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Why the North East’s ports are of great importance

Broker's Blog
The North East’s six ports have seen a year of developments that have strengthened their position at the heart of the region’s economy.

A proud and constant boast of the North East’s ports business community is that it is the region in the UK that enjoys a positive balance of trade. While exports have been falling in many parts of the country, the North East’s overseas trade has continued to increase and part of that success has been the the region’s six ports.

Britain’s port industry is the largest in Europe, handling around 500m tonnes of freight annually. Over 95% of UK imports and exports by volume, and 75% by value, still pass through ports, outlining the vital role they play in the UK’s economic infrastructure. Roughly 90% of global trade relies on the infrastructure and connectivity provided by ports and the North Sea is one of several areas around the world expected to experience significant growth, with growing Far East trade, continued developments in oil and gas and a burgeoning renewables industry.

The North East’s six ports, four of which – Tees, Hartlepool, Sunderland and Tyne – are classed as major ports, are critical to the region’s major industrial sectors – chemical process, polymer, biotechnology, pharmaceuticals, automotive, steel, engineering and fabrication, oil and gas, renewable energy and tourism – which collectively contribute over half of the North East’s economic output. Created as a result of the region’s importance in the steel, shipbuilding and coal industries in the past, the scale of the facilities is considerable.

port of tyneHead of public affairs – England for Invicta Public Affairs, Mark Stephenson, believes our ports should be playing an even greater role in generating economic growth across the North East. He said: “It is becoming increasingly clear that our ports have a much wider economic role to play.

“Energy supply, manufacturing, chemical and process industries, logistics and leisure are all served by port economies which cut across sectoral boundaries and serve critical functions for the UK economy in terms of jobs, energy security and the advancement of a more positive balance of trade.

“Our ports are also especially well-placed to take advantage of opportunities within a variety of sectors, none more so than offshore oil, gas and wind, and renewables such as biomass importation.”

Recent results and activity at our ports have been heartening. This week Port of Tyne chief executive Andrew Moffat announced pre-tax pofits almost doubling to £10.2m while overall cargoes handled on the river were 6.7m tonnes, the second highest since 1989. The Port spent £11m in 2014 in new plant and machinery and extended its Riverside Quay by 125 metres to 1km. Similar results were reported in May when Teesport operators Brookfield reported increased revenues and profits and said it expected Teesport to move into the top five in the UK for tonnage volumes.

On the Wear, the Port of Sunderland is re-connecting to the national train network by restoring rail lines last used almost 20 years ago while the Port of Blyth has benefited from its Enterprise Zone status to push forward plans to make it a hub for offshore energy companies.

There will also be a host of new opportunities and potential increased activity coming from the extended summer opening of the Arctic passage to the Far East. This is drastically shortening routes to markets from the UK and Europe and providing opportunities for all NE ports. It is hoped to bring growth in what has already been a success area for the North East in recent years.

The ports themselves are eager to play a greater role, particularly in offshore wind where the region was once mooted as a potential worldwide renewable energy hub before the recession.

Matthew Hunt, director at Port of Sunderland, has called on the Government to demonstrate commitment to offshore wind to create certainty in the sector, ensuring the UK does not lose the advantage gained on competing nations.

He said: “The UK still has more offshore wind developed in UK waters than the rest of the world combined and of course, that puts us in a really strong position when it comes to the supply chain here. However, we need to see definitive action and policy support to give investors the confidence to commit to the UK and take advantage of opportunities that will be forthcoming under Round Three developments.

“We are lacking a clear Government position on its long term commitment to offshore wind. And while projections on renewable energy usage is strong, we need explicit decarbonisation targets by Government, to fully understand whether the opportunities we hope will be available will actually materialise.

“The North East has the skills, the businesses, the regional will and the riverside and port locations required to become a European, if not worldwide, hub for offshore wind. All we require now is backing from the Government to empower us to capitalise on this fantastic opportunity.”

Investors such as Siemens and MHI Vestas Offshore Wind have already made commitments to the UK renewables market, but a number of planned developments have been reduced in size.

Port of Tyne

Prime Minister David Cameron at the Port of Tyne

Mr Hunt added: “The industry requires the confidence provided by a supportive Government. With the North East’s many manufacturing and engineering companies, we are a region of heavy energy users, so a vibrant new and renewable sector provides a much-needed balance to our energy mix.

“With the current political will to tackle increasing carbon emissions, the time has come for the Government to produce a clear and ambitious plan for new and renewable energy. With the progress made in the field of offshore wind in recent years, there is no reason why our region couldn’t reap substantial economic benefits by taking a lead in the continued development of this vital green energy industry.”

The total offshore generating capacity in UK waters provides around 8 terawatt-hours (TWh) of electricity annually, equivalent to the electricity consumption of around 2m homes and the Conservative Government is expected to look more to offshore wind after its manifesto commitment to reducing subsidies to unpopular onshore wind farms.

Industry projections see a total of around 6GW of capacity installed by 2016 and around 10GW installed by 2020, by which point offshore wind will supply between 8 and 10% of the UK’s electricity annually.

The North East and Scotland (including the Northern Isles) dominate crude oil exports, accounting for 99% of the 57m tonnes exported from the UK. This reflects the locations of the crude oil shore storage terminals at Sullom Voe, Grangemouth and the Tees, where oil is stored on receipt by pipeline from the North Sea oil fields.

Teesport is England’s biggest hub for the movement of crude oil both imported from Norway and produced in the North Sea. The value of the infrastructure that makes this possible is vast: Teesport is to crude export what the City of London is to financial services.

Oil and gas also contribute a great deal to ports in the North East, and to the economy more generally: 65,000 people in the region are employed in this sector, while over 70% of the oil and gas platforms operating currently in the North Sea were built at, or in the immediate vicinity of, the North East’s ports.

P hoto source and article by Graeme Whitfield: Chronicle Live

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