The UK population is projected to reach 70 million in 2027, up from 64.6 million today, according to the Office for National Statistics (ONS). Recognising that imports account for almost half of the food we eat, while the cost of transporting those goods continues to rise, the Port of Tilbury and NFT Distribution have teamed up to offer a unique port-centric cold storage facility for chilled food. PBUK finds out more about the depot that is tipped to revolutionise the supply chain by cutting both costs and food miles, and increasing shelf-life and sourcing options
Watch this video to visualise how the cold store will look.
Costing £25 million, the new 230,000ft2 temperature-controlled handling and distribution centre will open for business in March 2016; handling 25,000 pallets a week and linking London’s Port of Tilbury with NFT’s nationwide chilled food logistics network that already services retail brands like Marks & Spencer, Sainsbury’s and Asda.
Reefer containers entering the port will head straight to the depot for unloading, sorting, re-packing (where required) and distribution. Expensive, in demand reefer containers will then be freed up for the shipping lines to use again and save on demurrage fees.
Importantly, any food destined for sale in London and the south east will be supplied directly to customers and no longer make the journey to NFT’s primary 215,000ft2 chilled warehouse in Daventry, Northamptonshire, only to return again once processed. This will save a potential 24 hours of journey time and extend product shelf-life.
Despite much industry debate over whether it makes sense to locate coldstores at ports, having a port-centric location was a key factor in NFT’s decision to add more warehousing capacity, according to sales and marketing director Dale Fiddy, who goes as far as to say that the facility will be revolutionary for the supply chain.
“To add capacity in any marketplace you’ve got to think long and hard about where you invest and offer a competitive advantage,” Fiddy tells Produce Business UK. “I genuinely don’t think we’re taking a risk – it’s a no-brainer and a game changer.
“Having a port-centric location offers inbound cost savings that start at the port. Often, the cost of distribution from a port depot can outweigh those savings but we’re linking this coldstore with our existing national distribution infrastructure. We already have the platforms across the UK and lots of our trucks are travelling empty, so the facility at Tilbury will actually balance our network, while adding another platform and capacity.”
What are the cost savings?
NFT is a major player in the UK chilled food market; handling over 130,000 pallets a week. One of its advantages is its strong transport infrastructure. As such, Fiddy says the new centre will offer cost-effective distribution via the firm’s existing network. Already, the new coldstore will apparently save over £1m in supply chain costs for one NFT customer, simply by not sending products where they don’t need to go.
“There are currently a lot of goods that come in to the likes of Tilbury or London Gateway, which are trucked to warehouses in the middle of nowhere for no other reason than that’s where the distribution centre is located,” states Fiddy.
“For example, there are a couple of chilled warehouses in Suffolk, one in Hampshire and many in Spalding in the east of England, which were built up to support local production. But there’s been a shift to importing more food and topping up what we grow ourselves in the UK. Some imported products are sent to existing warehouses when they don’t always need to go there. We believe no product should have to travel anywhere it doesn’t need to go. Besides that, fuel costs are increasing.”
Perry Glading, chief operating officer of Forth Ports, which operates the Port of Tilbury and is leasing the land for the coldstore to NFT, agrees that the new facility works from a both logistical and environmental perspective.
“Currently, containers go straight through the port, onto heavy trucks and across the country; they might travel anywhere between 20-30 miles and 200 miles before they reach a distribution centre where they can be unloaded,” he points out.
“Containers are travelling far too far. It’s dead miles. And then food destined for customers in the south east has to come back to be distributed. It’s inefficient. We recognise it’s important to make these types of supply chain improvements at the port, especially when you consider that 20m people live within 75 miles of Tilbury.”
Will food be fresher?
Fiddy says food will “absolutely” be fresher as a result of the port-centric facility because it will provide a journey time saving of 24 hours and possibly more. “We’ve done some modelling with one customer to prove that we can increase the shelf-life of their product,” he explains. “And with visibility via our web-based system, customers will be able to manage their stocks better, so the opportunities for benefits go way beyond the obvious.”
With chilled food headed straight for the warehouse, Glading expects the turnaround will be “speedy”. “Containers will be able to come in to the port during the morning, be discharged to the warehouse straight away and food could be out on trucks on roads across the UK on the same day.”
Will it increase produce volume?
In the long-term, both Fiddy and Glading believe the facility will increase the volume of fresh fruit and vegetables handled by NFT and the Port of Tilbury.
“Forth Ports is not purely a landlord – it’s a partner,” notes Fiddy. “They see NFT and this facility as enhancing Tilbury’s attractiveness as a port and as a positive step towards encouraging more trade through the port.
“Clearly, if chilled food shippers and importers go through Tilbury and use NFT’s warehouse their savings will be higher. So I think more importers and shippers will start to think about Tilbury when they consider new shipping lines or ports of call.”
If the coldstore’s efficiency is proven, Glading adds that markets that have not opened up widely to the reefer container business like North Africa and Spain (Bilbao and the Canary Islands, in particular) will ultimately start to put more product through to Tilbury in reefer containers, rather than trucking it across Europe and through the Channel Tunnel.
“They’ve not done it before because they’ve been uncertain – they are only as good as their product and we all expect the supermarkets to have product there ready and waiting and in good condition,” he explains.
“But with a port-centric facility, they won’t have to go on a long truck journey. The carbon footprint has to be better. They will be able to bring in 200-300 containers on a vessel, whereas one truck can only carry one container. Capacity will be much higher and the service will be more robust.”
With that in mind, Tilbury definitely expects to see an uplift in traffic. Already, Glading says Tilbury is seeing more fresh produce arriving from Europe, especially southern Europe. “We will absolutely handle more produce from these sources, and there will be some announcements shortly about the new lines that will be coming in,” he reveals. “The volume of produce [handled] will change dramatically at Tilbury.”
Added to that, Tilbury has also recorded a 10-15% increase in trade as a result of the recent influx of migrants attempting to reach the UK, which has affected the Calais-Dover route. Some, of course, will likely be short-term gains, but over time Glading expects others will continue to use Tilbury in order to derisk their business.
“The shock of this year has made people think about changing their business, albeit a small percentage,” he explains. “We are certainly seeing an interest in moving traffic from Dover-Calais through Tilbury as an alternative route. Customer can be fickle so if a problem is resolved they tend go back to the route they’re most comfortable with and where they can control costs. But, in time, some will stay and perhaps send 20% of their business to us.”
Located on the River Thames in Essex, the Port of Tilbury is the third-largest port in the UK in terms of container volume; handling 500,000 containers a year from around the world, including Europe, Australia, New Zealand and South America.
The trade is diverse, with seasonal fresh produce, arriving from Spain, the Canary Islands, North Africa (Morocco) and the Caribbean, accounting for a good 15-20% of its volume, or over 100,000 containers annually.
Fiddy says deciding to build the new coldstore at Tilbury was a simple strategic decision, largely because of its location in the south east. He spent six months reviewing the UK food supply chain and its demand trends. Finding that a staggering 40% of UK food is imported, and with a population on the up, he concluded that in future more food will have to be imported one way or another to feed the growing population.
“Tilbury is located in the south east and covers the whole south east area – right on the doorstep to the largest population density in the UK (27% of the UK population) and the fastest-growing population at 1.07% a year,” explains Fiddy.
“But there’s no real cold storage capacity of this type in and around the south east or London. Land in this area is very expensive and it’s difficult to justify building there as a result. This was another compelling factor of Tilbury for NFT. The supply chain advantage was obvious – it’s location.”
Glading adds that Tilbury is also a big port that provides good connections. “We have very good rail and road connections straight on to the M25 motorway,” he notes. “It’s all about size and connections – you’re not coming to a small port that doesn’t have the infrastructure. Tilbury is a port that can provide a level of service and flexibility, plus added value with a coldstore that’s unique in the UK.”
How is it game-changing?
NFT is ultimately “re-defining the supply chain” with its new port-based coldstore, says Fiddy. “We’re now looking at other port-centric locations too,” he reveals. “This type of port-centric facility absolutely has the potential to revolutionise the supply chain for certain importers. I believe Tilbury will be a catalyst to start seriously challenging those legacy supply chains and we’ll see an awful lot of money saved simply by cutting out certain legs of journeys.”
Having a dedicated coldstore on-site will also put Tilbury at the forefront of the UK’s port industry, according to Glading. “Value can be determined in different ways, whether it’s monetary or in terms of your offer to the market,” he points out.
“The principle reason we invest in developments like this is because: a) it helps to improve our customers’ supply chain; b) it makes us a more viable service; and c) we are ultimately looking for a return on our investment for our shareholders. It’s so important to offer what the customer wants as well as to give them a reason to be at the port and to commit to a long-term contract. The ultimate benefactor is the customer.”
What’s the facility like?
The construction of the 230,000ft2 chilled warehouse will be completed by December, allowing the fit-out of chillers, racking and a mezzanine level for co-packing to be finished by February. The building will be fully commissioned in March, and NFT expects to handle 25,000 pallets (almost 1,000 containers) per week.
Initially, NFT will focus predominantly on citrus fruits in the fresh produce category, plus other produce that can be stored at 0-5oC. At the same time, the firm is evaluating how to create different temperature chambers within the facility, which Fiddy is confident will definitely happen.
So far, an importer of a major yoghurt brand has signed up to use the facility and in the last week Fiddy has held exploratory discussions with a major fruit and vegetable importer. Subject to pricing, he believes it’s “almost inevitable” they will come on board too.
“We want our retailer clients to come on board as well as fruit importers themselves,” he comments. “Retailers are already expressing an interest in our facility for obvious reasons. The major multiples are being driven by Aldi and Lidl to be more competitive and all retailers and suppliers are looking more closely at their end-to-end supply chain – right back to their growers and every port they use. They are looking to see if there are better ways of working in order to be more competitive and to offer a better price for their customers.”
See the progress of the coldstore facility in this timelapse photo
Other produce developments at Tilbury
Anything food-related for human consumption currently represents in the region of 20-25% of Tilbury’s volume. To maintain and grow that trade, Glading says Forth Ports is investing in a number of areas to shore up its position as a fresh fruit and vegetable terminal for the UK.
1. Reefer plugs
In recognition of the growing usage of reefer containers (rather than standard open hulled vessels or reefer vessels), which can maintain temperatures over a longer period of time, Forth Ports is ensuring it has enough facilities at its ports to handle the demand for reefer containers.
“We are making more reefer [electricity plug] points available,” says Glading. “The investment is significant at both Tilbury and Grangemouth [the largest container port in Scotland, where mostly potatoes are handled in the fresh produce category for the local market].”
2. West Africa banana link
Tilbury’s London Container Terminal also recently announced a new weekly West African service with leading shipping group CMA CGM, which Forth Ports claims will support banana imports to the UK.
Bananas is one fruit that certainly gives Tilbury a significant profile in the produce trade since the port already receives considerable volume from the Caribbean, as well as other tropical fruits. “I always say if you can get bananas right, you can get anything right,” Glading comments. “They require a certain level of control and they need to go out pretty quickly.
“The West Africa route is probably not far off the five to seven-day transit time for bananas Tilbury receives from the Caribbean,” he continues. “There’s also always been an historical link between Africa and Tilbury going back many years because we’re so close to London and the south east. The routes from West Africa to the UK make sense for shippers to come to London ports too, plus the rotation works – it’s a natural route.”
3. Investment in people
Another benefit that Glading believes Forth Ports offers the produce business is its increasing knowledge of the fresh fruit and vegetable trade in terms of its movement and importance to ports like Tilbury.
“We are placing an educational investment in our people,” he says. “We are starting to get out into the marketplace. Even this interview, for instance, isn’t something we would normally have done in the past because of a lack of specific produce knowledge.”