and labour costs have been increasing and this has, allied to the development of more rail-connected distribution parks and increasing volumes of traffic through Greater SE ports, has helped the intermodal sector of the rail freight industry to grow its traffic in the last few years. In addition, rail freight is often cheaper than road and the economic recession is encouraging shippers and logistics providers to seek more cost-effective solutions.

The key characteristic of the economics of sustainable distribution, whether the trunk haul is provided by rail, inland waterway or short sea, is that it has high fixed costs compared to road transport because the capital assets required are so much more expensive than for road transport before a single unit load is transported a single kilometre. However, road haulage has higher variable

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costs per kilometre when rail or waterborne services are able to generate sufficient critical mass of traffic to generate economies of scale. This, in turn, means that sustainable distribution services tend to be more competitive compared to road freight transport over longer distances. The break even distance is affected to a very great extent by whether final collection or distribution is required by road between rail/port terminals at either end of the transport chain; Liverpool Docks has the advantage that it is already connected to the rail and waterborne freight networks and so no road distribution is required at, at least, one end of the transport chain. Where a rail service is linking the port to an inland terminal with on-site distribution centres, sustainable distribution services can be cost-effective compared to road over distances of only 100km or less.

Shippers and logistics providers are increasingly considering rail freight services as an alternative to road haulage to reduce costs – trading off a slower transit time against lower costs. Intermodal rail freight has grown by 38% in terms of tonne kilometres since 2004, even if volumes through the Port of Liverpool have declined.

The greatest potential for use of sustainable distribution to and from Liverpool Docks is likely to lie with rail freight services for the inland distribution of containers, once the post-panamax berth berths are developed and Liverpool secures calls from post-panamax vessels that only make a single call in Great Britain and so are serving a national market. This development, plus a network of inland rail terminals with on-site distribution centres and increasing road haulage costs could lead to 22% of containers to be distributed inland by rail in 2020 and 24% by 2030. In addition, a daily barge service would distribute containers between Liverpool Docks and berths along the Manchester Ship Canal. RoRo traffic (in trailers) is likely to remain on the road, but coal traffic will remain rail-borne. There is potential for some ro-ro ferry traffic to be carried on the same ships in containers and therefore be suitable for onward carriage by rail. There should be potential for transporting a greater proportion of steel scrap by rail as Liverpool has a national hinterland for this traffic type.

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