Uncertain growth calls for flexible planning

However there is substantial uncertainty regarding future transport flows.

The European Union has forecasted about 40% increase of traffic flows until 2030 and international institutions like the OECD and the IMF forecast growth of global trade and freight transport.

But neither port authorities, terminals, nor shipping lines saw the 2008-2009 crisis coming. Likewise, the shale gas revolution left many LNG facilities at US ports idle.

Better foresight cannot solve this; unforeseeable events will continue to deeply shape trade and transport flows. Nevertheless, port authorities and governments continue to put infrastructure in place to accommodate expected growth of volumes. However, in volatile and uncertain environments, it may be better to secure port development options, rather than invest upfront in port expansion projects.

The UK port sector broadly applies this approach. Policymakers use forecasts to get an idea of potential future flows and aim to ensure that private port development companies (Like APB, Peel Ports, and Hutchison Ports) have sufficient options to develop port infrastructure. These in turn base investments on sufficiently strong user commitment for port development projects. This system clearly reduces the risk of over-investment in port facilities; other countries may want to move in the same direction.

Two important conditions need to be in place for moving from ‘building for the future’ to ‘securing port development options for the future’.

First, all environmental and planning procedures need to be handled in advance, so that the lead time for development projects is as short as possible; shorter lead times increase the value of port development options. However, getting approval for a broadly defined development project may be problematic. For instance, in the Netherlands, planners need to demonstrate that there is a well-defined market for a development project. Planning regulation seems to insufficiently acknowledge the uncertain nature of port development.

Second, port development needs to be regarded as a commercial activity. Only then can decisions about port expansion be driven by business cases. If port development is regarded as a commercial activity, it is less relevant whether the port development company (or port authority) is government owned or privately owned.

EU port policies may be better served with efforts to accelerate the ongoing transition towards business case-driven port development coupled with a framework that secures port development options, rather than by trying to identify and co-fund (port) infrastructure needs.