By Alex Binkley
Ports around the world have enjoyed a strong recovery in traffic through 2021 that will likely continue for the next few years although at a subdued level, but above pre-pandemic times, says Tim Power, Managing Director of Drewery Maritime Advisors, a London-based consultancy firm. The recovery from 2020 was largely due to people spending money on things rather than experiences, a demand that required a lot of imports to fulfill, he told the annual conference of the Association of Canadian Port Authorities (ACPA).
Congested ports started to become an issue last year because of the growth in dry bulk and container traffic needed to fill the demand, Power said. The congestion created delays that amounted to a 16 per cent reduction in shipping capacity. “Shipping is a very lean industry and the cut in capacity because of COVID meant it couldn’t handle all the traffic.” Power was a speaker during the opening session of the virtual ACPA annual conference that focused on how ports have dealt with the pandemic and what the future could hold once COVID is brought under control. He said port congestion resulted from labour shortages which reduced productivity. “Containers were delayed and the situation grew worse and worse. It had become a truly global problem.”
While shipping lines are ordering larger container vessels, Power isn’t convinced that alone will solve the congestion problems. Traffic will likely return to normal by 2023 of its own accord. What will be important is how resilient ports and supply chains are to all the changes arising from the pandemic experience, he said. “They need to work at being a reliable partner in the supply chain.” Ports have to focus on ways to improve their resiliency.
Another challenge facing ports around the world is adjusting to the decarbonization trend sweeping through shipping. Ports have to think about what kind of infrastructure they will need to accommodate the new fuels ships will use. Also, ports have to work at reducing the carbon emissions from their handling equipment and land-side transport. “Ports have to become much more fuel efficient,” he said. “Helping make decarbonization happen will be a big opportunity for them. It’s already a big challenge”
Ports globally experienced a sharp downturn in business with container ttraffic falling from about 850 million TEUs in mid-2019 to about 775 million TEUs by mid-2020 when traffic began to rise reaching just over a billion TEUs by mid-2021. That traffic will likely subside to under 900 million TEUs next year and stay at that level through 2025.
Chris Connor, President and CEO, American Association of Port Authorities (AAPA), said the port industry “came together at the start of the pandemic. Everyone was uncertain about what would happen. The industry made sure workers were protected and that crucial supplies were delivered. People had money to buy and there was a big growth in retail goods.”
One challenge facing the port sector “is educating legislators about global supply chains and what caused the backlog. We had to get the goods unloaded. COVID brought far more attention to supply chains than before, and that could help the ports gain attention and governments meet the need for funding for modernization. Companies in the supply chain need to get better at sharing data”, he said. “If shippers would require data sharing, it would have a domino effect on making improvements. Digitization will become increasingly important”.
Patrick Verhoeven, Managing Director, International Association of Ports and Harbors (IAPH) also cited the slow uptake in digitization by Ports as a major contributor to the congestion problem. “Only about one-third of Ports internationally are implementing it. The pandemic is a wake-up call and there is a clear need to accelerate conversion to digital to reduce port congestion.” He also said that decarbonization will be a tough issue for Ports because of challenges securing supplies of replacement fuels for vessels and shore power facilities. “But acting on it is vital to achieve faster ship turnaround.” He recommended Canadian Ports closely watch U.S. legislation to help American ports decarbonize.
On another subject, Verhoeven stated that it’s not realistic to expect regional ports to be able to handle a large enough amount of container shipments to ease current congestion problems, he said. “There is so much container traffic and the big ports are the ones best equipped to handle it.”
Embracing the data sharing and decarbonization challenges would enable Ports to get back to their role of honest broker in marine transportation.