PORTS FACE KEY STRATEGY CHOICES

Ports have faced many threats in the past ranging from wars, floods, recessions and competing subsidies to name but a few. The current threat is more intangible and difficult to deal with.

The new virus, COVID-19, has become a major threat to world trade and economic growth. It has brought with it an unknown disease which remains intangible and has created panic, fear and “lockdown” of cities and large geographic regions at a scale never before experienced.

The mix of rational and irrational behaviour by authorities has also created further confusion. Estimates of the disruption to trade range from ten per cent and more decline in volumes to 20% or more in value terms.

Supply chains have been seriously disrupted as we had become too dependent upon China and the other Asian countries hit by the virus. Thailand, Singapore, Taiwan and Hong Kong are facing the prospect of negative GDP growth as manufacturing has been hit by lack of raw materials and labour.

As more and more consumers are quarantining themselves consumption and non-essential spending are being hit badly. There are views that there will be a bounce back after the virus, whenever that will be, to lost sales.

These are the tangible impacts of the virus outbreak, but what of the more intangible ones that are cropping up?

We are seeing a collapse in international travel, both voluntary as well as outright ban on international movement in countries such as China and Israel, to name but two.

The impact on ports is beginning to become clearer. Australia banned vessels docking at their ports that had made a call in a Chinese port in the previous 14 days.

Many other ports are insisting on medical certification that crew members are virus free prior to being allowed to dock for cargo load and discharge.

Antwerp is one of the practitioners of this policy. Some dockworkers are refusing to handle cargo from infected countries. Where will it end?

Cruise ships have become pariahs as they have turned into breeding centres. Ports are refusing to allow them to dock after the Diamond Princess mishandling Japan.

Clearly ports are struggling in a difficult environment and recession has become a real possibility.