Once things settle down we can start looking at some basics again. Im quite interested in the biggest asset, the ports. Teesport, in the Humber area, is very interesting. The sound is being dredged to take very large container ships. Tees is already the third largest port in the UK by tonnage, because it has a lot of flat land and is suited to inputs for the steel, power and chemical industries etc.
A big development is that some of the biggest container handlers in the UK are setting up there. Eg Tescos who are building a 1.25 million sq ft distribution hub portside. One of their biggest competitors tied up with Wal mart is there and running with a big facility on PD port alnd, like Terscos. Why? Logistics appeal. They have been unloading containers in congested southern ports, sending trucks in and back full in some of the heaviest traffic in the UK, to a redistribution hub. It runs like this- unload at dock. Stack on port. Load to transport to distibution hub, unload at hub, sort, reload and truck to stores. Millions of road miles, even to the distribution hub, multiple handling all along. Putting the sorting hub dockside halves handling, and reduces truck or train journeys from four to two. Putting such a hub dockside in the Southeast limits it to smaller ships inbound, plus requiring a lot of money and time to try to consolidate sites.
Tees has land a plenty, much owned by BBI, (via PD ports) and so it is a much simpler faster process. The newer approach is freight is sorted almost off the ship, and is distributed to much of the country through much less congested northern road and rail lines minimising truck miles in the congested south east. About 70% of container traffic in the UK goes by road. Trucks travel faster and more cheaply on less congested roads.
Ok its basic stuff, but sometimes I think we focus too much on the stock and not enough on the business. This one alone is in the billion dollar class.
BBI Price at posting:
8.4¢ Sentiment: Hold Disclosure: Held
