Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence

Memorandum by Dr Merv Rowlinson, London Guildhall University (IW 20)



  This short report on the Manchester Ship Canal/River Weaver follows a recent information gathering trip to the waterways. The intention is to submit evidence to the Committee, focusing on the practical issues and opportunities of inland waterways, relevant to Chapter 6.61—6.68 of Waterways for Tomorrow. It is felt that it is imperative that the Committee is aware of the issues of inland shipping as seen from the "sharp end". Although the evidence here is drawn from the waterways of the Liverpool-Manchester region it is contended that similar issues could have been identified in the Severn, Humber/Trent, Thames regions. The information gathering process involved conversation with local and Scottish ship owners as well as shipping users in the Liverpool—Manchester region. The purpose of the trip was primarily to assess the performance of the Freight Facility Grant assisted grain barge operations of KD Marine. However, a number of interesting issues were also discovered, including a favourable "sea change" in the outlook of the Manchester Ship Canal management, new traffics—actual and potential—and the precarious state of the River Weaver. This is leading to the loss of chemical and salt traffics to water and, as a consequence, heavy road haulage concentration in the Mid-Cheshire area.


  The 60 kilometre waterway, and its Weaver off-shoot, offers one of the few UK opportunities for inland trading with vessels of a size, distances of a length, to allow competition with road haulage. Major industries—chemicals, petrochemicals, wheat milling, salt extraction—are located on the side of the waterways. Additionally, scrap, and the sand requirements of the nearby glass industry, are served by specialist wharves and docks.

  For the first time in several decades shipping enterprise is being encouraged and new opportunities are becoming realised. This follows a period of great uncertainty for shipping on the upper reaches of the canal. De-industrialisation, the increased size of deep sea vessels, and the diversification of the Manchester Ship Canal company (MSCC) into such high profile property development schemes as Salford Quays and the Trafford Retail Centre, all militated against the shipping interest. Closure plans were revealed for the upper reaches in the mid 1980s bringing instability for shipping and shipping users. The net result was the loss of traffics, including grain barge flows between Liverpool and Manchester.

  Despite the run down in traffic, the geographic reality of the mid 1990s was that the canal would need to remain open and be maintained as a crucial drainage system for the densely populated Greater Manchester and Warrington-Runcorn areas. This imposition has gradually brought a re-think on how the asset should be utilised, namely as an infrastructure supporting commercial shipping enterprise.

  Fortunately the key upper reach user, Cerestar, retained its canal side linkage for the import of up to three grain vessels per week. The pattern of grain imports from French Atlantic ports offers excellent opportunities for back cargo of scrap for the Spanish port, Pasajes, loaded directly from the canal side, Irewell Park. Revenue running is therefore maximised with the ships being loaded in both directions. As a consequence, freight rates are reduced, very much to the benefit of the shippers.


  After the uncertainties of the 1985-95 period, the company is once again promoting the use of the waterway for commercial shipping. The 1999 return of barge traffics in the transhipped (North American) grain trade between Liverpool and Manchester has been welcomed by Commercial Director, Jim Chilton: "This is an area of business that the canal company is keen to develop" (Lloyds List 15 June 2000, p 11).

  Further evidence of this change in attitude is the development of the Blue Circle cement terminal in Salford. This development represents an important shift in strategy towards new canal traffics. Blue Circle's new rail served terminal has become the first port facility investment in Manchester in at least three decades, allowing deep sea ships to load up to 7,000 tonnes of Derbyshire produced, bulk cement. The £600,000 investment in the rail facility was actually made by the MSCC. The first sailing occurred on 17 July 2000 when the Cem River left Manchester with 4,000 tonnes for Madeira. With in excess of 100,000 tonnes of cement traffic per annum generated, this rail-sea initiative reduces annual return lorry journeys in the Peak Forest/Manchester region by at least 8,000.


  The return of the Liverpool—Manchester grain trade is very much the result of the entrepreneurial efforts of K D Marine. With the support of the FFG, K D Marine has been able to benefit from the significant volumes of North American grain moving to the Rank-Hovis Mills, situated in the centre of the re-developed Quay West estate. The 980 dwt vessel, Gina D, qualified for capital cost support, as did the suction discharge and lorry loading facilities. It is evident that demand has grown to the extent that a second vessel, a 400 tonne barge, has been purchased in order to supplement Gina D.

  Underpinning KD's business success is the mixture of shipping experience and entrepreneurial drive and vision. A particular strong point is the firm's vertical integration which includes the following components:

    —  vessel ownership and management;

    —  port agency and freight forwarding;

    —  vessel discharge operations; and

    —  truck ownership and operations.

  This allows for direct dealing with the customer and provides the Head Miller at Rank-Hovis with a flexible just-in-time service, within the parameters of the annual contract of affreightment tonnages. Cost control and deployment of assets and employees and co-ordinated, leading to an efficient, customer focused supply chain. This proves advantageous in contrast to the traditional shipping company that limits its managerial control to the A to B points of the shipping leg. Such areas of friction as co-ordination between ship and the discharge/road distribution process, are thus avoided; as are potentially damaging disputes over demurrage and dispatch between the vessel and its principals.

  A particularly inventive improvisation employed by K D Marine is the use of the No 3 Dry Dock for discharge and transfer to its small fleet of articulated tipper trucks. Despite the close proximity of the Rank-Hovis mill 300 metres from the point of discharge, property developments have curtailed the once available conveyor link with the ship. Up until the early 1970s deep-sea bulk carriers discharged directly to the mill. Barges also enjoyed this facility pre-mid 1980s. The current construction of the Northern branch of the Imperial War Museum on the mill's previous quayside frontage obviously precludes the future opportunity of direct discharge. It should be noted that the need to tranship into lorries forced up the total cost of transportation significantly.

  Ownership of the discharge facility and the tipper-truck fleet allows K D Marine to co-ordinate deliveries to meet the supply needs of the mill. This is usually overnight, thus minimising traffic congestion.

  An unpredicted follow on development from the Rank-Hovis service has been the interest shown by another major Manchester wheatmill, Allied Mills. Although this recently completed mill is situated on the canal side it presently lacks facilities for direct vessel discharge. However, the utilisation of K D Marine's equipment and trucks has provided for the successful grain discharge of coastal vessels loaded in Cowes, Isle of Wight. In addition to their grain operations, K D Marine have identified a potential for boosting canal traffics by two million tonnes per annum and have submitted exciting development plans for the River Weaver and the Weston Point docks. This involves coastal/short-sea integration with river traffic movements of soda ash and salt from the Mid-Cheshire chemical industry concentration.


  Contrary to the signs of revival on the MSC, the current parlous state of the Weaver Navigation is of concern to the shipping interest. At present no commercial shipping activity occurs on the navigation, resulting in the waste of waterway infrastructure. This loss is particularly acute given the Weaver's potential for handling sea-going ships up to 1,000 dwt. The deterioration of the channel, due to the curtailment of dredging facilities, has led to the withdrawal of the waterway's last regular trading vessel, St Kieran. This tanker vessel is now forced into loading from tanker lorries in the Port of Liverpool, some 40 kilometres downstream from the point of production, the riverside Brunner Mond chemical plant at Northwich. Bulk soda ash exports also face a similar road leg. The inability of coastal and short-sea vessels to load to their capacity in the Weaver not only forces up shipping costs, but also leads to at least 15,000 extra road journeys on the restricted road system of Mid-Cheshire. Conversations with shippers, ship owners and British Waterway's management have revealed a wide variation in the assessment of the draught problem. It is apparent that British Waterways are reluctant to admit that there is a problem. In addition to the dredging issue, uncertainty over the state of the Weaver's road swing bridges is jeopardising any attempts at revival of traffics. In appears that British Waterways preferred bridge refurbishment plans involve lengthy closure (to shipping) periods.

  The opinion of several ship owners and users is that at local level, British Waterways have lost interest in the commercial potential of the Weaver. One ship owner suffered a six week delay in receiving reply to his commercial inquiry from British Waterways Northwich office! If this is indeed the case it contradicts Waterways for Tomorrow (6.64), which claims that British Waterways have a strong interest in commercial traffic.


  It is noted that there has been a significant increase in FFG allocations under the present Government. Additionally, it is apparent that the grant has had a big impact on reviving traffics on the Manchester Ship Canal and, as a consequence, has contributed to a significant reduction in lorry-miles in the Liverpool—Manchester region. Three firms have successfully implemented grant backed investment schemes:

    —  Hunstman Chemicals, Discharge Facilities;

    —  MSCC, Blue Circle Rail Terminal; and

    —  K D Marine, Vessel and Discharge gear.

  The grant to Hunstman appears to have proved successful. With an average of three 4,000 dwt chemical carriers trading to the canal side wharf at Carrington.

  The MSCC's Blue Circle Terminal at Salford provides direct access to the main line between Manchester and Sheffield. This provides for a daily service of 1,000 tonne cement trains between the Peak Forest plant and the quayside, thus obviating any need for road vehicles.

  The grant to K D Marine assisted with the purchase of the vessel, Gina D, and discharge equipment. The system for FFG awards is based upon shipping projects that can demonstrate a transfer of traffics from roads to water. Although this system was initially conducive to the development of the grain trades, the success of the service demanded extra tonnage which could not be accommodated by the procedure. The experience of K D Marine (and mirrored by that of Humber Barges) is that in situations where the trade is building up, and firm guarantees have not been established, it is impossible to apply for the grant. As a consequence, investment is either stifled or shipping companies place themselves at risk (negative cash flows) during the precarious start-up period. The position is that in situations where water transport is untested shippers will be unwilling to give firm guarantees of contract work. Instead an incremental approach of experiment and assessment is adopted. This prevents the shipping investor from applying for a FFG. Although this cautious approach may be rooted in sound business practice, it does little to aid the cash flow demands on a vessel seeking to survive the critical early days of a new trade initiative.


  This short report on the MSC and Weaver has identified grounds for optimism. The upsurge in shipping enterprise, resulting in new traffics being won, has developed a momentum for future business. The success of K D Marine points to the efficacy of shipping companies achieving integration into the complete supply chain. The build up of grain traffics, both North American via Liverpool and coastal shipped from South Coast ports, shows the incremental nature of freight shift from roads to water. The rail-sea link up at the Blue Circle terminal also demonstrates the benefits of modal integration. The picture of the Weaver provided, however, is less rosy. It is apparent that the river faces an irreversible decline unless radical action is taken soon.

  The issues of waterside "gentrification" are obviously of increasing concern to the water transport interest; the threat to the viability of water transport in that new property developments deny quayside cargo handling access. The evidence of the FFG backed schemes demonstrates the obvious advantages of such financial support; it was also made evident that a more flexible FFG scheme would prove conducive to the build up of new water traffics. From this perspective it would serve the Government's strategy on sustainable transport to recognise the way that business works, that in many cases freight transfer to water will be undertaken cautiously and piecemeal. This necessitates a more flexible FFG award criterion.


  The Incremental Nature of Freight Transfer from road to water needs to be recognised, with shippers preferring a cautious approach, initially. For the purpose of making the FFG more accessible, acknowledgement of the incremental build up of traffics shifting from road to water is called for, particularly in untested water markets.

  Consideration of the need to balance regeneration schemes and shipping infra-structure, particularly quayside loading/discharge points. This will protect berths for future water trades.

  The commitment of British Waterways to commercial traffics on the River Weaver and elsewhere needs to be examined, given the reservations of the ship owners and shippers interviewed.

  The successful link up between rail and shipping at Blue Circle's inland waterway terminal deserves heralding as an admirable example of sustainable inter-modal integration.

  The apparent advantages of shipping companies practicing inter-modal operations in order to achieve integration throughout the whole of the logistics supply chain should also be championed.

29 September 2000

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