Tunnel vision for another year

Growth is still stagnating, finance is more elusive than ever, and the pressure to ‘green up’ is becoming unbearable. All these forces are bearing down at a time when maintaining calls, never mind increasing berth and port throughput, has become a 24/7 business in itself.

Of course, ports are not alone in facing these difficulties. Homeowners, governments, nations and in some cases whole trading blocs (read the Eurozone) are struggling to manage the daily balancing act of where to make cuts to prop up business to see us through these austere times.

However, there needs to be an end in sight otherwise we will start to see casualties and when that trickle of failures starts it will soon become a flood. Ports and port-related business are not immune. Ports nowadays are running lean businesses; the extra pounds that were piled on through the boom years have dropped off and there is not much unnecessary fat left to spare.

In the specialist shipping press, much ink has been spilt on the failure of ship owners and operators to find business at breakeven levels. Much less has been spilt on the woes of port owners and operators. But make no mistake there are plenty of ports that are also having to accept business with little, if any, profit margin just to keep afloat.

This, needless to say, is unsustainable. Ports still have financial commitments that need to be met, whether that is in the form of loans for infrastructure upgrades that were installed before the bust, for the staff that still expect to take home a wage, or for the maintenance of debris-free channels and berths.

And as consumer spending remains stunted, there is less port-related business to go around. Slashing port charges to lure business away from established hubs is a short term fix. It’s a strategy that may have seemed attractive at the start of this depression, but will reveal itself to be untenable as the downturn stretches on. Those ship owners and operators that shifted alliances will soon start to rue the error of their ways as those ports on this reduced income struggle to meet the quality levels demanded by callers.

With no light at the end of this tunnel, it is fast becoming clear that those port businesses that put in place a medium to long term austerity plan will be the only ones to emerge from this tunnel.