The impact of low crude oil price on the maritime industry (ports)

• Main Author: Liauw, Priscilia Mei Yuan
• Other Authors: Chiu Sai Hoi, Benson
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2021
• Subjects: Business::General; Engineering::Maritime studies
• Online Access: https://hdl.handle.net/10356/150084
• Institution: Nanyang Technological University

Oil is the world’s largest energy source today and an essential resource in the global maritime industry. In light of the crude oil price fall that began in 2019, the global world economy and trade has taken a downfall, extending the impact to the maritime industry. This paper aims to investigate the resulting impacts of low crude oil price on the maritime industry, with a focus on the ports sector. The impacts will be assessed on a macro-environmental view from the Political, Economic, Social, Technological, Legal and Environmental (PESTLE) perspective. Research methods include interviews with the port industry professionals and garnering information from relevant books, market reports, news and journal articles. The insights and information are consolidated and analysed in this paper. The interview results have drawn an important conclusion. Low crude oil price generally affect port business on the economic aspect. Many of the interviewees highlighted that economic impacts is of topmost priority, while impacts in other aspects are more driven by national agenda rather than the price of crude oil. Many also expressed that during the low oil price environment, some ports may see a slowdown in the transition towards cleaner and greener energy sources for cargo handling equipment as well as a temporary switch to more diesel powered equipment from electricity, thus hindering environmental efforts towards carbon emission reduction to some extent. Furthermore, most of the interviewees and the current academic literature showed little/ no relation between low crude oil price and the political and legal impacts on ports. This area of study is highly recommended for more comprehensive research in future studies. Despite the challenges faced in the low crude oil price environment, port industry players continues to stay committed in moving towards the adoption of sustainable and clean energy sources – a journey to a zero carbon maritime industry. A recommendation would be for Governments to consider implementing more green initiatives or policies that provides certain incentives to ports that venture into greener technology or cleaner energy sources for port equipment to encourage the efforts towards an overall reduction of carbon emission. Another recommendation would be to spur greater investments into digitalization and automation in ports to effectively resolve port congestions all around the world which have been proven to be one of the major economic impacts on ports by various research and academic papers. This topic is particularly relevant and practical to the present market and we hope that our research can give industry players a broad overview of the ports sector under the pressure of low crude oil prices.