The new reality of the ports sector
Baltic Ports Organization’s second online event concluded last Friday. Over two days, a broad number of speakers and panelists discussed the current global situation and its impact on the port industry. The webinar also featured companies from the IT sector, helping to understand how digitalization can be of benefit in such challenging times.
Without a doubt the world economy faces yet another major economic crisis of the 21st century. Furthermore, the actual impact of this year’s COVID-19 pandemic is yet to be assessed. According to Jarle Hammer (Hammer Maritime Strategies), in terms of output, seaborne trade won’t reach its Q4 2019 levels for another two years, at the minimum. The business segment most vulnerable during a crisis is construction, affecting both the trade of raw materials used to produce steel, as well as streel products themselves. It is closely followed by the container market, due to the drop in demand for luxury goods, such as electronics or cars.
Asked about what market he would bet on in the upcoming months, Hammer was rather pessimistic regarding the tanker business, foreseeing less movement by tankers and lower demand for fuel overall (with travel being restricted). This, coupled with the continuing strive for a switch to greener energy, may affect the tanker sector. He was more optimistic about the dry-bulk sector. While growth rate of the past won’t be observed, climate-related events (e.g. storms, hurricanes) might drive the demand for dry-bulk material.
Switching to the port sector, there was a little optimism among the panelists. Isabelle Ryckbost (ESPO) underscored the fact, that despite the difficult situation, even in countries most affected by the pandemic ports remained operational. Perhaps there was also a silver lining to the challenges they met, with policymakers getting a new understanding for how crucial the ports are for the unhindered supply of goods, including medical supplies. The biggest challenge right now will be the planning of long-term strategy in face of a very rapidly changing markets.
This view was shared by Patrick Verhoeven (IAPH), stating that the pandemic is by no means behind us. Right now resilience and accurate risk assessment are the crucial focus points for the ports and the continuity of their business. He also touched upon the fact, that while definitely a challenge, the pandemic didn’t put a stop to the decarbonization process, although it may slow it down. Considering the current economic situation, many shippers may be reluctant to make new investments in this regard. It is worth mentioning that the brunt of the costs in this area has to be carried by the ports.
And this where a bit of optimism is to be found again. Maciej Krzesiński (Port of Gdynia) and Ville Haapasaari (Port of Helsinki) both remained confident that development projects in their ports will carry on as planned. Such investments are laid out over decades and a couple rough years should have minimal impact. Ingvar M. Mathisen (Port of Oslo) reassured the audience, that his port won’t allow the crisis to become a setback for their ambitious zero-emission strategy, a sentiment shared by Juan Manuel Díez (Port of Valencia), who mentioned Valencia’s plans to become carbon neutral by 2030. Johan Wallén (Ports of Stockholm) reminded the audience that working together is very important when facing severe challenges, exemplified by his port's decision to cut port dues in order to lessen the blow suffered by ferry lines.
Kimmo Naski (BPO) shared some information specifically related to the Baltic port market, "BPO is closely following the impact of the COVID-19 pandemic on the port sector. According to the latest data, during H1 2020, 10 biggest Baltic ports handled 228.5mt, 5.44% less than in H1 2019. Drops were also registered in container volumes, with the top 10 handling 4.35m TEUs in H1 2020, 6.57% less than H1 2019. The largest impact was observed in passenger traffic, with a drop of roughly 50%."
On the other hand, it was encouraging to hear about all the technological advancements and innovative solutions being implemented in the Ports of Hamburg, Rotterdam and Tallinn. These ports are well-known for their efforts related to digitalization, a process which importance in view of the recent challenges was closer analyzed by Indra Vonck (Deloitte). For many ports, the pandemic served as a trigger for a mindset shift, casting new light on some technologies, increasing their use. It also strengthened other trends, such as the focus on niche markets or establishment of new trade routes.
Tech was very present at the webinar, with a number of sponsors presenting their solutions to the audience. James Hosken (GISGRO/ VRT Finland) talked about propelling port asset management into the 21st century, illustrated by the example of the Port of Pietarsaari. Dan Steinnes (GRIEG Connect) focused on the benefits of self-service transactions in ports, e.g. for quayside booking. Last but not least, Graham Howe (ION) explained how digitalization can increase efficiency in day to day operations in small and medium ports.
Remaining competitive was the last topic to be discussed during the event, with the moderator, Przemek Myszka (Baltic Transport Journal) asking some of the panelists what they would improve given unlimited resources. Aneta Szreder-Piernicka (Port of Szczecin-Świnoujście) suggested a priority shift for infrastructure project financing, now heavily skewed towards rail and road transport. Ansis Zeltiņš (Port of Riga) mentioned establishing an information exchange standard between different modes of transport, as this would benefit all parties involved, while Zeno D’Agostino (Port System Authority of the Eastern Adriatic Sea) pictured ports evolving beyond their current role and becoming drivers for progress and innovation.
Recordings for both days of the webinar are available on our YouTube channel.