The coming year’s biggest challenges for the port industry will be to manage the impact of a slowing global economy. Ports will have to find ways to maintain financial viability as carriers cut service and shipping rates decline amid falling commodity and consumer goods prices. In this environment, ports also must find the capital to continue much-needed infrastructure improvement to serve long-range cargo growth projections, as capacity in general was already taxed prior to the downturn.
Most economists agree that recession is finite in duration and that before we know it, we will be resuming previously experienced volume levels in our seaports. Some ports will be able to weather the storm as new facilities and capacity come on line allowing once displaced regional shippers to lower transportation costs by shifting cargo to closer ports.
A few ports may also offset declining volumes with products flowing from new manufacturing investments. Yet, flat or declining volumes among many commodity groups will be evident on the industry’s balance sheets as deflation settles in on goods and construction wanes.