Looking into what the future will bring for ports is in many respects a challenging task, not least given the rapid pace at which our society evolves. The unforeseen shockwaves brought by COVID-19 add up to a complex mixture of geopolitical changes, commercial strategies, digitisation, decarbonisation and professional development. To help ports preparing for that future, IAPH established in 2018 the World Ports Sustainability Program, a platform for leadership and collaboration in such diverse areas as resilient infrastructure, energy transition, safety and security, community outreach and governance. With this programme, we hope to the firmly establish the leadership of ports to deliver value-added to their communities in the years and decades.
Geopolitical changes and the rise of Asia, the Indian Subcontinent and Africa
Short-term seismic tremors impacting world trade, such as the current pandemic, tariff barriers, WTO rule-breaking and political upheaval, should not be underestimated in terms of their influence on the maritime industry. Nonetheless, continued exponential growth in intra-Asian trade, especially with the Indian Subcontinent, as well as the expansion of Chinese interests across continents, will transform the geopolitical map by the second half of this century. Mass population growth in these regions will redraw main seaborne trade lanes. For example, of 1.03 billion people living in Africa, 50% are under 20 years old, and 40% live in cities. By the end of the year, 504 million Africans will form the continent’s workforce. China has already made its mark on the continent with infrastructure investments in its ports and hinterland connections and favourable trade accords with a subsequent steep rise in trade between its mainland and the African continent.
Rationalisation and consolidation
Nearly every segment of the global supply chain is seeking to rationalise its operations through mergers or strategic alliances. This strategy includes shipping lines, terminal operators and shippers. Port authorities remain the one notable exception to far-reaching cooperative arrangements, at least in relative terms, vis-à-vis other economic actors in the supply chain.
More consolidation of port authorities will become inevitable in the coming years and decades, given the market developments towards gaining scale and scope economies and environmental and societal pressures. The land is a scarce good, and competition for its use is therefore very high.
Such examples of consolidation at the port authority level have started emerging. The Belgian ports of Antwerp and Zeebrugge announced a merger earlier this year, with other recent unions including those of Ghent and Zeeland in Belgium and the Netherlands, Hamina and Kotka in Finland, and the state-owned port companies of Ningbo and Zhoushan in China. As opposed to a merger, a far-reaching cooperation agreement was reached between the ports of Seattle and Tacoma in the United States that joined the two marine cargo operations. These are examples of bottom-up cooperation. In contrast, the Italian port system's reform, which reduced the number of port authorities a few years ago from 25 to 14, is a top-down case.
What currently complicates more substantial cooperation between port authorities is public ownership and related institutional impediments to joint initiatives. An essential pre-condition for successful cooperation projects, therefore, lies in the autonomy of port authorities.
Digitisation and automation
In fifty years, what the industry is currently describing as disruptive technologies and innovations will have become widely adopted and will transform the way ports and their incumbent operators handle cargo and passenger traffic. It is digitisation that will most likely provide the impulse towards efficiency improvements in vessel arrival planning, time at berth and loading/discharge productivity.
Automation will emerge, albeit less rapidly, with the construction of highly sophisticated greenfield operations such as the APM Terminals facility in Maasvlakte in Rotterdam. Capital expenditure and the challenges of fully automating brownfield sites located near port city centres will take much longer to change.
We may reach a point where automation and real-time data handling between port players converge with the application of artificial intelligence and predictive forecasting using big data collated from devices throughout the port: the "internet of things". Speed of development will depend on the port and logistics players' readiness to share sensitive data and the willingness of the port authorities and their governing bodies to encourage or even impose this openness.
Decarbonisation and the push towards the circular economy
The IMO's 2050 target for greenhouse gas reductions heralds the start of a structured approach towards capping harmful emissions. It will ensure a vital adjustment to shipping status as the world's 6th largest emitter, were it to be a country. With UNCTAD predicting compound annual growth of 3.2 % for seaborne trade between now and 2022, the industry will be forced to act.
After an initial surge of interest four years ago that then waned, LNG's use as an alternative to heavy fuel oil for bunkering has now seen genuine advances. The first offshore and cargo vessels operating on LNG, ultra-large containerships and gas carriers with dual-fuel engines are now being ordered. The emergence of alternative clean non-carbon fuels such as hydrogen and methanol will also power the ships of the future within 50 years. How fast that transformation will take place will depend on owners' willingness and the preparedness of oil and gas majors and innovators alike to invest in fuel cell technology and infrastructure in ports. It will also depend on owners such as container lines de-escalating the fight for size based on alleged economies of scale, where 80% of energy is consumed by 20% of the largest cargo vessels.
We can also expect a growing number of initiatives in the field of the 'circular economy', whereby port authorities work together with their industrial clusters, inter alia, to generate their energy and give new economic purpose to waste products. For example, wastewater used to cool down industrial installations can be deployed for urban heating purposes.
Port professional development and attracting new young talent
The education and development of young port professionals will ultimately determine the success in transforming the industry. The quality of accelerated skills development will have to aim at changing age and gender demographic. Currently, 89 and 91 per cent of positions in directorship and C-levels are occupied by males. Moreover, a skew towards seniority versus performance-based promotion and job rotation can be observed.