DP World plans to develop warehouses at the Port of Southampton in the UK Ship’s crew

By Brendan Murray (Bloomberg) —

DP World Ltd. intends to expand operations in the UK port of Southampton by developing warehousing space to meet growing demand from UK businesses looking to strengthen their supply chains against global trade disruptions.

Ernst Schulze, CEO of DP World in the UK, said the plan is in “early stages of development” but “we are very excited about the possibilities this would open up for our customers.” but in concept DP World’s 2 square mile logistics park adjacent to its dockside facility at London Gateway.

Demand for warehousing in the UK has risen sharply since 2020, as Brexit and the pandemic prompted companies to stock up and ease the flow of overseas manufactured finished goods and parts needed for assembly. Commercial areas are particularly sought after around the major ports because of their connection to emission-reducing rail connections.

Average rents for industrial and logistics space in the UK rose 10.4% last year, beating last year’s record rise, according to Colliers, a commercial real estate consultancy. Even after a record amount of speculative square footage was delivered in 2022, rents are expected to continue rising this year.

In the South East, which includes Greater London and some of the country’s busiest container ports, “supply remains low compared to historical standards and user demand, as evidenced by strong annual average rental growth of 8.8% over the past year”, according to a February report by Colliers.

UK delivery costs

According to Luis Gomez, European President of XPO Logistics, a Greenwich, Connecticut-based transport company that integrates end-to-end logistics operations, supply chain costs for global companies have risen much faster in the UK than in neighboring European economies.

“Customers want to be more autonomous in the UK, have their own warehouses and not rely so much on flows between the UK and continental Europe,” Gomez said. “There was a clear shortage of drivers and available space and when less is available the price goes up. This is also having an impact on the British economy.”

Such market dynamics are driving expansions like that of DP World, which has pledged to invest £1 billion (US$1.22 billion) in the UK over 10 years, including £350 million for an all-electric fourth berth in London Gateway, which is scheduled to open next year and increase capacity by a third.

In November, Dubai-based DP World – which handles about 10% of the world’s container trade – announced an intermodal train service connecting London Gateway with Southampton, where the majority of freight originates from non-European countries.

“We think the UK is a good market,” said Schulze. “Obviously we’re going to have some ups and downs, but overall it’s a good place for the long term.”

The key to this longevity is maintaining the concept of free ports as British government policy – ​​the word used to describe trade gateways that are given investment incentives in taxes, regulations and systems like customs clearance to boost otherwise ailing economies .

Pioneered by DP World’s Jebel Ali Free Zone and engaged Meanwhile, Prime Minister Rishi Sunak helped the Freeport idea at London Gateway when he was MP in 2016, Schulze said.

“Freeports is something that we as a government company are pushing hard to make successful and even expand,” he said.

–With support from Siddharth Philip.

© 2023 Bloomberg LP

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