Adapting to the post-pandemic world
Supply chain experts expect Vietnam (pictured) and India to rise as functioning container shipping hubs. Credit: Son Vu Tran / Pixabay
Risk Intelligence analyst Thomas Timlen, recently contributed to the publication Global Posts Report 2023 with an article that discussed opportunities and challenges in the Asian port sector along with the perspectives of other experts in the field.
25 May 2023
Looking at the potential development of Asian ports requires a broad geographic perspective that spans a vast area from Turkey in the west to Indonesia in the southeast, with Russia rounding out the region in the north. Asia, the world's largest continent, has a diverse geopolitical, commercial, and environmental features that supports growth and opportunities in certain areas but poses particular challenges in others.
According to Glen Hilton, CEO and Managing Director for Asia Pacific and Australasia at DP World, inflation and corporate growth into new markets will increase export volumes in the second half of 2023. To capitalise on this expansion, Asian ports need to be adaptable and robust, and governments need to function as a catalyst to foster deeper public-private collaboration, improving visibility for port operators while widening gates to a broader global trade flow. “This growth cannot be sustained without strategic long-term investment, which is a key challenge for port operators across Southeast Asia,” he warned.
Digital progress
Given that ports in Asia accommodate two-thirds of global trade, they can handle massive volumes of cargo, by implementing more efficient terminal operations. “This points to a huge, continued opportunity for digital adoption in the region, and its role in driving efficiency to help port operators better serve their customers,” Hilton added. Others share his thoughts on the value of flexibility. Daniel Nordberg, GAC Group vice president for Asia Pacific and the Indian Subcontinent, has witnessed this happening at ports throughout Southeast Asia, with large investments in new terminals and facilities to support economic and regional growth.
“Offshore wind farm projects are picking up pace across Asia as countries in the region look to harness renewable energy in a bid to decarbonise,” said GAC Group vice president for marine and energy Erland Ebbersten. However, according to Ebbersten, rising energy and raw material costs raise questions about the sustainability of such initiatives in the face of global inflationary and supply chain pressures.
Sustainable energy boom
Which ports stand to benefit from sustainable energy exploitation as it moves offshore? GAC's Nordberg expects regional trade to rise, creating more opportunities and boosting sustainable offshore energy solutions. As stated by DP World’s Hilton, ESG issues in ports and supply chains will become more prevalent. However, challenges to progress towards decarbonisation exist, such as a limited supply of electric equipment and regulatory constraints. Furthermore, ports must navigate regulations, limited land availability, and technology in order to source and manage access to renewable energy.
Crew change services set to reset
As a reset to regular practises takes hold, Asian ports may find chances in crew changes. According to Nordberg of GAC, loosening of Covid limitations may make it easier for Asian ports to hire qualified seafarers and other personnel in 2023 and beyond. Ship agents, however, must be flexible enough to adjust to ever-evolving national regulations and requirements.
Some ports may benefit from this, while others may suffer. “During the pandemic, we saw a major uplift in the number of vessels calling at Manila port to conduct crew change operations for Filipino crew members due to Covid-19 restrictions in nearby countries,” GAC Philippines’ officer-incharge shipping and commercial manager Ronald De Leon said. As a result of loosening rules relating to pandemics and rising tourism, Indonesia's ports are predicted to be busier than ever during the next 12 months. To encourage tourism, port operators are giving price reductions of up to 40%, he added.
Uncertainty and trade shifts
MBS Logistics, with 900 offices in 144 countries, is capable of evaluating Asian port potential. CEO Joerg Roehl expects container sector volatility as empty containers pile up at Shanghai port and container prices decline in numerous major Asian ports. Global recession and geopolitical tensions are changing trade patterns, Roehl noted. China's trade with Russia is rising while India's with the West is growing. Asian ports are struggling with falling container prices, declining Western demand, and changing trade routes. “While the shipping industry may witness a rebound in the future, the current outlook remains uncertain,” Roehl added.
Kris Kosmala, vice president at Marine Digital, sees China's rail-sea intermodal trains as a practical solution to the accumulation of empty containers at Chinese ports. He further explained, that the service has made 25,000 trips along the New International Land-Sea Trade Corridor and has expanded from Chengdu to cover 61 cities in 17 provincial-level regions in China. This intermodal-plus-sea alternative to shipping China's e-commerce goods into South East Asia has worked well for everyone involved, he added.
Congestion still a problem
GAC Container pile-ups and overloaded ports across China will be a "consistent challenge" in 2023, according to China's shipping director Frank Xia. Container producers manufactured over 7 million Teu-worth of boxes in 2021, but there is currently an excess of empty containers stacking up at Chinese ports as a result of weak global demand and slow overseas trade. These empty containers will serve an expected increase in China's economic and manufacturing output later this year, he added.
New and expanded container hubs from cross-border foreign direct investment (FDI) may also change regional supply chains and commerce. “Looking to Vietnam, a hot topic is the possible wave of FDI inflow to the country,” Roehl said. He further added, that the Vietnamese government needs to catch the FDI wave, take advantage of supply chain transformation, and turn current challenges into opportunities for economic development to take advantage of the potential for FDI inflow.
Read the article in full here.
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