Shifting economic trends, trade flows and global demographic patterns, in tandem with changes in port ownership and ongoing investment in modernisation and expansion are all creating the conditions for what could be a defining year for the global ports industry, argued international law firm Ince & Co.
The company points to these factors as creating a unique set of commercial opportunities for port operators as they look to adapt to new operating realities, which will also impact the wider ports supply chain.
Ton van den Bosch, head of Ince & Co’s global ports & maritime infrastructure practice, said: “Recent years have been marked by changing fortunes across the world’s ports. From Africa to Asia, Europe to the Americas, no operator can avoid the changing commercial realities of port operations. There is every prospect that 2018 is set to be a transformative year for these terminals and their ongoing development, with real commercial opportunities to be had for those operators who can navigate these waters successfully.”
According to Mr. Van den Bosch, a key factor that set the stage for 2018 is China’s Belt and Road Initiative, specially for ports in Asia and Africa. The Initiative, which has already had a large effect on the shipping industry, particularly on East-West trade routes, has seen around $150bn a year in investment, covering roads, railways, pipelines and more. It is estimated that China has invested $20bn in ports and terminals alone in the past 12 months.
“If 2017 was the year when the West woke up to the Belt and Road, 2018 will be the year that its impact will begin to become apparent,” said Mr. Van den Bosch. “One of these is in consolidation of ownership. By 2020, the combined entity of COSCO and China Shipping is set to become the biggest container terminal operator by capacity. This will see them climb from fourth and eighth in the global rankings; a dramatic rebalancing of the operation of global trade.”
Regarding smaller port operators, if they can secure funding, they have the potential to compete effectively with newer operations funded by large global players, he noted, adding that the most successful operations will be those with a strategy for the long-term and one that is built to reflect wider economic trends.
“The most important thing to understand is that no-one is immune from these developments, but also that they offer commercial opportunities for operators who can take advantage of them.”
One area that Ince & Co sees as being of particular commercial value to operators planning for 2018 and beyond is a shift towards gateway operations, rather than transshipment. The firm points to changing trade flows in Asia and Africa creating captive markets ready to be tapped.
“Belt and Road investment improves local infrastructure and transport links, and operators move in to build. Put bluntly, cargo volumes needing to reach localised geographies in these frontier markets have few other choices. Port operators that can lead this trend and get into these markets early will be able to build themselves as a lasting and indispensable presence to these nations.”
Whilst the firm sees these shifting global trends as the most significant opportunity for operators, it also underlined the acute risks facing the port industry in 2018.
For instance, in emerging markets, financing will remain a challenge, as well as ongoing issues in terms of compliance, anti-bribery and corruption. However, the coming year will see an even greater pace and scale of investment for global ports industry, creating opportunities across the supply chain, Mr. Van den Bosch explained.
“2018 will also see continued R&D in the use of emerging technologies in the ports world, including automation and blockchain. Although we don’t necessarily anticipate any of these breaking through as a true game-changer in the next 12 months, we do expect a clearer picture to emerge of the likely commercial applications and benefits of each of these technologies within port operations.”
