In brief:  

• London Gateway handled over 2m TEUs in 2022, second only to Felixstowe, which is operated by Hong Kong-based Hutchinson, in the UK. 
• DP World has invested about £2bn in London Gateway so far. Another £1.5bn will be invested in the next 10 years. 
• The site includes an adjacent 9.25 million sq ft logistics park, which is currently 50% committed and is now operating under free port status. 
• “There is a big ambition to grow the Thames and put it back at the centre of global trade,” says Ernst Schulze, the CEO of DP World UK. 

It was not the Black Death nor the Great Fire that finished off the port of London. The Luftwaffe failed too, despite relentlessly bombing London’s East End between 1940 and 1941. In fact, it was a truck driver from North Carolina with a knack for business and invention who sealed its fate. 

Malcolm McLean is widely celebrated as the father of container trade. The 20- or 40-foot steel boxes he first conceptualised in the 1950s revolutionised global trade, making possible a level of speed and efficiency previously unimaginable.  

London’s Docklands were collateral damage. Their berths were unable to handle the sheer scale of new container vessels. Their dockers dug in to fight the change that would soon prove inescapable. 

The first container ship docked in the UK in 1966. In the successive three decades, all the London dockyards that at one time formed the world’s biggest port fell one after the other like dominos. Thousands of dockers lost their jobs, while container trade moved to deepsea ports along the coast such as Felixstowe and Southampton. 

At that point the London’s heritage as one of the world’s biggest hubs for seaborne trade seemed lost. That was until London Gateway opened its doors in 2013. Ten years on, the UK’s newest port is the country’s second largest and excavators are at work to add another berth to further boost total capacity.  Adjacent to the port, a logistics park is also taking shape. 

“There is a big ambition to grow the Thames and put it back at the centre of global trade,” Ernst Schulze, the CEO of DP World UK, tells fDi Intelligence. 

Deepsea trade in the Thames

DP World inherited the London Gateway project from the Peninsular and Oriental Steam Navigation Company, more commonly known as P&O, a relic of the British empire that ended up in Emirati hands in 2005. 

Based at the site of a disused Shell refinery about 30 miles east of London, the project raised a few eyebrows with the new management at first because it required the extensive, costly dredging of a 100km deepwater channel from the North Sea. Eventually, the works broke ground in 2010 and the first ship docked at London Gateway in 2013. 

DP World used the mud and silt from the dredging to reclaim a 2.7km quay hosting three berths capable of handling up to 2.3 million 20-foot equivalent units (TEUs) per year. Overall, it injected £1.5bn into the development of the new port. That figure has now grown to £2bn as the port reaches its 10th year of operation. 

“While it has taken time for volumes at London Gateway to ramp up, the port is now the second largest UK container port, and we can certainly see that it has overcome the vessel size constraints [of the Thames estuary],” says Eleanor Hadland, senior analyst at shipping consultancy Drewry. 

DP World’s new port created much needed space for the country to meet the growing demand for deepsea container trade. In 2012, one year before it launched, UK ports handled a total of about eight million TEUs; 10 years later, they handled 10.4 million. 

London Gateway accounted for most of that difference. According to DP World and government figures, it handled more than two million TEUs for the first time in 2022, second only to Felixstowe, which is operated by Hong Kong-based Hutchinson and whose annual throughput ranges between three and four million TEUs, and ahead of Southampton (1.8 million TEUs in 2022), which is also operated by DP World. 

Shifting global trade 

The success of London Gateway stands out against a backdrop of a tough times for logistics operators in the UK. 

Brexit precipitated a thorough overhaul of UK foreign trade policy, which caused plenty of political strife. Meanwhile, the Covid-19 pandemic dramatically accelerated the ongoing restructuring of value chains, creating several bottlenecks along the way. 

Mr Schulze believes the ongoing paradigm shift is playing to the port’s strengths. 

“First, there are bigger ships coming onto the market,” he says, highlighting the continuous demand for deepsea trade. 

As many as 31 new megamax vessels – ships carrying up to 24000 containers that are mostly deployed along the Europe-Asia trade route – are scheduled to be delivered to shipping lines by year-end, according to figures from shipping research firm Alphaliner. 

Besides, Mr Schulze adds: “There is change going on, but that will not overhaul supply chains completely. The sourcing [of finished and intermediate goods] will remain concentrated in certain locations, but companies will spread it out a little bit. They’re moving to different countries because of the geopolitical issues that are going on today.”  

As regards Brexit, most of London Gateway’s trade already originates beyond the EU. 

“It’s too early to tell as the UK is still forming new trade deals, but London Gateway is targeting deepsea trades as opposed to intra-European trades. Therefore improvement of trade with Asia and Australasia would benefit London Gateway,” argues Ms Hadland.

It’s too early to tell as the UK is still forming new trade deals, but London Gateway is targeting deepsea trades as opposed to intra-European trades. Therefore improvement of trade with Asia and Australasia would benefit London Gateway.

Eleanor Hadland, senior analyst, Drewry

Waiting for global trade to find a new balance, DP World is ploughing ahead with the development of a fourth £350m berth expected to come online in 2024. Once the expansion is completed, the port’s overall capacity will grow to about three million TEUs and DP World will get closer to its goal of handling a third of the UK’s container trade. Overall, the company plans to invest an extra £1.5bn in its operations in the UK in the next 10 years. 

Freeport boost?

The port is just one of the several pieces in DP World’s port-centric proposition for the UK market. While most of the container cargo imported into the UK is trucked inland to logistics centres in the Midlands and distributed from there, London Gateway offers to store and distribute the cargo from warehouses built in the vicinity of the port. 

In this vein, its success is closely intertwined with the success of the adjacent logistics park, which was granted freeport status in early 2023. Spanning more than 9.25 million sq ft (0.86 sq km), at the moment, the park is 50% committed, Mr Schulze says. At capacity, it is expected to employ 12,000 people. 

The logistics park is part of the wider Thames freeport area, where investors have been able to enjoy specific customs and tax incentives from March 2023. These benefits may be marginal, academic research suggests. They also extend to other major ports including Felixstowe, Southampton and Liverpool, offering little competitive advantage. However, they can help capture some eyeballs, Mr Schulze argues. 

DP World is also leveraging synergies with the other UK port it operates, Southampton. The company launched an intermodal train service moving containers between the two ports in 2022. The two locations combined moved about 3.9 million TEUs in 2022, according to company figures. 

London Gateway epitomises the reality of contemporary port logistics. It works for London, but it is outside London. It can get busy, but everything follows a precise script designed to maximise economies of scale and safety at work. Human labour is kept to the bare minimum. It could not be more different to the royal docks of the past, but it could not be more similar in its ambition to keep London at the heart of global trade.