London Gateway 'a game-changer'

DP World's ambitious London Gateway project is hailed as "a game-changer" in the container world.

An automated stacking crane being tested this month at the London Gateway port, which is under construction in the Thames Estuary. Stephen Lock for The National

"We are really going back to London's roots," enthuses Simon Moore, the chief executive of DP World's London Gateway project.

"This is what the Romans did 2,000 years ago, they had a deep-sea port next to the most important market in the land," he adds.

Mr Moore's historical perspective is relevant, but he is quick to point out the more immediate inspiration for his work at Gateway: the years he spent working for the P&O container shipping business in Jebel Ali in the 1990s.

"I saw the potential there for a port and consumer market close together," he said.

The Gateway, downriver of London at Thurrock, is on the doorstep of one of the biggest markets in Europe: the affluent City of London and the surrounding Home Counties of the south-east of England.

"Around 50 per cent of the UK's GDP is here in the south-east. The UK is one of the most advanced economies on the planet in terms of how much produce is bought on the internet, but consumers are getting more sophisticated, and less patient. They're not prepared to wait two weeks or more for delivery. Gateway will help reduce the wait to more like two days," said Mr Moore.

Marks & Spencer can appreciate the logic. Its chief financial officer said it could no longer have a ship-to-shelf waiting time of up to three weeks. M&S is basing one of its main logistics hubs at Gateway.

"It really is a game-changer for distribution and logistics," Mr Moore added. "The Olympic Games last summer put a greater spotlight on the east of London, which had traditionally been an area of car manufacturing. Gateway is part of that process of transforming a part of London that had been relatively neglected compared with the West." The British government has committed £150 million (Dh841.2m) on road improvements around the Gateway region.

"With that kind of access, we become the nearest deepwater port not just to London, but also to the Midlands, Birmingham and Manchester. We're here to serve the UK, by road, rail - 35 per cent of Gateway's freight will go by rail - and coastal shipping. The UK had a shortage of deep water container capacity, but Gateway fills that gap," said Mr Moore.

The development is being funded partly by DP World and partly by project finance, what Mr Moore calls a "50-50 debt-equity split". The total investment amounts to £1.5 billion.

He admits there was some uncertainty in 2009-10, when Dubai was suffering the effects of the global financial crisis, and especially Dubai World, DP World's owner. "There was a bit of a cloud over timing back then, but never any doubt about the central proposition."

Since then, Dubai's economic recovery has coincided with two trends that reinforced the business argument for Gateway, Mr Moore believes. "The ships have got much bigger and that has put pressure on port facilities around the world. But second, the end-user market has changed. In the UK high street trade has suffered and businesses there are looking to be more competitive, which means controlling costs more efficiently.

"Fuel and transport costs are among the biggest items, and our location will help reduce them dramatically. We're bringing ships closer to the market, and overall that's good for the UK economy."

For Dubai, Gateway will be generating revenue from the fourth quarter of the year.

There has been speculation that Gateway could be among a list of assets Dubai World might consider selling to meet debt repayments in two years. "That would be a question for the owner, not for me," said Mr Moore.