I have come across many forecasts on international trade, shipping and ports. Some are very optimistic and some makes you utterly depressed. This blog is not a forecast from an expert but a commentary on the status of port planning (and execution) today. I am finding relevant indications across continents, but I am too scared to say anything about the future. Albert Einstein once wrote: I never think about the future, it comes soon enough!

These information might be interest to many including the budding planners.

Few months back we were holding some academic discussions on important forecasting models like GARCH. One of my senior colleagues posed this question (on a lighter vein) –Can you guess the salary of the person who can forecast 3-year crude prices? It was a very naïve question but had an underlying message. Some may have ideas contrary to this and that’s respected.

In this blog I shall be focusing on the global Port Development. Since the canvas is very big and many countries are not prepared to share their plan possibly due to eco-political reasons. Till December 2019, the country planners and the economist had been advising to tread a cautious path, but never could imagine that most of the commercial activities will be under a lock-down, everywhere.

In elementary language we state that shipping is a derived demand (based on how the world trade is faring); thus the ports are logically ships’ demand driven.

I remember that when the 20000 plus TEU ships were being built there was a sense of awe and respect and many of the top-notch fleet owners placed orders for some of them. But it seems that many of the ports failed to provide the adequate number of containers that could make their voyages sustainable. As far as published report is seen on the web, Evergreen Lines (Evergreen Marine Corporation, Taiwan) has placed orders for 65 vessels ( updated information as available on April 1st2020) and Taiwan is simultaneously going forward with construction of Transhipment hubs at Kaohsiung, Taipei harbourand also at Colon in Panama. Seems that these decisions are based on key geo-strategic considerations.Going slightly off the track, it seems that the country has decisively fought a planned battle against the pandemic that is being followed by other countries.

Port projects often reach a break-even point after 5 to 6 years, if the region and the country is doing well; and that’s proved in pen and paper. Thus whatever plans and related investments are considered to be realistic, has an unknown condition latched on to it; that’s the unknown and unpredictable global economic conditions combined with the evolving state of international logistics. The first condition impacts the money flow and the second condition is on transportation of project materials (including pre-fab parts) which are very heavy, say more than 1000 tons apiece. Such logistics is absolutely innovative as it varies from carrying a quay crane to even a part of the pre-cast jetty with ocean tugs.

The state of affairs lead us to believe that the corona-virus crisis has impacted the ship-building industry deeply and the global economy is in a recessionary downturn. While nations have kept most of the new orders on hold, some of them wanted to get a bargain price and they have placed orders to Chinese and South Korean shipyards, making the Japanese ship-yards wary of the competition and thus have created a consortium.

Shall be sharing some points that the recently held Singapore Asia Summit, threw up. Asia is in news as the last few years’ statistics shows exports are about 40 % and imports, about 55% of world total.

The first challenge was seen in the port design in terms of layout and sizes; obviously the necessary draft, that had to be catered to. The demands were uncertain and I have mentioned in the beginning and thus the scenarios had to be carefully constructed with increased vessel capacities and related vessel-design parameters. As planners are apprehensive of the uncertainties, they look for alternate terminal space uses and advanced technology introduction and may be some of the disruptive technologies that are seen at the horizon.

Many ports in this region had been plagued by low productivity and overcapacity; these two issues have a distant relationship (we shall discuss in some other forum later); keep leaders out of the ambit of the statement.

Some well-known ports have challenges in dredging and reclamation in relation to the sea-bed level (impacted in future with global warming), soil erosion and setting of appropriate land infrastructure.

The world is amazed at the level of automation and digitization that are available for the port sector. With the ports agreeing on the social cost benefit, it may be a serious concern for the states to reduce the employment opportunities of port workers. The structure & design of such (automated) ports seem irreversible. While the UN bodies seriously creating global master-plans for skilling the masses (to align countries to reach the SDG-s), such decision is quite difficult to take.

The paradigm of port efficiency and increased traffic flow is not changed much and at times we fail to foresee the choking of the pipeline of last-mile connectivity. Congestion does not take place in the channel but also in the land side access. Very loosely but certainly linked with this is the issue of ‘concession’ as the investments are now spread over multiple interests. The hard liner concept is welcome no more.

The climate change issues are normally high on agenda and thus the concept of green port development is becoming strictly an essential part of the port conceptualisation. Some countries on the other part of the globe are using this as a revenue model by involving in CDM (clean development mechanism) – and generating CER-s (Certified Emission Reduction Units) which can be traded.Goes hand in hand with this is the risk assessment and climate change adoption through EIA/EMP modes.

The most crucial questions that are being asked now is regarding the expansion and relocation of core activities in a volatile world.

Possibly one will agree that covering all the continents in one blog will be too frivolous. Thus here are some of the relevant threads that might make one think.

Coming to the Indian subcontinent – we find that there was a raging debate whether the country needed more ports or the ports are underutilised. Over last few years many contradicting comments have been pasted on authoritative bill boards – but to me this debate is difficult to resolve. In 2016, when SAGARMALA project was initiated – a few new ports were planned in the East Coast, with a backdrop of Act East Policy adopted by the GOI. But all is not well it seems.

Tajpur Port (approx. investment of USD 79 million) which was being promoted and monitored by the Central Government had to take their hands off as the West Bengal State has decided to hold its reins and manage the complete project. There is another port in Odisha which is again being sponsored by a steel major in India. Shall come up with more details on a later day.

In a shocker, the initial private promoter for the Bhavanapadu Port in Andhra Pradesh has left the project, as per a news report of February; the state was hopeful of creation of an infrastructure of about USD 40 million. Another AP port at Ramayapatnam with a planned investment of USD 150 million (approx.) has released tender as the port-project is on track with the involvement of a South Korean team and the State Government is quite involved as they also feel that it will lead to establishment of Port Based Industries and that will encourage the internal and external investors.

Coming back to European Ports – it was revealed in a study in 2017 (made public) that the investment needs in the ports for coming 10 years hence, was to the tune of USD 24 billion. These investment needs had multiple priorities; most important being basic infrastructure (37%), marine access (8%) and infrastructure for smooth transport flow (8%) followed by ICT etc. All these were required to be managed in the backdrop of ten environmental priorities. But can we believe that all priorities will be managed without international contacts and logistics support? I have grave doubts and also quite apprehensive that with deep scars left in European economy, in the (trail of the pandemic) – whether these priorities can get materialised, now.

Here is one example of stunted expansion project of Hanstholm, a North Sea port with a tentative budget of USD 55 million. In another instance the DP World (which had already invested USD 1.9 billion) in UK Portsand was contemplating further involvement, was unnerved with the Brexit developments and thus put the further investment on hold. It is not a C-19 issue. But it’s a halting situation.

In the Egypt – the Port of Damietta was being developed as a Transhipment port looking at the increased container vessels through the Suez but that too is on hold.

Have not touched the US ports in this blog – hope to place some interesting stories in next one.

These issues are not just some construction work that is stopped somewhere in the continents – it is the long supply chain that is getting immensely modified and with this the points of production and consumption may discover sea changes in the whole value chain.