07 September 2020
Mark Whitworth, CEO
The maritime industry is arguably the world’s most important supply chain enabler, responsible for the constant global flow of food, fuel, medical supplies, raw materials and agricultural products. Its smooth functioning is essential in underpinning national economies, and the health and wellbeing of billions of people. This is further exemplified by the fact that the UK is reliant on the industry for around 95% of its internationally traded goods.
The Coronavirus pandemic has brought with it unprecedented turmoil in the global economy and whilst the maritime sector has risen to the challenge, it hasn’t been immune to the disruptive influence of the pandemic. Despite these challenges, the sector has played a pivotal role over the last few months in ensuring the UK remains fed, fuelled and supplied with critical, life-saving equipment. Ports and their key workers have been at the very forefront of the national response to the crisis, in countless cases making Herculean efforts to ensure the smooth transit of millions upon millions of tonnes of goods.
During the outbreak, the essential work of ports has come into sharper focus. Borders closing, freedom of movement restricted from country to country, and huge volatility in demand for critical supplies, meant that it was vital businesses had access to well-connected responsive ports that continued to operate effectively and efficiently.
Those businesses needed confidence that their supply chains could cope with the changing landscape. Whilst the full effect of the pandemic is yet to be realised, what is certain is that it has irrevocably changed the global economy.
Our lifestyles, consumer spending patterns and business investments are not expected to return to the way they once were. Studies are already being published citing the majority of companies will alter their global sourcing strategies. In turn, this, along with changing demand patterns, will have an ongoing and lasting impact on international trade and global supply chains.
It will be a considerable time before we truly understand the long-term consequences of this world-changing event on global trade.
Now, more than ever, businesses need confidence that their goods can reach their end destinations. They need to know that their supply chain partners can provide a level of resilience to mitigate against further shocks in the months ahead, whilst equally providing a level of agility to respond to emerging demand and supply patterns.
Resilience will need to be at the forefront of everyone’s minds over the next 12 months. It was only around six months ago that Brexit was perceived to be the biggest shock to hit supply chains for a generation. From 1st January 2021, new border arrangements will govern the flow of goods between the UK and the European Union, and indeed between Britain and Ireland.
Businesses face a dilemma too when looking at their sourcing strategies. On one hand, globalisation has been challenged by COVID-19 and nearshoring is once again being reconsidered. However, on the other hand, moving manufacturing to Europe is equally challenging given we still do not know what rules and bureaucracies will govern trade beyond the end of the year.
Some argue that we will bring more manufacturing and production back to the UK – an idea potentially encouraged by the Government’s Freeport policy. Not only does this mitigate some of the risks of international trade, but potentially improves the environmental sustainability of the supply chain. Rather than importing finished products, we import the less time sensitive raw materials or intermediate components.
The delivery of this strategy, whatever it may be, needs to focus on collaboration between the supply chain partners of the businesses they serve, enabling us to harness to the full the enormous capabilities of our nation’s ports as uniquely placed economic powerhouses.
The opportunity to ‘build-back greener’ will become a central part of many business’ agenda and there is recognition that now is the time to make long term sustainable choices. Locational ports of choice will be central to the decision, shorter land journey times to end destinations will be considered for reduced emissions and well placed ports, with a multi modal approach, can take many miles off the road.
As we emerge from this crisis, ports will play an ever increasingly important role because they fit in with an integrated trade and digital ecosystem that allows for seamless trade. The maritime sector already boasts world-class excellence and we need to continue to drive these strengths, with ports now the lynchpins in global end-to-end supply chains.
With the global economy looking ahead to signs of a recovery and supply chains springing back to action, ports have a vital part to play. This will include ensuring we build resilient supply chains, which are agile and flexible enough to navigate whatever disruptions the next 12 months might bring, whilst becoming enablers of the longer-term solution optimising for efficiency, the environment and the economy.