“The conflict in Iran is yet another test for global logistics and for port terminals too. I believe that, from the Covid period to the present day, our entire system has, in a way, become accustomed to living with emergencies,” says Roberto Alberti, president of the port terminal operators’ branch of Confindustria Toscana Centro e Costa.
Speaking to Port News, the Managing Director of Livorno International Shipping Centre (CIS – Centro Internazionale Spedizioni di Livorno) points out how these constant disruptions are destabilizing the entire supply chain. “Route changes, port cancellations and ships being held up are throwing cargo delivery times into disarray, when goods naturally require reliable schedules,” he says.
According to the Livorno entrepreneur, the escalation of the conflict in the Middle East is undoubtedly having a severe impact on shipping companies and cargo. “For high-risk areas, the cost of additional insurance is in many cases higher than the cost of ocean freight,” he points out, adding that freight rates are rising not only for destinations close to the crisis areas but also for other shipping routes which are nonetheless impacted by the blockade in the Middle East and by all the changes and repositioning of vessels that used to transit through there.
The new rerouting of ships towards the Cape of Good Hope could also put pressure on quay capacity and yard space at many ports. “Rather than a problem of additional pressure, I can see a danger of losing additional traffic, at least in the container sector,” says Mr. Alberti, highlighting how Suez has unfortunately become a source of uncertainty due to its proximity to areas which aren’t safe and its overexposure to recurring risks.
The manager from Livorno points out that, in recent times – even before the conflict began – there had been a growing trend among shipowners to avoid using the Suez Canal and to extend their voyages by circumnavigating Africa. In his opinion, this decision is still having an impact on Mediterranean ports today and could, in the future, reshape the balance of power in the region.
The reason is simple: “A ship that does not pass through the Suez Canal finds it more convenient and efficient not to call at Gibraltar but to continue on to Northern European ports, from where goods are distributed throughout Europe by lorry and train – a process that is, incidentally, more efficient than the one we use here,” he remarks.
The president of Confindustria’s terminal operators’ association highlights that geopolitical instability is discouraging long-term planning and reducing the predictability of cargo volumes. This, in turn, jeopardizes terminal operators’ profit margins: “Until recently, he recalls, “terminals could rely on a high degree of predictability and therefore on a type of planning that no longer exists today; container terminals, in particular, have been forced to make major investments to ‘keep pace’ with progressively larger vessels and to reschedule operations where ‘peaks’ are now systemic and becoming increasingly frequent.
In the sector Alberti knows best – bulk cargo (he was previously managing director at Terminal Calata Orlando, that has been handling bulk cargo traffic in the port of Livorno since 1976) – “There has never been any planning, so we’re used to dealing with emergencies.” Ships carrying raw materials are, in fact, “almost always chartered on a spot basis and often at the last minute, when a favourable opportunity arises to get a cargo shipment. As a result, there are days when the quays are free and days when we are handling three vessels at once whilst others are waiting”.
What we can say, however, is that “instability increases the unpredictability of arrivals, volumes and distribution throughout the year”. It follows that “terminals have to be even more flexible”. Easier said than done, “especially when it comes to workforce management, which affects not only terminal operators but also those who provide the workforce, who face the same challenges in managing ‘peaks and troughs’”.
There are also other factors that are directly affected by this period of economic uncertainty, and which involve terminal operators. “If this instability were to become the new normal, the African route could become the norm, and shipowners might permanently opt for new hubs and a new port-of-call schedule, which would have a significant impact on our ports,” says the Livorno entrepreneur.
This is not science fiction but a real possibility, which could soon become a reality due to another form of geopolitical instability: “The relationship between member states and international organizations,” he observes, “is going through a considerably complex period, often characterized by misunderstandings, economic differences and political clashes between national sovereignty and centralized decision-making”. This growing difficulty in communication “makes it hard to take joint action in key sectors such as energy and compliance with environmental regulations”. According to Mr. Alberti, this lack of alignment “which means that EU measures – which could be beneficial within a framework of common rules (notably the ETS rules) –are yet another reason to opt for non-EU solutions”.
Getting back to the war in Iran, the head of Confindustria’s port operators’ branch prefers not to make any hasty forecasts: “I am not in a position to say today exactly what impact the continuation of this war will have on Italian ports,” he admits. “I have read about possible scenarios involving a drop in traffic, but it is too early to speculate.”
One thing is certain, however: “If the war – and its consequences in terms of restrictions on shipping – were to drag on for much longer, everyone, from small to large operators, will have to consider a new strategic repositioning in order to cope with the unstable scenario”.
Translation by Giles Foster
