Friday, 17 March 2017

Why choose Manston for freight

With the setting up of a dedicated UK team "Riveroak Strategic Partners" Freudmann has finally cut all links with his US funders Riveroak Investments LLC based in Connecticut. Where the funding is to come from to supply the stated £300M is unknown at present but like everything Freudmann does these are "commercially sensitive" or to put another way "I ain't telling you".
Riveroak (sic) Strategic Partners
To date no business plan has been disclosed but it is sure to be the most Bigly Business plan ever seen and it needs to be absolutely stupendous as the economics are against most normal business plans.
Taken from observer's that attended the Public Enquiry is this little snippet

The following information comes in small digestible facts easily acquired if you scan the Department for Transport reports, The Airports Commission and the CAA website. None of the figures are made up and there is no reinterpretation (spin) just facts pure and simple.

Firstly total Airfreight at a stagnant 2,300,000 tonnes is a paltry 0.5% of the total freight shipped into the UK, the rest 99.5% is shipped via lorry or Shipping. It has been stagnant for more than a decade with little prospect of increasing for the foreseeable future. However within this figure 70% is shipped in the belly of passenger planes and as the demand for passenger flights is increasing that % is likely to increase.

The target freight that Freudmann has indicated he wants to take on is in the dedicated cargo plane market of the remaining  tonnage which based on CAA figures are carried on 52000 air traffic movements (avg 13 tonnes per movement).

To be a Nationally Significant Project justifying taking the land from Stone Hill Park Freudmann will have to prove at least 10000 air freight movements which would need to haul 130,000 tonnes at the above average significantly less than their boast of between 500000 - 600000 tonnes, however that is still taking 20% of the dedicated freight market from the two biggest airports outside of Heathrow. (East Midlands and Stanstead who between them have a quarter of the total freight market and have significant capacity to take more).

A simple comparison of East Midlands and Stanstead show that Manston is at a distinct disadvantage and I list them below

Does Manston have a 24 hour operation like EMA? NO because they say they don't need Night Flights.
Does Manston have a central UK location with fast motorway access to all parts of the UK? Er No it's stuck in NE Kent with an hour to get to the M25.
Does it have frequent flights to other UK airfields to avoid the road network? Well no and it has never been suggested.

Can it build an extensive network of Freight forwarding companies? Doubtful

In fact most cargo travels in the belly of passenger planes and would prefer their planes not returning empty something that didn't happen at Manston.

Freudmann has already said they will be putting in £300M to build the infrastructure however he has yet to say where this money is coming from and how it will be repaid.

Let's take a look at that situation. No bank will lend him the money as it would be too risky so he will have to look at the Investment Market such as the Riveroak Investments LLC would have been however they have walked away (He has some new directors which may be his bankers). Investment banks take a view they want a return that matches the risk. In today's climate that is likely to be in the region of 9-10% and even then they will want to secure this against the land.
£300M at 10% would mean a return of £30M a year or an eye watering £2.5 Million a month something that would put them at a major disadvantage in the cut throat world of Airfreight. (and that's without repaying the capital borrowed which over 25 years would be £1M per month).

To summarise Manston is and will continue to be at a considerable disadvantage in the Airfreight market so unless Freudmann is completely stupid why is he chasing this non starter maybe that is more to do with the 800 acres of building land which he is fully aware of since his 1st approach to TDC in December 2013 when as MD of Annax Aviation he asked TDC whether he could build 1000 houses on the grass runway to the north. (my take on the reasons)

Further there seems to be some doubt in former supporters minds as to the intentions of Freudmann

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