The COVID-19 pandemic provides lessons to learn from when addressing future disruptions. These include the following:
- Ports should aim to formulate an integrated resilience and business continuity approach that includes relevant stakeholders (e.g. shipping lines, terminal operators, third-party logistics service providers, inland carriers, etc.), as well relevant suppliers, e.g. port equipment provision.
- The availability of personal protective equipment (PPE) for relevant staff members is vital for port operational continuity and should be managed as a strategic resource.
- A pandemic can be accompanied by other significant risk events, such as typhoons or hurricanes. Therefore, resilience-building strategies need to consider the potential for compounded events.
- Pandemics can have impacts beyond a short time scale extending beyond two years. Port resilience planning should consider the potential for a disruption to take more time to clear than expected.
- The pandemic accelerated the diffusion of new technologies, including digitalization, such as e-bills of lading, blockchains and smart logistics hubs, to drive efficiencies and overcome human contact required by sanitary controls and protocols. These measures have been useful in ensuring business continuity and keeping ports open and the maritime supply chain working.
- Synergies and co-benefits can be generated by combining port resilience building and sustainable maritime transport strategies (e.g. digitalization).
- The value of improved data-driven decision-making for ports has been emphasized. For example, data insights and analytics can help ports understand their various levels of dependency on other stakeholders in the supply chain.
- Collaboration is crucial for stakeholders in the maritime supply chain, including carriers, ports, inland transport providers and shippers. This particularly enhances communications and data-sharing to ensure that maritime transport and ports remain reliable, predictable and efficient.
- The importance of a better understanding of the network effects of disruptive events. For example, the queueing of container vessels at a port can impact on related global trade routes due to a reduced ship carrying capacity and lack of container availability.
- The importance of having resilience-building and risk management processes and structures, including collaboration and communication within ports, as well as between ports and relevant third-party port hierarchies.
- Pandemics create conditions that are complex, dynamic, ambiguous and volatile. Human resources are crucial to resilience efforts, and need to be appropriately supported with improved education and training.
- Many risk management frameworks and systems are designed to manage risks for which information needed is sufficient and available before the event occurs. However, ports need to learn to make decisions with imperfect information.
- Improving awareness of emerging risks is critical and horizon scanning and scenario planning can help anticipate future challenges to port resilience.
- Ports and terminal operators need to better manage yard and gate operations, such as the management of container stacking and satellite yard facilities.
In the case of broader disruptions that may be caused by factors other than pandemics, the various case studies reviewed, including small ports (Box 5), indicate that the impacts were severe in most cases. In addition to the initial trigger, the disruption was amplified by various local or contextual factors, including: (i) poor hinterland connectivity and lack of effective coordination with freight forwarders and hinterland transport operators; (ii) limited technology and insufficient digitalization; (iii) delays associated with increasing ship sizes; and (iv) severe weather conditions.
Immediate responses usually involve the formulation of emergency plans, which were coordinated locally or with international support (especially in developing regions affected by severe natural disasters), optimization of operations, and temporary restrictions. International cooperation and public support are instrumental, especially in the early stages when significant modifications or restrictions to normal operations are required.
Over the medium and long term, most mitigation measures tend to focus on: (i) investments in port infrastructure and equipment; (ii) modernizing existing technology; (iii) enhancing cooperation across key actors (shipping lines, terminal operators, cargo owners); (iv) engaging with relevant stakeholders; and (v) diversifying freight forwarding options and service offering. The goal is to ensure sufficient agility in case of disruptions and avoid cumulating bottleneck effects. In some instances, the ability of a port to effectively cooperate with partners across the supply chain (e.g. Antwerp, Rotterdam, Seattle, Gothenburg and Mumbai) played a role in mitigating the disruption. A business culture that favours cooperation among port stakeholders, and shared risk awareness and preparedness plays an essential role as risk and disruption mitigating tools.
A review of 23 cases revealed that, among others, the ports of Antwerp, Los Angeles and Hamburg, accelerated digital coordination with the hinterland, continuously optimizing operations, and ensuring spare capacity based on enhanced risk awareness and forecasting. Another cluster of ports, such as Rotterdam, Ho Chi Minh, Tianjin and Laem Chabang, are more exposed to natural disasters and vulnerability to climate change. They tend to carry out pre-event risk assessments, establish engagement and communication with stakeholders, accelerate shared digitization, invest in and adapt infrastructure to the identified risks, and diversify hinterland connectivity options. Another set of ports, such as Freeport, Gothenburg and Gulfport, tend to respond to disruptions by tightening their regional bonds, investing in digital connectivity, and cooperating with their ecosystem to offer attractive and competitive services. Coopetition with rival ports, rather than market competition, can be a resilience enabler for smaller ports.
Measures that promote robustness, redundancy, visibility, flexibility, collaboration, agility, information sharing and technology, all enable greater port resilience. Some good practices identified from the case studies include the following:
- Setting up regular risk assessments and disaster prevention management framework.
- Strengthening collaboration among hinterland stakeholders and partners.
- Reinforcing cooperation with local and international agencies.
- Enhancing communication and information sharing.
- Improving maritime and hinterland connectivity.
- Investing in technology and infrastructure.
- Ensuring digital readiness and connectivity.
Internal operations and process optimization emerged as the most straightforward response and mitigation measure. As generally, other measures involve other partners and stakeholders, their effective implementation is not directly within the sphere of influence of a port.
Proactive strategies seem to be more prevalent when facing recurrent risks. Such risks can be associated with: (i) capacity constraints arising from the delay in mega-ships schedules; (ii) workload peaks creating bottlenecks for hinterland transport operators; (iii) unexpected demand surges; and (iv) expected disruptive events (e.g. natural disasters). The cases reviewed have shown that preparedness, i.e. planning for the disruption before its occurrence, contributes to the effectiveness of the response measures and reduces the disruption’s duration.
Diversifying hinterland connectivity options and modal choices linking the port to its hinterland can mitigate risks and disruptions to ports. Digital connectivity is equally important, especially when the pandemic underscored the need for better, quicker and more transparent information-sharing across various supply chains. Greater use of digital means and solutions across the hinterland has become a necessary requirement for port connectivity. Digital connectivity provides an opportunity to reduce transaction and coordination costs needed to cope with conventional bottlenecks, such as customs clearance. When a disruption occurs, digital tools help reduce the operational disturbance, while also facilitating the participation of smaller and more marginal players.
Box 5: Key resilience activities for small ports
Smaller ports can face a paradoxical situation: 1) they can be more agile as they have a smaller organizational structure and more direct lines of communication, and at the same time, 2) have limited resources and skills available to drive resilience-building activities. That said, the tools and approaches set out in this guidebook remain valid for consideration and appropriate for adoption even for a small port.
Some relevant steps and actions that small ports may wish to consider to strengthen their resilience and improve preparedness in the face of disruptions, whether from pandemics or any other risk factor, are set out below:
- Identify the intended benefits of the Enterprise Risk Management (ERM) resilience-building initiatives and seek to obtain the support of the board and senior management.
- Plan the scope of the ERM initiative and develop a common language relating to risks and their management. Relevant key concepts are defined in the guidebook.
- Establish the resilience-building and risk management strategy and define roles and responsibilities. One may need to assume more than one role, and the selective use of specialist third parties should also be considered. Ensure that the port workforce benefits from relevant training and awareness-raising activities about risks and their management.
- Adopt suitable risk assessment tools and an agreed risk classification system. As a minimum, it is suggested that a port looks at horizon scanning (HS), early warning systems, such as those around weather events, business continuity plans, and financial, infrastructure, reputational and market approaches to assess impacts. Establish risk benchmarks and undertake risk assessments. Determine risk appetite and risk tolerance levels and evaluate existing controls.
- Evaluate the effectiveness of existing controls and introduce improvements on an annual basis.
- Mainstream a risk-aware culture and align resilience-building and risk management with other activities in the port by linking staff health and safety training to resilience and risk management.
- Monitor and review risk performance indicators to measure ERM contribution.
- Report risk performance in line with regulatory obligations and monitor improvements.