How are UK ports faring during the Covid-19 outbreak?

The British Ports Association looks at how ports are keeping the UK supplied in difficult circumstances

The Chief Executive of the British Ports Association, Richard Ballantyne, writes here today about how the ports industry is performing and the things it needs from Government to continue to keep the country supplied throughout the Covid-19 outbreak.

Richard comments:

“Ports and their workers, who are keeping imports of foods, essential products, energy and fuel coming into the country during the current coronavirus situation are unsung heros. We have a wide variety of ports across the UK that facilitate a range of activities, including trade, energy provision and tourism. They also provide important hubs of economic activity and jobs in often deprived coastal communities. The Key Workers across the UK include those in the ports, shipping and logistics industries who are literally ensuring the nation is fed and supplied, and helping us overcome Covid-19. However to continue to do this, UK ports do need some assistance from policy makers. Ports like other organisations and businesses performing critical roles in the country need PPE and testing capabilities to keep their workforce’s resilient. Many operators in our ports industry will also need to access assistance from the Government’s financial support schemes and this assistance could be needed well after the lockdown finishes. With people suffering in hospitals and self isolating to protect those most at risk it seems insensitive to say that the lockdown, oil prices and impacts on shipping and maritime markets will leave the economy in a critical condition. Those across Government are of course doing their best to protect the country’s population from both the health risks and potential negative economic impacts. There will be many competing requests and pleas from industry but the needs of ports need to be heard. To come through these challenges we will need to keep the country supplied and maintain our significant volumes of internal trade and this means ensuring the ports industry survives in tact. Unlike some other industries, most ports are unable to drop all their tools, close their gates, or lay up ships. Even reducing services is difficult for port businesses as have many fixed costs and while some can furlough staff, many port functions must continue. Even when shipping and maritime activities reduce dramatically, ports must ensure all services are maintained, such as managing marine operations, keeping channels dredged and quays manned, often with a full suite of staff.

He continues:

Presently are not only seeing a substantial impact on their customer activity and a reduction in their workforce but facing requests for ‘rent holidays, from tenants and a reduction in harbour and cargo dues from port users. This means those in power do need to provide additional support and resources to ports. As well as industry, we understand this is a challenging time for individuals, who may be facing the detrimental impacts of enforced isolation or with unwell family members, and we offer our deepest sympathies to those affected. The health of the shipping industry and the wider economy is inherently linked to the prosperity of a port and we support wider economic measures to ensure stability. However, global trade and global maritime traffic flows are inextricably linked, and UK ports perform a critical role for importers, exporters and intra-UK supply chains, so government must ensure there are measures in place to ensure ports can continue to play a key role in facilitating UK supply chains, and keeping supermarket shelves stocked, but also in the UK’s economic recovery from this crisis. The British Ports Association represents over 100 members, who own and operate around 400 terminals and facilities, accounting for 86% of port tonnages and 85% of all vessel calls. We also represent all the UK’s passenger ports and all the main energy gateways, the top 20 fishing ports and an extensive network of ports and harbours that facilitate over one million leisure craft and yachts. Many of these ports are limiting the numbers of staff needed on site, some taking advantage of furloughing. But still a significant amount of the 115,000 people who are employed in the ports industry need PPE and testing capabilities, and operators will need some type of help and flexibility from exiting lenders to ensure they remain liquid. The ports are however still open and keeping us supplied, but let’s make sure this doesn’t change.”

The British Ports Association is involved in various discussions with government and on a range industry calls regarding the impact of the pandemic, as well as being in constant communication with members. Although currently there are no publicly available ‘real-time’ statistics, the BPA’s Policy & Economic Analyst, Phoebe Warneford-Thomson has been assessing the impacts and she has prepared a snapshot of activity below. This includes analysis of the current situation, and some detail on each sector within our industry.

Impacts on Ports - a snapshot

Shipping and Customer Activity
The total impact of this pandemic is yet to be seen, but ports are already under intense pressure, from both a downturn in customer activity, as well as pressure to offer rent holidays and reduce harbour dues. What can be seen already in the early figures is that international trade and EU markets activity has declined significantly. Data recently released for January, showing exports down by 3.2% to EU markets and by 7.8% to the rest of the world. Though, only when the crisis is over will the figures reveal the true extent of harm caused to industry. Shipping specialists have however forecast a 20% reduction in world trade in the first quarter of 2020 and six million few globs container movements in the same period. 

Ferry and Roll-on Roll-off (Ro-Ro) freight 
The initial impact of coronavirus on the UK passenger ferry network was substantial. Many ferry operators are now reducing passenger capacity and the numbers of sailings (and indeed in some parts routes) in response to the shut-down of passenger movements and economic activity. There was a brief short spike in ‘reparation’ type passenger activities but now this has gone many ships have reduced onboard services and catering etc. 

Some Ro-Ro operators have at least seen relatively healthy freight volumes, particularly with fresh, produce, foods, medical, cleaning products and other grocery supplies. However, since the government's lockdown announcement, Ro-Ro freight volumes have been declining as demand from non essential business and shops decreases. Indeed for some port operators, this has resulted in storage opportunities and/or headaches.

In terms of cars and automotives, the closure of vehicle manufacturing plants in Britain and Europe has seen a dramatic decline in finished trade car imports/exports. This has also impacted Ro-Ro and container freight demand for components and materials.

Dry Bulks
Generally, most dry bulk cargos were holding up well until the Government’s lockdown announcement. At least however agricultural products and animal feeds, which following a slow start to the year, potentially should remain fairly constant in the coming weeks as farming and food production continues (although there are regional and season-related variations). As with Ro-Ro sector, however, following the government announcements demand is falling other trades such as timber are beginning to slow.

In particular, decisions made by the housebuilding sector to cease construction activities are likely to have an impact on port throughputs and indeed some ports have been asked to store cargos until activity resumes. Biomass remains stable although we have seen various operational challenges for ports who handle this cargo in acquiring PPE (such as face masks) for their staff to deal safely with dusty cargos. One shipping company said there had been a lag on steel and metal handling, and while the materials for the canning of foods is in high demand, generally these cargos are expected to slow along with other traffic.

However I notable cargo that has flourished is the paper pulp which has been in high demand for the toilet roll and tissue manufacturers. Some ports have reported record quantities although there remain questions as to how agile the timber and pulp producers will be at sustaining this increase in demand, especially given potential consumer stockpiling.

Liquid Bulks
This sector and in particular and oil and petroleum cargos have seen the substantial impact in deflated oil price and a substantial reduction in industry and consumer demand in fuel. This is also leading to storage demand for certain fuels such as aviation jet fuel. 

Chemicals for manufacturing are slowing although not for essential industries. Other liquid bulks such as orange juice have remained plentiful across Europe and separately in terms of port activity, some tanker owners are talking to certain ports about ship layups and storage.

Containers
After the initial much-publicised deep-sea container traffic slowdown in February and March (which largely import driven) saw a reduction in throughputs of between 25% – 30% in early March following the effective shutdown in Chinese manufacturing and exporting. However with the Chinese economy fully active again there appears to be an abundance of traffic being shipped from Asia to Europe which will start to arrive in the coming weeks.

There are now concerns in the European container sector that with the shutdown of UK and our neighbouring economies and the dramatic drop off in demand for non-essential products, much of this cargo could be held up. Some operators are concerned about increasing box dwell times and congestion with containers potentially needed to be stored at ports, warehouse, logistics parks until the lockdown finishes.

Despite some suggestions from short-sea operators who have said they have plenty of capacity, it would appear as though diverted container traffic and short sea shipping solutions either from container or Ro-Ro options are not likely or feasible.

Finally, one cargo that has grown substantially is finished toilet rolls and some ports have reported a 400% increase in this cargo arriving in short-sea container form the Netherlands. Also, refrigerated units carrying products such as bananas have increased at a healthy level although across the globe the reefer containers themselves are somewhat in short supply as many are being used for storage.

Recreation and Tourism
Perhaps the sector that has seen the most dramatic impact has been the cruise industry. Practically all cruise sailings and port calls are cancelled until the end of May at the earliest. Some ports are now talking to cruise operators about calls in the late summer and the early autumn, but it would appear there could be quite a lasting impact on consumer bookings, particularly for the largest cruise ships. However, some ports have at least managed to gain some business from cruise operators from layups in their ports.

In terms of recreational sailing and yachting, the Government's lockdown has in the words of many members wiped a key part of the summer season and particularly impacted on ports and harbours that rely on visitor income. We understand that all marinas are now all closed.

Offshore energy
The decline in the oil price continues to disrupt the sector. Many offshore oil and gas companies have ceased extraction activity meaning some port cargo and support activities are falling substantially however certain ports who accommodate rigs and offshore support vessels have seen varying increases in inactivity. How long this will continue is unclear.

Renewable energy is also important for the country and ports and most marine related activities continue, although somewhat reduced. Some offshore wind construction schemes have also been impacted as have some scheduled wind farm maintenance routines but this appears to be quite short term.

Fishing
Another sector that has taken a hit is the fishing industry. While some white seafood catches remain healthy many ports with smaller fleets and landings that are exported to Europe have seen a dramatic slowdown in activity. Generally, seafood prices have fallen substantially and this has discouraged many fishermen from taking boats out. Many smaller operators have taken advantage of the government’s support for self-employed workers and the furloughing staff. This has seem major declines in revenue for the ports and many operators are in real trouble.

Employee Absence
Port employees are work hard and keeping our gateways open. Following the Government’s recent advice about isolation, there was predictably a general increase in port employee absence rates as people followed national advice. The initial spike has calmed somewhat and port operators this week were reporting modest levels of absence rates, still largely for people self-isolating although some who were unfortunately suffering from Coronavirus.

About:

Created in 1992, the British Ports Association represents the interests of its 100 full members (covering in excess of 350 ports and harbour facilities and terminals of all sizes across the UK), and numerous associate members, to the UK and devolved Governments, the EU and national and international bodies. w:www.britishports.org.uk