BMW has denied it is threatening to withdraw distribution operations from the ports of Immingham and Southampton in the face of controversial new port rates being introduced in the UK. “We are not planning to pull out of distribution operations at the ports of Immingham and Southampton,” BMW spokesman Frank Wienstroth told Automotive Logistics, “[BMW] is committed to using its existing ports in the UK.”
The news may come as some comfort to Southampton, which opened its £7m ($10.1m) European Vehicle Terminal under a blanket of snow on Monday. But the denial may yet prove as permanent as the white stuff covering the new multi-deck facility.
The denial follows widely reported details of a letter the company sent to its operator DFDS Tor Line which was revealed by the Labour MP for Cleethorpes Shona McIsaac at a debate in Westminster last week.
In it the German carmaker said it was “extremely concerned about the prospect of increased costs as a result of the change in the way business rates are to be assessed at statutory ports in England and Wales.”
The charges are being proposed because the UK Government has changed the way business rates are collected on the docks. They have attracted controversy because the assessments preceding their introduction, which started in 2005, have failed to properly calculate properties or inform those affected. This has resulted in surprise backdated sums in the millions. For the Port of Immingham, BMW is said to face a bill of £9.9m. The company refused to reveal the bill at Southampton.
In response the carmaker stated in the letter that, were the measures to be fully implemented, “it would be forced to re-examine its decision to handle its UK distribution from the ports of Immingham and Southampton and instead move the operation back to the port of exit on the continent.”
However, according to Mr Wienstroth, the statement that has appeared in the press was part of a wider discussion concerning the reduction of costs.
BWM is “reviewing contracts and considering all available options… due to the current situation of the automotive industry, and our ambition to reduce the transport and handling costs,” said Wienstroth, and he reiterated “it is not the company's intention to pull out of Immingham or Southampton”.
But when asked specifically whether it would definitely continue to use the ports even if the new charges were brought in Wienstroth said “that is not correct… we await the Government’s decision before we decide.”
So why the equivocation? Could BMW be hiding something?
They could according to Mark Rowbotham at Customs and Excise consultancy Portcullis ISC. The whole question of port rates being a deciding factor in the withdrawal is a “smokescreen” according to Rowbotham and disguises the more endemic problem of port congestion for carmakers. “The thing about BMW is they would assume that they could distribute the cars pretty well, Immingham to the North, Southampton to the South, but as soon as they reach saturation they will say 'we are not going to continue',” he told Automotive Logistics.
“The port’s rates do apply to a point,” he continued, “but it’s not just BMW.”
This is true insofar as other DFDS Tor Line customers including Volvo, General Motors and Honda have all raised concerns (and Honda, for one, already has 10,000 vehicles at Southampton).
VW, which is facing a £2.8m bill, was committed to the port and had no plans to withdraw its operations, said spokesman Angus Fitton.