Logistics News, Port News

Oxford report reveals multi-billion dollar risk affecting ports

A combination of external pressures and weather patterns is potentially causing global ports billions of dollars according to the Oxford report

The latest report from Oxford’s Environmental Change Institute suggests more than $122 billion of economic activity, including $81 billion in international trade, is at risk at the world’s ports courtesy of extreme climate events.

According to the paper in Nature Climate Change, systemic impacts – those risks faced due to knock-on effects within global shipping, trade and supply chains network – will hit ports and economies around the world, even if the local ports are not directly affected by extreme events.

In fact, according to the study, some $81 billion per year maritime trade is at-risk, around 60 per cent of which is because of cross-border knock-on effects; those outside a country’s own jurisdiction.  

Parts of northern Europe, the western United States, Southern Australia, the Middle East and West Africa are particularly expected to feel such effects, mainly because of dependencies on East Asian ports. This is important because the risks faced as a result of foreign dependencies on ports are often overlooked. This became dramatically visible when Ukraine grain ports suddenly closed due to the Russian invasion, and it all has a flow-on impact on Australia’s ports.

When the spill-over disruptions to dependent ports, trade flows, global supply-chains are taken into account, this adds up to a total potential at-risk cost of atleast $122 billion of economic activity – say the researchers. 

“This clearly highlights the importance of quantifying these so-called systemic risks, as only looking at localised damage to infrastructure can hide the wider economic losses that could materialise during extreme events,” the paper’s lead author Dr Jasper Verschuur says.

The paper calls on countries to consider regulation to mitigate potential impacts of climate extremes, the research team suggests identifying alternative trading routes or partners and improving the resilience of port systems to such shocks.

A previous analysis by the same researchers already revealed that physical damages to ports from storms, floods and other climatic extremes can add up to almost 8 billion USD of losses each year to global ports.

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