Ports under pressure

Explosive growth in the developing world is putting heavy pressure on ports. Governments want to help, but are hampered by deficits.

Demand for Asian commodities has created dilemmas for world ports, including:

  • Increased congestion;
  • Altered trade patterns, taxing already overstretched ports and triggering demand for new ports; and
  • Demand for a new class of megaships, which many ports cannot accommodate without substantial expansion.

In general, governments are aware of these issues and motivated to ameliorate them. But the present malaise has weakened public support for investments in infrastructure.

Leaders feel compelled to focus on deficits. The size of the investment required to build or upgrade a port lends a special edge to these concerns.

Nevertheless, some work is underway. Kuwait is building its third port. India has funded several port expansion projects. Brazil is building what will be its largest port. China is expected to have 10 of the world's largest ports by 2025. A current project in the Americas will double the capacity of the Panama Canal, creating what is hoped will be a positive impact on port expansions along the US Atlantic coast.

While bottlenecks persist, both shipping costs and commodity prices are likely to rise. But with an economic upturn, port investments will create attractive opportunities for shipping and logistics companies – and help spur the global economy.

The transition of ports to private operators is becoming increasingly common around the world; public-private partnerships are ways for the private sector to invest in new infrastructure and/or upgrades needed to meet demands.