18 million people earn their living from maritime logistics and its surroundings in APAC [REPORT]

The competitive advantage of Asian economies is growing and will not be hindered by tariff wars and non-tariff restrictions. Maritime transport and seaports are among the most important economic activities generating employment and growth in the region. Across East Asia and the Pacific, this sector directly employs approximately 8-9 million people in waterborne transport, ports, and maritime logistics, according to the latest World Bank report, “Ports, Ships & Fuels: Maritime Efficiency, Safety, and Sustainability in East Asia and the Pacific.”

Maritime logistics supports the retention and active utilization of another 8 million additional jobs in supply chains, services, and household consumption. In East Asia and the Pacific, between 16 and 18 million people earn their living from maritime-related industries. Maritime transport and seaports are particularly important, as they generate a “strong multiplier effect.”

According to the World Bank, in the Asia-Pacific region, every additional million tons of cargo transported supports 300 jobs in ports and their hinterland. Each ton of cargo generates approximately $155 in industrial production and directly generates about $75 of GDP.

Improving shipping and port activity generates “two to four times more additional economic activity and employment in the production and consumption sectors,” emphasized Carlos Felipe Jaramillo, Vice President, East Asia & Pacific, World Bank, during the webinar introduction.

Three Key Strategic Challenges in East Asia and the Pacific. Source: “Ports, Ships & Fuels: Maritime Efficiency, Safety and Sustainability in East Asia and the Pacific.”

A report commissioned by East Asia & Pacific, the World Bank, indicates that “efficiency, safety, and sustainability have been identified as three key strategic challenges shaping the future of the maritime sector in East Asia and the Pacific.”

Bertrand de la Borde, Global Director for Transport & Logistics, World Bank, emphasizes that these are “levers that will enable the sector to provide ‘more and better jobs.’” He emphasizes that “Maritime transport is the economic engine of the East Asia & Pacific (EAP) region. Bustling ports and long ocean voyages connect economies, communities, and open up new opportunities.”

The World Bank’s Department of Infrastructure (Transport) for the East Asia and Pacific region has prepared a regional report entitled: “Ports, Ships and Fuels: Efficiency, Safety and Sustainability of Maritime Transport in East Asia and the Pacific.”

Dynamic Supply Chains

“The report was developed based on comprehensive analyses of large data sets and in-depth stakeholder consultations. The report analyzes maritime transport and supply chains, assesses challenges, identifies opportunities, and provides practical advice and insights,” said Jan Hoffmann, Global Lead for Maritime Transport & Ports, World Bank, at the beginning of the webinar.

From container terminals in Singapore to the ports of Tuvalu, efficiency, sustainability, and safety are not abstract ideals; they are the driving force behind growth, development, and job creation,” the report emphasizes.

“With appropriate investments and policy reforms, the EAP region can transform these challenges into increased productivity, resilience, and long-term competitiveness,” emphasized co-author Cordula Rastogi, Senior Transport Specialist, East Asia & Pacific Transport, World Bank, during the report’s launch. Inaction or delays in action and investment could lead to bottlenecks in the region, and aging fleets will burden maritime transport. The slow implementation of decarbonization will also be a constraint, as “poorly managed fuel transitions can turn into structural constraints that will increase logistics costs, reduce reliability, and worsen the economic performance of countries operating in the region.”

Efficiency, Safety, Sustainable Development

“Its maritime trajectory will ultimately be shaped by progress in achieving three interdependent goals: Efficiency drives competitiveness and often enhances sustainability; safety is fundamental to operational reliability and efficiency; and sustainability is essential to ensuring long-term development on a livable planet,” Cordula Rastogi points out.

Over the past 50 years, there has been significant progress in engine design, improved hull design, and optimized ship utilization. Ship operation and operational management have improved. This has led to optimized fleet management and efficient utilization.

Since 2008, global shipping activity has increased by almost 50%, while energy consumption has increased by only 5%. A World Bank representative notes that “This has allowed for a reduction in fuel consumption.” approximately 1.8 million barrels of oil per day and saving approximately $60 billion annually.”

Investment cycles in ports and fleets and technologies for the introduction of alternative fuels. Source: presentation “Ports, Ships & Fuels: Maritime Efficiency, Safety and Sustainability in East Asia and Pacific.”

Sustainable development in maritime logistics, broadly defined, has different timelines depending on the region. In the short term, attention is drawn to further reduction efforts. Ports should continue their large-scale investment programs in new infrastructure. The report emphasizes that “aggressive efficiency improvements are an ‘easy-to-achieve’ goal that will allow shipping in the EAP region to achieve measurable progress towards decarbonization in the short term.”

Improving the operational efficiency of seaports and maritime transport must be pursued on a broad scale, as it not only reduces fuel consumption but also reduces emissions of environmentally harmful waste and reduces costs “without the need to build new ships or use alternative fuels.”

It points out that such improvement measures as high-level crew training, optimizing ship traffic between ports, designing streamlined hulls, and optimizing port call schedules are crucial. These no-cost measures “can deliver double-digit emissions reductions, as already demonstrated by many ports and EAP shipping operators,” the World Bank report emphasizes.

Fossil Fuels Dominate

The report, “Ports, Ships, and Fuels: Efficiency, Safety, and Sustainability of Maritime Transport in East Asia and the Pacific,” notes that countries in the East Asia and Pacific region account for approximately 40–50% of global bunker fuel consumption. Most of this fuel is imported. The authors calculated that by 2025, over 99% of maritime fuel will still be conventional fuel.

The reality is that global maritime transport still relies on fossil fuels. Therefore, disruptions in oil and gas supplies and the destruction of fuel and gas production facilities destabilize transport systems globally and locally.

Unfortunately, most of the approximately 100,000 ships engaged in the transport of general cargo, bulk cargo, and tankers used conventional fuels for their main engines. All types of marine fuels are bunkered. Demand for low-sulfur fuels remains high.

In the region studied, “Bunker fuel typically accounts for 40–60% of a ship’s operating costs.” This is the primary reason for the increase in freight rates. The price of bunker fuel is undermining the competitiveness of those operators who lack access to relatively cheap marine fuel. Logically, therefore, investment in engines with the best operating parameters is imperative.

The report’s authors note a simple relationship: “Investment needs in alternative marine fuels between 2025 and 2040 will depend on future fuel demand, production pathways, renewable energy availability, and infrastructure costs.” Estimates conducted today determine the necessary expenditures for new solutions.

Costly Alternative Fuels

Cordula Rastogi and David Wignall estimate that by 2040, supporting the global marine fuel supply could require approximately $310 billion in expenditures to launch green ammonia production, $81 billion to expand the production and bunkering of green methanol engines, and $42 billion to introduce renewable gas in ports and on ships and develop LNG installations.

LNG is currently the most widely used alternative marine fuel. Currently, containership, bulk carrier, and gas carrier operators operate approximately 470 ships with LNG-powered engines. Over 400 ships have been ordered. These orders significantly exceed the expenditures for ships powered by genuinely green fuels. It should be emphasized that LNG is a fossil fuel.

“The report emphasizes the need for ongoing port investment programs, estimated at $12 billion annually,” writes Carlos Felipe Jaramillo, Vice President, East Asia and Pacific Region, The World Bank, in his foreword. The dynamic economic development of Pacific Rim countries requires increasing port capacity and improving the efficiency of land and sea logistics. These are the challenges facing managers. Jaramillo notes that “a significant portion of these investments was financed by private capital, supported by political programs that enable private sector participation [in logistics development – ​​Ministry of Economy].”

The profitability of investments in production, bunkering systems, and the use of alternative fuels on ships remains costly. Its application at the current technological stage is unprofitable and economically inefficient. The World Bank Vice President emphasizes the Bank’s efforts to support countries in the region in developing environmentally friendly maritime logistics.

The World Bank Group works with countries through analytical work, policy dialogue, and financing to support the development of ports and shipping and their contribution to connectivity, employment, and sustainable economic activity. This support has a tangible economic impact.

In Asia, continued investment is being made to increase port capacity, reduce congestion, and speed up the processing of larger vessels. Various forms of advanced automation and computerization systems have been implemented, supported by AI, VR, and the widespread use of IoT with satellite systems.

Pacific countries are poised for a growth in containerized cargo supply of up to 3.5–4% annually. World Bank analysts even estimate that the container handling capacity and system in their hinterland will need to nearly double by 2040. To provide “around 300 million TEU of additional capacity, an investment of $90 billion, or about $6 billion annually, will be required.”

More dry and liquid cargo handling capacity will be needed. To prevent ports from becoming bottlenecks in the transshipment of general cargo, bulk cargo, and liquids, the demand for financing new projects and the modernization of existing terminals is increasing – this is the banking perspective. Overall, the annual investment needs of ports are expected to reach $12 billion, of which approximately 65% ​​is allocated to China, approximately 25% to the ASEAN-5, and the remainder to the remaining developed economies of the EAP.

For European Union countries, the World Bank’s report on seaport activity and maritime transport is important information indicating that deglobalization has practically disappeared. Even the crisis in the Persian Gulf proved less damaging than expected in the short term. The competitive advantage of Asian economies is growing and will not be hindered by tariff wars and non-tariff restrictions. Therefore, European ports and logistics operators in Europe must be as active as their ASEAN partners.