Changing Face of the Port Industry: The COVID-19 Recovery Phase

If change brings opportunity, then seaports have a remarkable year ahead of them. After adjusting to multiple stressors that marred their carefully conceived strategic plans in 2020, including the worst public health crisis in a century, ports are now deploying and fine-tuning innovative solutions. While the transportation system has been wholly stricken by the pandemic, seaports continue to keep goods moving, with a view to a progressive 2021.

By Lori Musser

The 2020 Stressors

Tariff struggles, demand and sourcing volatility – including temporary shutdowns of entire industries, capacity fluctuations and cargo bottlenecks – were just some of the challenges that plagued transportation networks in 2020. COVID-19 exacerbated an already challenging environment, and became the ultimate test of the global supply chain.

Funding Assistance

After 9-11, governments eventually provided support to help seaports align operations with new national security mandates. Lessons were learned and this time there may be faster access to funding to better align with emerging health and safety directives. Every port is prioritizing workforce safety. Going forward, there is also a need for capital grants that buttress slashed project budgets and restart flagging regional economies.

In December 2020, citing a nearly 14% drop in U.S. cargo value, the American Association of Port Authorities and other maritime transportation entities asked Congressional leadership for $3.5 billion in relief funding for the U.S. maritime transportation sector, citing “significant hardships” and “unique and unexpected challenges” posed by the pandemic.

Conservative Budgets

The recovery of cargo volumes has been difficult to predict, so many ports have taken a conservative approach to 2021 budgets. The tough decisions were mostly made in 2020, with widespread staff reductions, operating budget cuts, reassignment of funding to safety protocols and capital project deferment. With global vaccination roll-outs, 2021 may prove brighter.

North Carolina State Ports Authority’s new Executive Director Brian Clark, who moved from COO into the top leadership position in January 2021, said even though tonnage was up for the fiscal year ending June 30, 2020, the uncertainty of ongoing pandemic impacts warranted cautious budgeting. “We didn’t want to reduce staffing and start furloughs,” but did stop filling open positions, “and we were able to move forward on major strategic projects,” but deferred a number of smaller capital investments, said Clark.

Ports that are heavily dependent on the cruise industry have had to be far more aggressive in their budget cuts.

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