Business as unusual - adapting port business models to survive and thrive in the post COVID-19 era.

Questions and Answers

Considering that volumes of freight are going to decrease, do you see big ships +13200 to 23000 TEUS being the dominators in the industry, and small ships going to scrap yards.


The mega ships are in the market, so carriers will be inclined to make maximum use of them. 15,000 TEU + ships are less flexible, as they cannot be deployed on many trade routes, so this has resulted in a higher number of idle mega ships compared to smaller vessels. Older smaller vessels with a low fuel efficiency are most likely to be taken out of the market (scrapped).




Do you think excess capacity in Container Shipping Lines, could drive further consolidation by Shipping Lines in alliances or otherwise? If so, do you envision further anti-trust issues?


I don't expect a new consolidation wave soon. Also after the 2008-2009 financial crisis it took five years before we saw a new consolidation wave. If we would see a new wave in a few years, these M&As will be scrutinzed by competition authorities in Europea, the US and China. Also, I believe national strategic interests are going to play an ever more important role in the future of container shipping lines.




Given the number of seafarers due for change at the moment, do you think Covid-19 will increase or decrease the prospect of autonomous vessels?


I personally believe COVID-19 will have a marginal impact on the development of autonomous vessels. The large scale application of autonomous vessels will not be for the next 10 years, and the initiatives taken so far mainly focus on smaller vessels and ferry services.,




Do you think that ports like Antwerp's and LA's will start looking now more to Latin American markets and less to Asian supply chains?


Antwerp has always been a very diversified port. In volume terms it is the leading European container port on many non-Asian trade routes. In the past ten years Antwerp has become much stronger on the Far East as well, but this does not mean the port is now putting all its egss in the Far East basket. The North Europe - Far East reamains a very big market, so Antwerp will continue to focus on that market as well, while at the same time further developing connectivity with other markets.




Could you please share an estimation on when are you expecting the international seaborne trade and shipping activity to return in the pro COVID-19 levels and normality assuming that D-day is the date of vaccine discovery


Very difficult to say: we don't know when a vaccine will be around, and we have no idea whether there will be a second wave in some regions around the world. Overall, I expect the market to pick up strongly in the Summer, but this could be a temporary spike (to replenish stocks). Later in the year, the more structural economic effects of the crisis might become visible in the flows.




Theo Notteboom, could you explain further your opinión that ports will have to look not only in volum-based renevenues but other added value ? do you think wont be same level of volumen than before covid 19?


I mean that ports will have to look for other revenue streams beyond land fees and port dues (which are tyypically related to cargo volumes and activities in the port area). New revenue models can be found in the area of energy transition, digital transformation or involvement in inland logistics solutions.




How will developing countries ports survive in 2021?


I have no specific data on the current situation, so difficult to say what the future will bring. In any case, I believe a number of developing countries will continue to benefit from the move of certain production activity from China to countries such as Vietnam, Bangladesh, Ethiopia, etc.. This will obviously have a positive impact on cargo flows in these regions.




Which cargo trading is most down and which cargo is most stable?


This depends on the region you are looking at. The automotive industry has been very hard hit, as car sales in Europe and US have almost come to a standstill. Consumer products shipped in containers are also heavily affected. Untill recently, oil and oil products were the least affected as a lot of these products were being shipped due to the low oil price (impact of traders). However, these flows are now also being affected by the drop in the demand for oil.




Do you forsee push back from the ILWU on Green technology and port modernization as a key way of starting back up the economy in the US?


The opportunity for MTOs to introduce technology was agreed upon between the employers and labor in the 2008 contract. Implementation of the actual technology requires dialogue between parties. Finding a balanced way to introduce technology is the way forward. Green technology benefit all in the supply chain.




Do you have a cargo disinfection process/protocol at LA Port? How is it organised? Any buffer zones? and if yes for how long? Is is standard practice for all US ports?


The employers (PMA) and labor (ILWU) met right away to establish protocols. The port also faciltated conversations between county public health officials and state occupational health experts to advise the employer and labor organizations. In addition, and due to a shortage of cleaning products, the Port of Los Angeles was able to secure 700 gallons of chlorine bleach that was mixed to the required standard and put into spray bottles for distribution at marine terminals allowing for cleaning of equipment between shifts.




Can we get more information after on Gene's "port/community" model and the "medical port optimizer"


More information is available on-line https://www.wabtec.com/business-units/ge-transportation/port-optimizer and https://lovla.org/ The Medical Optimizer is an extension of Port Optimizer focused on the critical medical commodities, and provided channeled access allowing accelerated delivery to its final destination.




Curious about the alliance between LA and Long Beach announced in February. How has the pandemic affected progress on this? Also, is this a trend you see in the industry (e.g., Seattle/Tacoma; Taiwan Ports)?


Work between the two ports continue specifically in the area of environmental initiatives. COVID 19 has hampered our ability to progress that discussion, but we are now moving forward. Collaboration between adjacent ports can provide benefits from an overall operational efficiency point of view. Increased efficiency makes for a better, more competitive supply chain.




With covid 19 the open borders and global value chains are under severe pressure. With end of Globalization looming large over the economy how does ports needs to revise strategies to keep align to the new normal ?


I think we will see growth in domestic and regional trade where small to medium sized ports are well-positioned; nonetheless digitalization of processes and lower overall costs of production and distribution will mean that international trade lanes will still prosper post COVID19. Ports will have to reinvent how they serve their stakeholders to keep their relevance, in my opinion they should look beyond the role of being landlords. They have so much more value to potentially offer in this new business environment.




Would you expect autonomous shipping and terminals being speed up now after this crisis?


Even before this crisis we have seen a lot of the largest ports such as Singapore, LA and Rotterdam automating some of their cargo handling processes. This requires a skill set change for port personnel, who are ultimately key to the efficient running of operations. Autonomous shipping is in its infancy, and for it to work will require a change in the ship-shore interface, especially in port call optimization. The crisis may accelerate digitalization, however the same challenges remain on the process, and legislative side. For an interesting paper on automation, take a look at our report on this : https://bit.ly/2yfUkND




As a result of social distancing, enhanced safety measures. Do you feel that this will push more ports to automate?


I certainly do. In fact here in Antwerp there is a pilot project using bracelets to ensure social distancing between port staff : https://bit.ly/2WJzQ9h




What are the current optimal measures being taken at standard ports to minimize interaction between ship & shore personnel?


Rather than minimise ship-shore interaction, the focus is to do it safely and to assure both crew and shore staff that they can work well together in the new circumstances. IAPH has worked with ICS on a guidance document that deals with this particualr issue, it can be found here : https://bit.ly/36ojAOt




Great insights, thank you. Q. Some of my port clients who have taken early action on climate change "adaptation/resilience" measures (e.g. infrastructure enhancement, flexible uses in the design of new buildings, updated Emergency Response Plans) feel they were better prepared to respond quickly when the pandemic hit. They were on the front foot. Have you also witnessed examples of this 'proactivity' in the maritime sector?


We have indeed seen the case where some ports were, as you say, on the front foot, particularly in North and South East Asia given their previous experience with SARs. Some larger Northern European ports were also very quickly off their marks with contingency planning based on crisis procedures that were already in place prior to the COVID19 crisis. Overall if you look at the Port Economic Impact Barometer, ports have perfomred relatively well in terms of business continuity since the crisis began.








Do you think that this will be the begging of new sanitary and environmental rules for all the ports around the world?? Because we now that new virus will come and maybe more dangerous.


This crisis has certainly placed ports as well as shipowners in the spotlight, and led to fast collaboration in order minimize risk and optimise working conditions for those onboard as well as onshore. We have seen in recent weeks very close work between all maritime stakeholders to ensure safe operations at ports - you can look at our WPSP COVID guidance document to see just what has been done by ports as these are recommendations to all ports : https://bit.ly/3g0XBBj




Thank for you for the webinar!I was giving a webinar on Smart Ports, and I got asked a question on whether COVID will force ports to go "smarter", which might affect those dock workers on the front line. I don't think workforce will be replaced from one day to another but rather reshaped, for which new standards, as well as retraining, will be needed. I was wondering what your vision was on post-Covid Human Capital in the maritime sector, especially for blue collars.


We have seen evidence of the emergence of Smart Ports across our IAPH membership, from electrification, use of alternative fuels, drones and cargo handling automation to the optimization of the port call process and use of AI and predictive data. The essential role of port staff will mean the need for retraining, and it will also be important to make the port industry attractive for younger people to bring in new talent to challenge traditional ways of running ports. You can also combine smart port innovation to improve efficiency and safety of human capital such as this example of smart bracelets being used as a trial at the port of Antwerp : https://bit.ly/2WJzQ9h. Its the combination of human skill and innovation that will lead the smart ports of the future.




Do you think that this crises will change the way terminals and ports operate more towards a sustainable way of operation?


I think the crisis has indeed accelerated how ports are adopting a more sustainable approach to operations, especially through digitalization. For example, our Task Force members are looking at taking advantage of the benefits of teleworking gained by the crisis to see how they can incorporate remote working which in turn reduces consumption and emissions. The crisis and the changes brought about by COVID19 has led to many ports relooking at the entire port call optimization process, which if better optimised, will lead to less vessel congestion and less emissions. Electrification of many cargo handling operations is now being looked at. And for Hamburg I see your port leading the way in seeing how to automate beyond the port gates. These should all hopefully lead to more sustainable port operations.




Is this a good opportunity to reap the benefits from automation? Will ports see value of automation, 5G, towards industrial 4.0...? Or is it a case of preserving jobs for worker? What are the priorities which will impact terminal investments?


The emergence of Smart Ports across our IAPH membership, from electrification, use of alternative fuels, drones and cargo handling automation to the optimization of the port call process and use of AI and predictive data will all require human intervention. The essential role of port staff will mean the need for retraining, and it will also be important to make the port industry attractive for younger people to bring in new talent to challenge traditional ways of running ports. You can also combine smart port innovation to improve efficiency and safety of human capital such as this example of smart bracelets being used as a trial at the port of Antwerp : https://bit.ly/2WJzQ9h. Its the combination of human skill and innovation that will lead the smart ports of the future.




In the Port of La Spezia we are pushing on digitalization specifically for the management of port access for truck drivers. How digital tools could help us to make safer the port workers and for assuring the social distancing?


We see many leading ports looking to improve processes throughout their ports through digitalization. If you take a look what is happening at Port of LA, they are combining digitalised RFID entry for vehicles with a program to reduce vehicle engine emssions : https://bit.ly/2LE01rG. In fact here in Antwerp as well there is a pilot project using bracelets to ensure social distancing between port staff : https://bit.ly/2WJzQ9h




What is the opinion on operational cost reduction via automation or introduction of optimization software etc, so that terminals become economically more resilient or less depending on labour shortages?


If you see our Weekly Port Economic Impact Barometer, whilst most ports have been affected by some shortages in the crisis , overall most have not suffered a critical shortage of staff. Your question is nonetheless interesting from the viewpoint of the rise of digitalization. Even before this crisis we have seen a lot of the largest ports such as Singapore, LA and Rotterdam automating some of their cargo handling processes. This requires a skill set change for port personnel, who are ultimately key to the efficient running of operations. Efficiency improvements will require a change in the ship-shore interface, especially in port call optimization. The crisis may accelerate digitalization, however the same challenges remain on the process, and legislative side. For an interesting paper on automation, take a look at our report on this : https://bit.ly/2yfUkND




When talking about decarbonization, is hydrogen the (only) way forward?


Our IAPH Clean Marine Fuels (CMF) Working Group has been working closely on alternative fuels such as LNG and is now looking into others such as Hydrogen. In the end it will be vessel demand and supply availability that will ultimately influence which low carbon/carbon free fuels are deployed, and ports must be ready to provide these fuels efficiently and safely. So the use of our CMF audit tool (https://bit.ly/3cMM8U2) on checking a terminal operator's suitability for being granted a license should have a similar process for LNG provision as for provision of any other fuel. Thats is the work we are concentrating on for now, whilst the technology is still in its infancy. There is no doubt that Hydrogen will have a role to play in the future.




It seems like not all port will be affected equally, the Port of Veracruz, Mexico or Port of Los Angeles or in Asia definitely won't be impacted equally. Is the port community working together to help those with a smaller budget?


Our COVID19 Task Force has been working with organizations such as the World Bank, who are looking at the data we are accumulating on the impact of COVID19 on different regions of the world. Inevitably some will obtain support in the rebuilding post-COVID19, and it will be important to quantify the impacts on ports in order to ensure a proper assessment can be made in terms of the support needed. For our weekly baromoter, this week with a focus on Central and South American ports, please see : https://bit.ly/36aRLsI




How does one access non-confidential data of Caribbean Region Ports, for research purposes to understand current capacities and how we may be able to expand? I do believe we have a huge lack of visibility due to the lack of IT/ICT.


The survey data is confidential so we are unable to share it externally. I would nonetheless suggest you contact Port Management Association of the Caribbean to enquire on data.




Do you think that foreign trade will decrease due to the pandemic and focus on domestic consumption by the countries?


Yes, In the long term, trade will probably grow slightly slower than it would have grown without the pandemic. The causes for this slower growth are likely to include regulations and private sector business decisions to depend less on foreign providers, and also to diversify, i.e. to preferably depend on a smaller number of providers. There are, however, also other drivers that may lead to less trade, including more economic protectionism, populism, a weaker multilateral trading system, and the attempt by China and the United States to decouple their technology sectors. These motivations are aggravated by the blame-game we currently observe regarding the causes and responses to the covid-19 crisis.




What new supply routes will open in each of your port locations after COVID-19?


Shippers will want to diversify more, to spread risks. This could mean some additional potential for secondary ports.




Jan, thanks for pointing your finger on the unfortunate fact that the interface with seafarers has not necessarily been working well. Hearing you all, we cannot be happy that all single ecosystems work (egoistically) well. In the entire supply chain we need to improve.


Agreed. In our UNCTAD call for action we put the plight of seafarers as point number 1.




Does the notion of too big to fail hold, considering hanjin case.


In the shipping sector, I think there are still enough companies and competition and choice. It will not really be necessary to save carriers from failing in order to ensure the supply chains. A different story could be individual countries, where large employers are protected. However, the shore employment of shipping lines is not usually so high that it becomes crucial for national employment. One argument to also financially support carriers is to avoid a situation of "too big" in future.




Will ports adapt on/off scenarios as standard procedure ?


Overall, I think very few ports were really "off" during the pandemic. We should not go back to casual employment, but ports should keep fixed employment.




Do you think that this crises will lead into a de-globalisation when the production is more being executed by local manufacturers?


There will be a trend towards more diversification in sourcing. Also some further reduction globalization, enhancing the negative effects of populism and protectionism.




Fair point from Jan, this is also a Supply problem. The CEO of Flexport gave an interesting talk about that, and how the new digital players pushing for disintermediation have been capable of connecting smaller trucking companies which might be idling with those demand peaks. Do you think some of the legislation boundaries hindering digitalization will be revised?


Espero que si. The pandemic has really heightened the need for further digitalization, automation and dematerialization.




The necessary safety measures implemented now may impact the efficiency of the supply chains which ultimately increases cost. As a result, there is a risk that this is fuelling the trend towards localisation/regionalisation of production moving forward which may impact port growth prospects. What are options for the three key measures for ports to respond?


Gute Frage. Thinking aloud, if there is really to be less global trade growth in future, ports could possibly diversify and also cater for national and regional logistics services. On the other hand, the more efficient ports continue to be, the lower will be the decline in globalization.




United Nations SDG #17 is essentially focussed on 'Partnerships' - I was wondering what the views are on the importance of this global goal for the port sector in the 'COVID recovery era'....? Seems to me to reinforce the importance of helping everyone in the supply chain going forward in a new economy focussed on 'collaboration'..


Yes. International cooperation and coordination is ever more important, along corridors, developing and applying standards, mutual recognition of tests, support to transport workers et al.




Covid-19 has significantly altered the fundamental assumptions underlying port authorities strategies/Business Plan implementation. Do you think it ideal for port authorities to immediately review their strategies reflect reduced cargo throughput, revenues and even their planned investments?


I think (I hope) that there will be new and additional investment opportunities for ports in the context of the decarbonization of shipping. Most investments necessary to support alternative fuels will have to be made in the seaports.




Do you think the time it takes to craft regulations will slow the adoption of tech in the sector?


Yes. I think that uncertainty as regards the regulation of standards (block-chain, paperless b/l, …) may discourage investors. The solution is (in my view) not less regulation, but global regulation that is developed fast and responds to the latest available technologies.




What practices could Shipping companies adopt that align and support global trade?


In times of pandemic, reliable and transparent services are even more important. Blank sailings and unpredictable surcharges will not encourage importers and exporters to resume trading. But overall, I believe that carriers are responding well and proactively to the crisis - it is of course in their own interest not to discourage international trade.




How can the maritime industry contribute more to sustainable development in a post-COVID world


Understand that in the end, the consumer will pay. Hence, levies, or "contributions" or fees on carbon or other emissions should be embraced as s.th. Positive that helps achieve a global level playing field. Once we have the right economic incentives (the polluter pays principle), the innovation and investments will be made by the industry.