Volume growth will continue for ports throughout the world but at a more modest pace over the next 10 years, according to Fitch Ratings in a new report.
Global port throughput has shown resilience over the last 10 years with throughput growth outpacing economic growth rates despite volatility through the last recession. Containerization of cargo and increasing vessel sizes coupled with supporting infrastructure at ports have all contributed to these throughput trends. However, growth rates are slowing relative to historical averages as these trends mature, and volume growth, while expected to continue, will likely more closely mirror that of global GDP.
An increase in protectionist trade policies, shifts in centers of production, and the advent of disruptive technologies are all factors which add further complexity in considering future throughput levels. Regarding U.S.-China trade relations, "Primary ports of call will be able to weather the storm despite elevated concentration in Chinese trade exposure in some cases," said Senior Director Emma Griffith. "Conversely, smaller and more specialized ports will have less leeway to offset major losses in imports and exports if commodities handled are targeted by tariffs."
Shifts in trade policy are not likely to curb growth meaningfully for ports located in North America. "Port investment will continue to focus on capacity enhancements to accommodate larger vessels while investor interest in North American port assets appears to be increasing," said Griffith.
The outlook for ports in Latin America is somewhat more unpredictable. Recent changes in trade policy between Asia and the United States are clouding future performance of the Panama Canal's container business while Brazilian ports are still facing overcapacity challenges.
European and Middle Eastern ports are not directly in the crosshairs of the U.S.-China trade battles. However, should the dispute take a toll on global trade flows, the historical relationship between European GDP growth and trade flows would be adversely affected. The bigger issue for European ports over time may be fallout over Brexit with disruption in trade flows possible as new customs processes and non-tariff barriers come online. U.S.-China trade uncertainties could mar the rate of growth for ports in the Asia Pacific, which have been the pace-car for volume growth. Bilateral trade in particular will suffer if the dispute continues to escalate.
Potential sector "disruptors" to watch in the coming years include:
