Why the UK’s New Approach to Freeports will be Different

When the UK’s first lockdown loomed in March last year, supermarket shelves were stripped bare as suppliers desperately tried to keep up with rising demand. In manufacturing it took only three days after the prime minister enforced a lockdown for Jaguar Land Rover to shut down due to shortages in components and materials.

The pandemic has highlighted the fragility of global supply chains and tested the resilience of maritime trade flows.  As an island nation we rely on ports for 95 percent of our trade but over successive years, the maritime sector hasn’t received the same levels of support as the aerospace and the automotive sectors. So the return of freeports, announced in this year’s budget, could not be more timely and represents an incredibly exciting time for ports and the maritime sector.

Freeports have existed before in the UK. The first opened in 1984 but by 2012, none of the seven were operational. So what will be different this time round?

One crucial distinction with the UK’s new approach to freeports is the strong emphasis placed on innovation and driving regional economic growth. It isn’t solely about attracting an increased flow of goods but how ports can leverage regional strengths to attract new companies and foreign investment. This is a key condition outlined by the Chancellor of the Exchequer.

Incorporating a regional regeneration story and what the wider economic impact will be is pivotal. Freeports are not just about port operations—building warehouses and creating tax and tariff zones—but the need to stimulate the whole supply chain.

It is important to take on new challenges, like digitalisation and decarbonisation, and turn these into opportunities. Why can’t, for example, freeports become multimodal energy hubs to attract inward investment for a net-zero mission across the multiple transport modes they serve?

Regional strengths must be built into the freeport mission to attract foreign investment. Without a unique selling point to drive foreign investment, freeports run a risk of merely displacing jobs from one part of the country to another.

Specific strengths could include a cybersecurity cluster, supporting the transition to net zero by promoting connected supply chain technology, establishing connected and autonomous logistics corridors or linking medical devices with a manufacturing hub.

By establishing a unique selling point, global finance companies with like-minded or interested investors could help foster jobs and wealth creation. Further, with only a finite amount of global capital to invest in freeport zones, the positioning of UK freeports must happen take a coordinated and collaborative approach to realise their ambitions.

At Connected Places Catapult we led on the Department for Transport’s Transition to Smart Ports projects which delivered a vision and roadmap for UK Ports of the Future.  We worked with ports and connected stakeholders across the value chains and UK regions to scope and jointly publish ‘Smart Port’ use cases to bring actionable next steps to this vision, to stimulate the market and accelerate the delivery of the digitalisation and decarbonisation across the port ecosystem.

Through our network and stakeholders in the innovation ecosystem we provided advice to three of the freeport bidders, two of which were announced as part of the first eight successful freeports and we continue to work with various freeports across the UK during their vital establishing stages.

Freeports won’t be situated in a physical fenced-off area and will instead consist of geographically dispered ‘virtual’ tax and tariff zones. As such, technology challenges exist in terms of tracking goods, and possible goods tampering during transit to ensure that the freeport system is not misused. Our expertise in IoT and connected logistics is helping inform some of the responses to this challenge.

To maintain focus on the innovation and regional impact missions of freeports, we released the Freeports Playbook in March–a fundamental guide of what a freeport is and how it operates. It details the different operating models of freeports and aligns these with the government’s objectives to develop freeports as regional cornerstones of the UK’s national innovation landscape.

As the eight selected freeports prepare to be “up and running” by the end of this year the Freeports Playbook can help guide their potential to stimulate innovation, investment and regional growth. In this way freeports will not only offer new market opportunities for the UK globally but will also reaffirm and strengthen the importance of the maritime and ports sector to the UK.

DfT Ports of the Future Report

Delivered a holistic view of UK ports of the future focusing on digitalisation and decarbonisation. The report engaged with over 150 stakeholders in analysis and recommendations.

Smart Port Use Cases

Connected Places Catapult with 5 ports around the UK in collaboration with Royal Haskoning DHV to develop clear, use cases following themes identified in the DfT Future Ports study: