UK government freeports plan: A reality check

It’s interesting to hear that the new British Prime Minister has the creation of freeports in regional locations in the UK as one of the key elements of his economic strategy for the country. As someone who gained freeport status for the Port of Tilbury in the 1990s and subsequently held the position of Freeport Manager there for a number of years, it’s a subject close to my heart.

The PM’s plan cites several studies which claim huge economic benefits from freeports in the UK, creating hundreds of thousands of jobs and adding massively to GDP. The PM claims that they will create “thousands of high-skilled jobs in left-behind areas”. It sounds like a magic wand to me.

Others in the industry are also reserved and cautious. For example, the UK Major Ports Group was quoted in Lloyd’s List today saying that “…..free ports should not be seen as a silver bullet, but just one of a range of measures to improve productivity in the ports sector” with the British Ports Association adding “Many of the benefits of classic free ports can be achieved through existing processes and they will not benefit every port”. Wise and measured words.

What worries me about all this is that the studies that support the idea have been high-level macro economic ones, with some very broad, positive assumptions made. I have not seen any hard evidence of a market for UK freeports. What specific commodities and cargoes would the idea be attractive to? Coming from where and going to where? What would be done? Storage? Processing?

Then there is the question of competitiveness. Why would UK freeports be a better option than all the other freezones and alternative customs regimes both in Europe and worldwide? The competitiveness of freeports and freezones is not just about freedom from customs dues and tariffs. In fact this is simply a given. Rather it is about a whole range of other, more fundamental factors including the cost of land, the cost of labour, cost of utilities like power and water, location, connectivity and critical mass.

Lastly there is the danger of diversion. Rather than creating new jobs and activity, freeports often simply result in re-location of existing activity into the freeport area.

I would like to be convinced about a) the market, b) the competitiveness and c) absence of diversion before claims about new jobs and huge economic boosts are made………..