Since 2013, ESPO has been putting each month a port in the picture through its “port of the month” articles. After four years, we will start with a new series of articles called the “port pro of the month”. Every month, we will pay a visit to a port executive who will present us his or her port and also help us understand what it means to lead a European port.
Our first “port pro of the month” is Clemence Cheng, CEO of the Port of Felixstowe and Managing Director of Hutchison Ports Europe. Managing the UK’s largest container port, Mr. Cheng is an established figure in the European port sector. But what are his views on the future of his port? How did he become a port CEO? What about Brexit, the increasing size of vessels or climate change?
Can you briefly tell us about the Port of Felixstowe? What are its main characteristics and challenges?
Apart from being the largest container port in the UK and one of the largest in Europe, Felixstowe is an important gateway port for Europe-Asia trade. Almost all of its 4.2 million TEU handled are gateway cargo with very little transshipment business. Its ro-ro operation is also an important facility to enable short-sea trade between the UK and Europe. It is one of the core TEN-T ports designated by the European Commission.
The Port of Felixstowe’s chief attributes are its deep water access with a short approach channel, its location close to the main shipping routes into North Europe, its excellent road, rail and coastal feeder links with the rest of the UK, a skilled and experienced workforce, and a strong shareholder who understands port business well and who is committed to constant investment. Felixstowe was the first overseas investment made by Hutchison Ports. Since its acquisition in 1991, continuous investment ensures that the facilities, the people, equipment and systems keep pace with the growth in trade of the U.K. and ensure we are able to offer the best levels of service expected by our customers in a very competitive sector.
In June, we celebrated the 50th anniversary of the container terminal of Felixstowe. This is an occasion to look at the achievements over all these years, but it’s also a time to look at what you consider as your biggest achievement or your role in the success of the Port of Felixstowe.
Port of Felixstowe’s history dates back to 1875. My involvement with the port started in 1998 when I joined Hutchison Ports as its CFO for Europe. It is a relatively short period of time when compared with Felixstowe’s long history. I see my role as the CEO of Port of Felixstowe as one of “custodianship” and my biggest satisfaction is to be able to work with all stakeholders to continue to grow this great port. My predecessors had the foresight to start a dedicated container handling business in 1967. The story of the last 50 years has been one of growth, competition and change. I do not think the future will be fundamentally different. Our main objective is to deliver for our customers. We have paused at times this year to look back and reflect on the last 50 years but our main focus is always on the future and how we can continue to improve.
The latest ESPO Conference focused on “Ports in a changing climate, a changing world”. “Disruption” has become a real buzz word. Do you agree? Are the changes and the challenges really unseen? Is there some positive news?
I think there is a lot to be positive about. The world is changing but it always has. The invention of the container box changed not only the course of Felixstowe’s history but, in many ways, it has changed the world. Globalisation could not have happened without the container. This simple steel box has generated immeasurable wealth for literally billions of people. The volume of trade made possible by the container has lifted large parts of the world out of poverty and continues to help developing economies to grow and developed economies to prosper. A world without the container is unimaginable.
Change brings opportunity. We are excited about the opportunities that the so-called “disruption technology” will bring. The use of “block-chain” will simplify how we do business in the future. The successful businesses – and I include ports in that – are those that embrace change and are constantly adapting.
The European political scene is also facing unseen challenges with the Brexit. The UK and the EU will have to negotiate a new trade relationship. What are the main priorities for the Port of Felixstowe in view of the negotiations on that new trade relationship?
The EU accounts for roughly half of all UK trade so it is clearly an important market, as the UK is for many European countries and ports. I think we all have an interest in ensuring that Brexit is as smooth as possible and that both sides keep economic considerations to the fore when negotiating the new relationship. That means we need to keep trade tariff-free, procedures as simple as possible and any physical checks at the border to a minimum and risk-based. I do not doubt there will be significant challenges in the negotiations but if we can avoid them being too politicised I am optimistic that a workable and mutually advantageous agreement will be reached.
Felixstowe had the first UK container terminal. The invention of the container must have changed port activity dramatically. How will this further evolve?
Prior to the advent of containerization, Felixstowe was a small local port employing just a couple of hundred people. Today we have 2,500 direct employees and 12,500 people are employed in the shipping and transport industries locally so, yes, the change has been dramatic. The next phase of evolution will involve further improving both capacity and capability and we have plans in place to do both. More immediately, we will be creating an additional container storage yard next year and we have already commenced a programme to increase the height of 10 cranes on Trinity Terminal to handle more mega-ships simultaneously. We are also investing heavily in our system upgrades as well as training and developing our people to use more technology to improve our working conditions, e.g. remote control equipment.
The success of any company depends of the quality of workforce. How do you as a port CEO motivate your co-workers?
We are lucky to have an experienced and dedicated workforce. A large number have been with us for many years and take great pride in the success of the port. They are very knowledgeable about the industry and what is necessary to maintain our position as the no. 1 container port in the UK. In fact, Felixstowe has developed many talents, who are now being deployed around the world within the Hutchison Ports’ network. There are also ex-Hutchison people in senior positions at many other ports worldwide. As a leader, it is important for me to develop, motivate and nurture future leaders, not just for Felixstowe, but for our group and, indirectly, the wider industry.
The Port of Felixstowe profiles itself as the “go-to” port in the UK for the largest mega-ships. How has the port anticipated on the spectacular growth of container ships?
Last year, we had 137 calls by vessels of 18,000 TEU or greater and we have already had more than 100 calls this year. It helps Felixstowe to be part of the bigger port network of Hutchison Ports as I believe we have better intelligence about our customers’ development plans. Preparation for handling these mega vessels started over 10 years ago when we began the design of our latest terminal, Berths 8&9. We built the terminal for the future and, although not yet necessary, it was constructed to allow us to go to 18m depth alongside. The cranes on the new terminal – and we have more on order - allow for even larger container ships so we are already anticipating the next phase of growth.
Reducing CO2-emissions is crucial in the fight against climate change. How do you think a port can contribute in reducing CO2-emissions?
We are very conscious of the need to reduce the impact of our operations on the environment. That includes reducing our CO2-emissions, but it is also important that we contribute to other environmental priorities such as improving air quality and reducing waste.
We have an Environment Committee which I Chair and which looks at the ways in which we can minimise our impact on the environment. We also participate in programmes such as the Go Green initiative in which a number of major ports and terminal operators took action on an international level to benefit the environment.
In the last 12 months, 32 RTGs (Rubber Tyred Gantry cranes) have been converted from diesel to electricity as part of a three-year programme to convert 54 machines, 278 MWh has been generated from 2,000 solar panels on the port, an equivalent CO2 offset to planting around 5,000 trees, the port’s carbon footprint (CO2e) has fallen significantly as part of a long-term programme resulting in a 34% reduction since 2009, in 2016 70% of all waste generated or received was recycled and no port-generated waste was sent to landfill. So we are making good progress on a number of fronts.
Ports also have a role to play in helping their customers to make sustainable distribution choices. We have invested heavily in rail, opening our third rail terminal in 2013 and, as well as being the UK’s largest container port, we are also the country’s largest intermodal rail facility. The benefits of rail are such that the CO2 saved by our customers using rail at Felixstowe amounts to more than twice the total CO2 attributable to port operations.
The consequences of climate change (rising sea levels, extreme weather, etc.) might have an impact on ports. Are you taking this into account in setting out a future vision for the port? Is your port taking measures in that respect?
We are mindful of the potential of climate change to impact on ports and it is one of the risks we consider in our future planning. By taking measures to cut our carbon emissions, we can all help to mitigate climate change and therefore reduce its impact. One of the ways we hope to do more in future is through greater use of electric vehicles. We were one of the first ports to install charging points for electric cars and I am excited by the prospect of technological developments leading to viable electric terminal tractors in the future.
We have a division called PARIS which is already helping our customers reduce the impact of their haulage operations on the environment through the provision of traffic optimisation software to reduce empty truck miles. I expect further developments which will allow us to work ‘smarter’ in future and will also help us to reduce our carbon emissions still further.
To date, the main consequence of climate change on the development of the port has been that we constructed our latest quay higher to mitigate against sea-level increases and designed the drainage system to be better able to cope with heavier rainfall in shorter periods.
ESPO is a partner of PORTOPIA, an FP7 project that aims to measure port performance. Are you measuring your port’s performance?
Measuring our performance is absolutely central to everything we do. If we do not measure it, we cannot improve it and improving our performance is essential to our success. We have a large number of metrics and data collected within the Hutchison Ports group that record chiefly operational, financial and environmental performance. This generates a wealth of data but the real trick is in using that data properly to benchmark ourselves against the best in our group and industry. All ports, and pretty much all ships and customers, are different. Care needs to be taken that we are comparing like with like. We will learn nothing if we try to compare apples with pears.
We assume you love your job. But was this the career you had in mind when you were 20? What could have been another career for Mr Cheng?
I studied Computer Science and Management Studies at University and after my graduation I decided to get a better understanding of how business and finance work by training as a Chartered Accountant. I have always been interested in running a business. After qualifying, I decided I needed to understand how banking works and spent a number of years working as an investment banker. As I mentioned, I joined Hutchison Ports in 1998 and when my predecessor retired in 2007, I was appointed the Managing Director of Europe and the CEO for Felixstowe. For me, this is one of the best jobs in the world - running a successful business and serving the community at the same time.