Impact of Covid-19 on the cost of technical services in European ports

Abstract

Despite efforts to maintain supply chains unaltered as a result of the Covid-19 pandemic, statistics published after the second quarter (Q2) of 2020 have confirmed a drop in maritime traffic in European ports. Furthermore, the evolution of the pandemic indicates that stabilisation of traffic at levels prior to the Q1 of 2020 may take years. Port authorities in Europe, in an overall context of landlord port governance, are already being challenged, due to the need to ensure the provision of port technical services (mooring, pilotage and towage). In addition, the cost adaptability of these services to the current situation could be confronted by the European legal framework that demands transparency and proportionality in port rates in order to provide an effective cost of services. This paper analyses the impacts of Covid-19 on European ports, first by quantifying traffic drop after Q2 of 2020 and then calculating its effects on the cost of port technical services, in a general context of lack of flexibility in the cost structures of private providers. Due to this ongoing situation, a rise in rates, allowed by the port authorities, could mean that the prices of port services are not aligned with effective costs, along with loss of competitiveness.