Forced flexibility

This was the key message from Theo Notteboom, professor at Ghent University, Shanghai Maritime University and University of Antwerp, during the Global Trade Outlook of the IAPH (International Association of Ports and Harbors) World Ports Conference 2021.

Notteboom said: “They have to be ready for unannounced vessel arrivals, cancellations and late arrivals. This is impacting their bottom line and overall productivity. If you can’t schedule your activities several days ahead, then it will have an impact on your overall terminal productivity.”

He suggested this is also one of the reasons why some ports in the western world are underperforming currently.

Schedule integrity

Notteboom was responding to Patrick Verhoeven’s observations on schedule integrity. The managing director of IAPH noted that schedule integrity is under pressure and the industry appears to be moving towards a flexible port call system.

Schedule integrity has been fluctuating between 55 and 80% over the past decade. But since summer 2020 this has only been reaching 30%, said Notteboom.

“For ports we see a poor schedule integrity and a lot of last-minute changes to the schedules.” He highlighted the blank sailings at the start of the pandemic and later vessel delays, skipped, diverted and rearranged port calls.

“Supply chain managers now realise that focusing too much on just in time principle is dangerous and is becoming very costly.”

Companies and logistics service providers are also stockpiling cargo to prepare for delays which is adding to demand, he said.

Lack of resilience

Looking at what the industry has learnt from the pandemic, Turloch Mooney, associate director, maritime & trade at IHS Markit, stated that ports might have been overlooked when assessing risks for the container supply chain, but the pandemic has highlighted a potential lack of resilience in the supply chain that is a longer-term problem.

“The pandemic brought some specific challenges to ports, but the delays are so great because the basic levels of efficiency, probably aren’t where they should be.”

He noted there were no US ports in the top 50 in the IHS Container Port Performance Index, released with the World Bank earlier this year. Many US ports, which on the west coast are dealing with vessel and cargo congestion, were ranked below 300.

“It’s very clear there is some lack of resilience,” said Mooney. This results in delays in normal circumstances, and when an extraordinary event occurs like the recent Suez Canal blockage those weaknesses are exposed.

Speaking about the Index, he said it wasn’t a surprise that a large number of Asian ports were in the top 50 and there is now focus on why this is, e.g. newer infrastructure or technology, or a stronger focus on efficiency because of direct link with export led growth in some Asian economies.

“The key takeaway is there is room for improvement in performance at so many ports and in fact there is clearly enormous room for improvement in the case of certain important ports,” he said. This applies to both emerging and developed markets.