You\u2019ve heard the forecast \u2013 sunny intervals and some showers, although some of those showers may join together to form longer periods of rain. Sunhat or umbrella, anyone?<\/p>\n
Now consider the forecast for port traffic volumes. GDP heading upwards? Traditionally, the forecast has been that cargo volumes will follow suit, especially containers, given the assumption that more goods will be transported that way. But what if advances in technology mean that the computers previously measuring two square metres are now half the size so that twice as many can be packed into a container? What if there are new regulations regarding the use of certain materials? What if there\u2019s a major shift in energy policy?<\/p>\n
\u201cPeople tend to start off with a simple model; they think that the number of containers is a function of GDP. But the whole thing has been immensely simplified and it\u2019s absurd,\u201d says Graham Cox, director of Maritime Traffic Forecasts. \u201cTake the multiplier \u2013 history shows that when GDP goes up by 10%, container traffic goes up by 20%. People take those figures and ignore all the other factors, but you really need to look at these underlying things now.<\/p>\n
“The multiplier theory \u2013 which worked before \u2013 collapsed at the same time as the world financial crisis, so anyone running a simple model had absolute egg on their faces.\u201d<\/p>\n<\/p>\n
Macro challenges<\/strong> <\/p>\n These are “really interesting and challenging times” in forecasting, says Mr Cox. Whereas in the past operational forecasting at the micro level was the more complicated area \u2013 labour relations, pricing, etc. \u2013 he says that is now less difficult than measuring the macro picture and sector forecasts.<\/p>\n \u201cIt is a very complicated challenge and many forecasters have oversimplified it. Now the search is on to introduce a little bit more complexity, without destroying your capability to produce a forecast.\u201d <\/p>\n Anything connected to oil and energy is full of uncertainty, due to the shifting energy scene. \u201cWith global warming, changes in policies, power stations opening and shutting, it is horrendous,\u201d he says. \u201cEven if you produce reasonably good modelling by looking at the past and then the future and make a fairly good prediction of how much plastics are required, how much the petrochemical sector will grow, etc., factors such as regulations and green-related changes can change everything.<\/p>\n \u201cYou are trying to invest in a port, with a payback of 20 years \u2013 but exactly what will the green regime be in 20 years\u2019 time? You are really reduced to the \u2018what if?\u2019 scenario. However, the main problem of forecasting is if you wrote down all the things that might influence how much cargo, the particular types you would get and what might go into containers, it would be a phenomenally long list. Put in too many variables and it actually destroys the estimates and produces nothing useful.\u201d<\/p>\n<\/p>\n Two extremes<\/strong> <\/p>\n There are two extremes in terms of forecasting, says Mr Cox. First, the case where investors are considering building a port in a part of the world which simply doesn\u2019t have one. Second, there\u2019s the situation where there are already four ports on the estuary \u2013 one is losing business and a management consultancy investigates what needs to be changed to win back business, whether it be prices, labour arrangements or efficiency.<\/p>\n \u201cIn the second case, it is all about business decisions; if, for the sake of argument, you were to halve your prices or build an extra quay, can you forecast how much business you would win from the others? On the other hand, there\u2019s no point in building the extra quay if the staff are still striking every other week.<\/p>\n \u201cFor a new port, it is a completely different situation, where competition is much less important. It is really about predicting how much the market is going to rise and how much each particular type of cargo is going to increase over the next few decades.\u201d<\/p>\n Maritime Traffic Forecasts takes a \u2018multi-factoral\u2019 approach to forecasting \u2013 adding to the simple GDP method the relationships between cargo volumes and sectoral\/industry developments, and the economies of partner countries. It also undertakes specialised research and analysis of potential changes in infrastructure, technology and the commercial state of the transport sector.<\/p>\n<\/p>\n Wide net<\/strong> <\/p>\n Chris Fisher, director of Fisher Associates, agrees that while GDP can increase, structural changes and a wide range of other factors can hugely affect what traffic is going through a port.<\/p>\n \u201cIf you are running a container terminal, GDP is probably half the answer. But if you are doing a lot of transhipment, for example, it is all about trading partnerships.\u201d<\/p>\n Growth in containers varies substantially around the world, from China where volumes have historically been growing at more than twice the increase in GDP to more modern developed countries where container growth might be lower than the GDP percentage.<\/p>\n A lot of people think that forecasting is very mechanistic when it is really much more art than science, says Mr Fisher. \u201cExperience comes into this quite a lot. You can do all the forecasting you like but at the end of the day it boils down to commercial decisions. All the forecast does is help to inform the company or investor what commercial decisions to make.\u201d<\/p>\n If a company is considering even a moderately substantial investment in a port development, forecasting has a vital part to play, he adds. \u201cIf you are the bank being asked for finance, you are not going to rely on some decision-making material given to you by the person who wants to borrow money \u2013 you are doing to do the work for yourself, for due diligence.\u201d<\/p>\n<\/p>\n No guarantees<\/strong> <\/p>\n What are the challenges of port traffic forecasting? Chris Fisher lists forecasting economic changes, including growth\/structural; understanding the link between economies and port traffic; and being able to apportion port traffic for a country to individual ports based upon their competitive position.<\/p>\n Can forecasting ever provide certainty? The answer, he says, is \u2018no\u2019; but despite that, everybody is at it. Port companies for investment planning, banks for risk assessment, governments in order to understand national infrastructure requirements and set policies.<\/p>\n There are factors such as a shift from a manufacture-driven to service-driven economy or changes in energy policies. The trick is trying to spot the big structural changes, he says \u2013 and as far as individual ports are concerned, that is very difficult to do.<\/p>\n At the micro level, it\u2019s a case of working out whether an investment will pay off. \u201cMaybe you need deepwater, a new quay, faster cranes, a berth in the river instead of behind the lock. How much does it all add up to and how much more competitive does it make you?<\/p>\n \u201cShipping lines will say \u2013 build this and we will think about it. It\u2019s always in the shipping lines\u2019 interest, broadly speaking, to encourage investment in ports to give them more options, but people have to understand the economic drivers that underline shipping lines. Ships follow cargo, not the other way round. Shippers themselves have a big influence on overall logistics practices.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Love it or loathe it, port traffic forecasting is an essential part of forward planning explains Felicity Landon<\/p>\n","protected":false},"author":8,"featured_media":3947,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[],"sponsor":[],"class_list":["post-3946","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-container-cargo-handling"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts\/3946","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/comments?post=3946"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts\/3946\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/media\/3947"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/media?parent=3946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/categories?post=3946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/tags?post=3946"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/sponsor?post=3946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}