9 April 2020

Port resilience to COVID-19 economic effects

In spite of the fact that the recovery in China is seen, the tensions in Eurasian supply chains are not yet over. According to analysts, the rebound in trade in China will lead to a sudden increase in the number of containers and temporary shortages of ship capacity. At present, it is Europe that is closing factories and even entire sectors such as the automotive industry. Logistics chains are being disrupted, both at supplier level and consumers. Analysts warn of the growing possibility of a serious collapse in capacity in backhaul transport. As a result, carriers are already pressing for higher rates, and for some backhaul operators, the coming weeks may be a question of whether they will manage to move their cargo at all.  

According to data from the Port of Bremen, terminal operations in German ports are carried out on a regular basis, without interruption. There are absolutely no restrictions on the availability of intermodal infrastructure and port services that are necessary for the handling or transport of goods to and from the ports. There is also no evidence of any current or foreseeable problems with the traffic of supply vessels to the ports. Full access is possible by land, rail and inland waterway.  However, it is too early to assess how many so-called blind trips will be announced in the coming months. Ocean Insights (OI) has already calculated 386 blind spot announcements to the end of April 2020. Therefore, large-volume vessels are being replaced by smaller-volume vessels in order to adapt to lower trade volumes. To assist container carriers, the OI continuously monitors the so-called “blind” sails. This is necessary because it will allow the industry to plan its shipping requirements. An updated list is available free of charge at https://mailchi.mp/ocean-insights.com/blank-sailing-updates

Up against the pandemic, it is worth noting that maritime economies naturally seek to strengthen the resilience of supply chains to the effects of the epidemic. In addition to hundreds of scientists and laboratories currently looking for ways to combat the virus, governments and central banks around the world are ready to do “almost anything” to prevent the global economy from derailing. Huge aid packages are being introduced unprecedentedly. The world leader in container transport, MSC Mediterranean Shipping Company, has developed the “Suspension of Transit” programme to meet Asian demand and ensure continuity of service. (SOT). The programme includes the storage of containers at major transhipment hubs in Asia, Europe (Bremerhaven, Germany), the Middle East, Africa and the Americas. SOT is addressed to all container carriers from Asia and all types of cargo. This solution provides potential cost savings for customers facing high storage costs at destination, downtime costs, per diem costs and other charges. It will also free up space in the factories and exit warehouses and avoid over-stocking on site, bringing the cargo closer to its destination markets and reducing the risk of congestion or closure in the ports of discharge.

Facing COVID-19 , a number of companies around the world are forced to implement remote working and digitisation procedures. In order to ensure continuity in supply chains, production and trade, as well as better monitoring of different aspects of the supply chains, better use of modern technologies, use of automation (MAS, ARMADA vessels), on-line trade etc. can be expected.

Regardless of the forecasts made and the course of the situation, we can hope that a recovery will finally come, as it used to be the case in all previous epidemic times in the past.

Text: Patrycja Zając