As previously noted, port resilience is regularly being challenged by disruptive events that can be internal, and under the control or influence of stakeholders, such as shipping lines, port authorities and inland carriers, or influenced by external causes of a natural or anthropogenic nature. Most disruptions tend to be local in scale and scope, but there are occasions when disruptions can become wide-ranging and affect a whole region, network segment, or in extreme cases, have global ramifications.
Figure 10: Port risk factors and challenges to resilience
Source: Adapted from Kim, Y., and L. Ross (2019).
Several internal and external risk factors to the maritime transport sector, or the port ecosystem, can become disruptive and test a port’s resilience (figure 10). Internally, these risk factors originate from within the three segments of the maritime supply chain:
- Shipping network. A change in a ship’s routing, scheduling and service configuration can result in a decline or rise in volumes, which can negatively affect ports. A simple change in scheduling involves operational adjustments in terminal work hours and gate traffic. A port’s capability to handle these changes can reflect its operational resilience. Economies of scale applied to maritime shipping have also tested the resilience of ports to adapt by upgrading their infrastructure and operations. Larger containerships, requiring channel and docking clearance, adequate terminal equipment, yard space and operational surges, can challenge a port’s capabilities. The navigation channel approaching a port can also be subject to potential navigation disruptions because of depth and width limitations. Conflicts with different shipping services, e.g. ferries, cruises, barges and bulk and break-bulk ships, can create contested navigation channels, and limit the range of port activities, and the number and type of ships they can handle. An additional challenge is the on-going concentration of shipping lines, at both the individual shipping line level and through alliances.
- Port level. Governance could be ineffective at the port authority, or terminal level, and could lead to delayed decision-making and responses to disruptions, particularly if the hierarchical structure of the port authority relies on only a few key managers. There could also be a lack of regulatory oversight, implying that rules and regulations are not sufficiently monitored and enforced. This can pose a risk when hazardous materials are being handled and stored. Port infrastructure and equipment require a maintenance and upgrade cycle that must be monitored. Lapses can lead to failures, breakdowns and a decline in reliability. As the demand for container shipping has grown across the world, so has the demand on a port’s footprint or extent. Several ports have faced a land scarcity issue, which has not only limited their expansion potential but has also become a source of conflict with local communities. Lack of space can become a challenge to port resilience as it limits a port’s options for growth. When feasible, ports have responded to this challenge by relocating to new sites, resulting in an expanded footprint and related operational flexibility. Ports are large energy consumers and can face provision challenges, particularly in the context of on-going decarbonization efforts among the shipping and logistics industry. Changing port energy supply systems could be disruptive as new systems, e.g. wind energy, could be associated with new forms of vulnerability.
- Hinterland. Ports are generally integrated with their hinterland through transport corridors and inland facilities, such as dry ports and empty container depots. Maintaining and improving this connectivity can be complex and requires a collaborative framework involving: (i) cargo; (ii) land infrastructure managers, e.g. rail, highways, inland navigation; and (iii) cargo owners using the port, e.g. manufacturers, retailers. Lack of coordination between these actors could lead to capacity shortages or failures across segments of the inland transport system.
Additionally, the following internal risk factors are cross-cutting and common to the three maritime supply chain segments:
- Labor. The port industry requires an increasingly diverse set of labour skills to operate sophisticated equipment, manage operations and oversee complex information systems. Recruiting, training, and retaining this labour can be a challenge. Failure to do so impairs not only the operational capabilities of the port system but its ability to effectively recover from disruptions. The COVID-19 pandemic highlighted the crucial importance of maritime labour, ranging from seafarers, port terminal workforce to truck drivers.
- Cybersecurity. Maritime supply chains are increasingly relying on IT to manage operations and to transfer documentation (e.g. bills of lading). Digitalization along the maritime supply chain underlines the need to focus on cybersecurity to safeguard the integrity and availability of critical data, secure operations and to protect maritime infrastructure. A growing number of cybersecurity incidents have occurred in recent years, including the Maersk Petya attack of 2017, as highlighted in the Case Study on the Jawaharlal Nehru Port Trust and the 2021 South African port disruption.
- Safety and security. Theft, piracy and terrorism have come into sharp focus in recent years, especially after the events of 11 September 2001. This has led to the review and implementation of a range of port and maritime security measures, including through supply chain security-related instruments, such as the Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework, 2005) adopted under the auspices of the World Customs Organization (WCO). Additionally, the Authorized Economic Operator (AEO) concept was introduced to allow certified entities, e.g. carriers and cargo owners, to be considered as a lower risk factor.
A series of other risk factors are external to the maritime transport ecosystem. These can have a significant impact on port resilience by directly affecting the port or its users, such as shipping lines and inland carriers:
- Natural hazards. Conventional natural forces, e.g. hurricanes and other extreme weather events, that can impact port and shipping activities.
- Anthropogenic hazards. Forces derived from human activities, intentional and unintentional, that can impact port and shipping activities. Examples include accidents and cyberattacks.
- Market changes. Sudden or gradual changes in supply or demand patterns which can impact global trade and supply chains. These include economic cycles, e.g. market crashes, recessions, and commodity and energy price shocks.
- Access to finance. A port’s ability to access financial resources is critical to cover the cost of operations or for capital investment. Being unable to secure sufficient funding can be considered a risk factor undermining the capabilities of a port to cope with changes.
- Environmental impacts. Environmental conditions, such as pollutants, water contamination and noise that impair port activities and the health of the workforce. Efforts that aim to mitigate impacts or provide remedy can also result in additional burden.
- Trade Policies and regulations implemented by governments to impede and restrict the importation and exportation of specific goods; they can also involve a change in regulatory status, such as the creation of a free zone, which can impact the comparative cost structure of the goods being handled by a port.
- Geopolitical events. Such as conflicts and civil unrest, are highly destabilizing events for port activity in impacted areas. These impacts can be unforeseen and have dramatic consequences on port activity. Russia’s invasion of Ukraine in February 2022, and its blockade of Ukraine’s Black Sea ports is an example of the unforeseen impacts of geopolitical events on ports.