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Port of Tyne ready for the challenges ahead13 May 2009

At the Port of Tyne's annual review, INSIGHT, on 7th May, Andrew Moffat, CEO of the award-winning port, reported an excellent 2008 trading performance, but added a cautionary note that 2009 will be a more difficult trading period and that the port was ready for the challenges and opportunities that lie ahead.

Overall, the port reported a record breaking turnover of £48.6 million, an increase of 20%, mainly due to the increase in coal handled by the port. Cash flow from operating activities were similarly impacted, increasing by 22% to £9.6 million. Capital expenditure, whilst lower than the previous year, remained significant at £9.7 million.

Capital expenditure in 2008 reflected the continuation of investment in port infrastructure which included the installation of the coal conveyor, the expansion of car parking facilities at the International Passenger Terminal, the acquisition of the new pilot cutter, The Collingwood and the purchase of 25 acres of land in North Shields. After taking into account the cost of interest and taxation payments, borrowings increased by £1.6 million to £13.4 million.

Andrew Moffat told a packed audience at the port's annual review, INSIGHT, held in the Great Hall of Jesmond Dene House in Newcastle, that as a direct result of the significant investments in its enabling infrastructure, the port had been able to attract larger vessels carrying greater volumes of cargo and thereby provide scale benefits to customers.

Mr Moffat said: "I am pleased to be able to report that the number of panamax-class vessels discharged at the port increased from just one in 2007 to 19 in 2008. Included in this statistic was the 229 metres long Golden Spring, carrying 65,000 tonnes of coal, the largest cargo shipment ever handled by the Port of Tyne.

"Clearly coal is important to the business, but it also handles significant volumes of other cargoes, for example, scrap, steel, paper, woodpulp and grain."

In describing the Port of Tyne's five business areas - conventional and bulk cargo, car terminals, cruise & ferries, logistics and estates - Mr Moffat highlighted the fact that the Port of Tyne was the 4th largest coal importer in the UK in 2008, handling 3 million tonnes, and this 65% increase in coal volumes represented over 80% of cargo handled. This growth has resulted in larger coal stocking areas and increased train operations. 2008 saw a 48% increase in rail traffic with an average of 42 trains leaving the port each week although during one week in November, a record 67 trains left.

The port provides facilities for its two main car customers: the 70 acre Tyne Car Terminal on the south side of the river for Nissan imports and exports, and the 50 acre Tyne Distribution Centre on the north side for VW Group imports. Car volumes decreased in 2008 by 9% to 540,000, reflecting the dramatic decline in the demand for new cars that commenced in the final quarter of 2008.

In July, the first in a new generation of lengthened car carriers berthed on the Tyne at Tyne Car Terminal 1. At 229 metres in length and over 68,000 gross registered tonnes, the Hoegh Detroit was the largest car carrier to enter the Tyne to date.

Of particular relevance to the region's tourism economy is the port's cruise and ferries business area where cruise experienced a healthy increase in 2008. Mr Moffat explains: "The Port of Tyne is now an established port of call for the major cruise operators. The record 29 calls in 2008 represented an increase of 38% together with an increase of 48% in the number of cruise passengers visiting the region.

"Holland America's newest cruise vessel, the Eurodam, visited the Tyne on 11th July during her maiden voyage, and again on 31st July."

On the downside, in August DFDS Seaways closed the Newcastle to Bergen route as a result of high fuel prices and the continuing competition from low cost airlines. "The port is working hard to support the remaining Amsterdam service" explains Mr Moffat "and we are delighted that passenger volumes have been strong during the first quarter of 2009. We are actively seeking a new operator to operate the Newcastle to Bergen route."

The loss of the Norway service resulted in a reduction in ferry passengers from 638,000 to 589,000.

The Port of Tyne's Logistics business provides a seamless integrated supply chain solution providing customers with, literally, a one stop shop for their container handling, warehousing and distribution requirements.

Describing how containers are shipped to and from the Tyne on feeder vessels operated by Feederlink, Mr Moffat told the audience: "Goods can be offloaded in the container terminal; stored in the port's 500,000 square feet of high security warehousing; reconfigured, re-packaged and then distributed, all by the port's own skilled staff."

The Port of Tyne's rail connectivity was enhanced during 2008 when Network Rail completed work to deliver W9 gauge upgrade between Tyne Dock and the East Coast Main Line giving the port the capability of moving high cube container traffic in and out of the container terminal.

Container volumes rose by 10% 2008 and this increase was due to the global export of part-constructed vehicles and engines manufactured in the region.

Andrew Moffat also touched on the port's Estates business which handles a mixed portfolio of land and commercial and industrial developments. In line with the Port of Tyne's strategy of expansion and sustainability, 25 acres of land in North Shields, adjacent to land already owned by the port, was purchased in 2008.

As part of the port's future business strategy, Andrew Moffat has strengthened the port's management team with the appointment in April of Dr John Hudson as chief finance officer. In addition, Steven Harrison has been appointed as chief operating officer and will take up his appointment in June.

Mr Moffat emphasised the importance of the port's involvement in the local and regional community and used INSIGHT to introduce Michael Chaplin, a renowned writer and playwright, who will take up his appointment as Writer in Residence at the Port of Tyne in June with the remit to "celebrate the past, present and future of the river Tyne".

And the outlook for the Port of Tyne? Andrew Moffat says: "While everyone tends to think of a port as being steeped in history, we should never lose sight of the fact that a port is also a service provider operating in a global market and as such, the Port of Tyne is not immune to changing trends - what is happening to our customers is happening to us. Unsurprisingly, 2009 is anticipated, and is to date, a much more difficult trading period. We have been working with our major customers to identify and share cost savings and resource efficiencies and we are looking to gain a further foothold in the energy market with existing and new customers. The Port of Tyne is ready for the challenges and opportunities that lie ahead!"

Sir Ian Wrigglesworth, the Port of Tyne's Chairman, compared the rapid changes experienced by the port at the closure of the mining industry in the 1990s and the resulting loss of its coal and pit prop business, with the equally dramatic growth being experienced with today's coal imports.

Sir Ian explains: "As a business, the Port of Tyne is now able to quickly adapt and change to suit the ever changing and increasingly sophisticated needs of our customers and the market, none more so than during the first quarter of this year with the consequences of the credit crunch. We are benefitting from our recent investment in the port's facilities which has enabled us to substantially increase the amount of coal we can handle.

"At the same time, the port is ever conscious of its responsibility to its stakeholders and the needs of the wider community. It is involved in the sponsorship of a wide variety of awards and events and, despite the economic downturn, will maintain its support of charitable and community activities.

"And as a global business we can be subject to rapid change. We are always looking for new opportunities and I hope to stand here next year and report on the exciting new developments with which we have been involved in 2009."

Operational Note to Editors

The Port of Tyne is an important Northern Gateway and key player in the Tyne & Wear region; a dynamic trading hub with five business areas: conventional and bulk cargoes; logistics; car terminals; cruise and ferries; and estates.

For further information contact

Lisa Donohoe, Assistant Marketing & Communications Manager
Tel: 0191 455 2671
Mob: 07912 390 777
Email: lisa.donohoe@portoftyne.co.uk

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