Page 26 - IB October 2021

Ports
PACIFIC PORTS: COVID AND

CLIMATE RESPONSES

By Islands Business decline in ship calls at our ports, cargo volumes have also
decreased, and low revenue has been generated as a result of
More than 90% of trade commodities come to Pacific Island a decline in export.”
countries and territories by sea; with imports dominated by Fiji Ports Corporation (FPCL), recently paid its shareholders
fuel, industrial, commercial machinery and other natural a dividend of F$13.63 million, following a net profit of $22.73
resources. million for 2020. Its shipbuilding arm, Fiji Ships and Heavy
But over the last two years the region’s ports have faced Industries, suffered a 40% loss. FPCL is currently implementing
unprecedented challenges. Service has cut back on some its 2019-2023 strategic plan, focusing on yard infrastructure
routes as shipping companies focus on their most lucrative development, wharf rehabilitation projects, and other ICT and
markets. Ports authorities and personnel have had to adjust port operations capital investments.
to the inherent risks of being gateways for COVID-19 into their Meanwhile, the Australian Government-funded Market De-
countries and outer islands. New handling and quarantine velopment Facility (MDF), has been tracking how global supply
protocols have been implemented, adding time delays and chain disruptions have affected its partners in Fiji, PNG,
expense. COVID has led to problems facilitating crew changes Timor-Leste and Sri Lanka.
and staffing. The picture is not uniform; a decline in production in some
There are knock-on effects for Pacific producers. Some ship- locations has led to reduced shipping volumes and slower ship
ping companies have added extra stops to their routes to try turnaround. Elsewhere demand has increased, with container-
and increase volumes, slowing transit and delivery times and laden vessels arriving full, but leaving empty. Shipping costs
posing challenges for the shipping of agricultural and other have increased across the board.
perishable goods. MDF says that “both delays and price spikes are beginning
At the same time, ports have played a critical role as to impact countries in the Pacific and Asia, as these lower vol-
staging points for vaccine shipments and distribution, and ume routes are increasingly neglected by shipping companies.
in ensuring people get humanitarian relief supplies after cy- This in turn is affecting the commodity trade that contributes
clones and water during drought. In Fiji, they’ve even berthed significantly to these nations’ export baskets, as well as the
hospital vessels to deal with surges in COVID cases. import of staples.”
Add to this the longstanding need to update aged facilities While container costs are up, the increase is a fraction of
at many Pacific ports, and emergence of ports as the focus the increases in air freight costs. Even so, some Pacific ex-
of geopolitical competition between China and the U.S./ porters have been left with no choice but to ship by air rather
Australia in some Pacific islands, and even more complexities than sea, due to less regular shipping services.
emerge.
Beyond COVID
Around the islands While the impacts of COVID on shipping and ports is ex-
The Commonwealth Ports Authority (CPA) in the Northern pected to last well into next year, the region’s energy and
Mariana Islands says COVID-19 has caused a dramatic decline transport ministers are looking beyond the pandemic. They
in revenues, prompting austerity measures. CPA benefited have adopted a Pacific Ports 2030-2050 vision, which focuses
from a US$22.7 million grant offer from the Federal Aviation on green, climate resilient and ‘smart’ ports (where there is
Administration (FAA) which it will use to fund operational “no waste of space, time, money, and natural resources)”.
expenses, and service its debts. The Asian Development Bank (ADB) is also running a Prelimi-
In Guam, where volume levels at the port have remained nary Foresight Study to look at key trends shaping the future
“relatively stable”, S&P Global Ratings has upgraded its of transport across the Asia and Pacific. The ADB is looking at
outlook for the Port Authority of Guam to ‘A’. “The strong en- financing port projects in Solomon Islands, Tonga, Fiji, Kiri-
terprise risk profile reflects…the port’s essentiality and virtual bati, Tuvalu and Vanuatu through a mix of grants and conces-
monopolistic position as sole provider of maritime facilities sional loans, with a particular focus on climate resilience.
and services in Guam, somewhat offset by high leading carrier Not all of the responses will involve multi-million dollar
concentration…[plus] a very strong debt profile (low debt projects; smaller scale solutions such as lighting using renew-
burden), and strong liquidity and financial flexibility,” S&P able sources, extreme weather sensors and system efficiencies
stated. already being discussed. For example, Fiji Ports has acquired
In Papua New Guinea, PNG Ports recently paid more than a new Vessel Traffic Management System from Australia, and
K28,467,878.42 million to the government for 2020 taxes, and is waiting for borders to reopen so it can be installed at Suva
advance tax payments for this year. Port (and later in Lautoka). Berthing applications and revenue
Board Chairman, Kepas Wali, said there was no better time management is being digitalised and Fiji Ports has a new pilot
than this to assist the government. “PNG’s economy, like the boat. The region’s other ports authorities will be looking to
rest of the world, has been hard hit by the global economic fast track their investment and development programs as soon
downturn and businesses, like PNG Ports, are also facing the as possible.
brunt of it.
“International trade has slowed down, there has been a editor@islandsbusiness.com

26 Islands Business, October 2021