- Sea Level Rise Threatens Major Ports Like Houston, Antwerp, and Shanghai.
- Port of Houston Faces Billions in Potential Damage from Extreme Weather.
- Energy Cargo Volumes at Risk as Ports Vulnerable to Climate Disruption.
Climate change is a significant threat to the infrastructure of ports around the world, putting about $7.6 billion at risk each year, as highlighted in a recent report by JP Morgan. These vulnerabilities could lead to serious repercussions for global energy distribution and trade, reports S&P Global.
Rising Sea Levels Threaten Major Global Ports
“Necessary infrastructure upgrades and expansions will take capital,” JP Morgan said. “Otherwise, ports risk damage and resulting global trade disruptions, potentially threatening economic security.”
The report points out that sea levels are projected to rise by as much as 40 cm between 2020 and 2050, putting key ports like Houston, Antwerp, and Shanghai at risk of operational challenges. These challenges could disrupt not just the physical infrastructure but also the vital supply chains that are crucial for energy and trade.
Houston: A Vital Energy Hub at Risk
The Port of Houston, a crucial entry point for energy imports and exports, is highlighted as especially at risk due to its proximity to the Gulf of Mexico, making it susceptible to powerful hurricanes.
Just one severe weather event could trigger a domino effect on trade and lead to billions in damages, reminiscent of Hurricane Ike in 2008, which inflicted $2.4 billion in damage to Texas ports, as noted in the report.
Beyond Infrastructure: The Value of Cargo at Risk
The financial threat to infrastructure doesn’t even take into account the value of the cargo itself. In 2024, for instance, Houston loaded 773,000 barrels per day (b/d) of crude and dirty products, along with 793,000 b/d of clean petroleum products, according to S&P Global Commodities at Sea data.
Platts evaluated Platts AGS, which tracks WTI Midland grade crude transported from the Permian Basin to the Gulf Coast, averaging $77.84 per barrel in 2024.
Maritime Trade Remains Central to Global Commerce
JP Morgan reports that global trade in 2024 hit $33 trillion, with over 70% of that value linked to maritime transport. When looking at volume, around 80% of global trade is moved by sea.
Fossil fuels account for about 40% of all seaborne transport, with crude oil making up roughly half of that, meaning crude alone represented 20% of seaborne trade volumes in 2024.
Anticipated Growth and Increased Vulnerability Ahead
Maritime trade is projected to more than double by 2050, according to forecasts from the Organisation for Economic Cooperation and Development (OECD). This growth brings heightened exposure to climate risks unless proactive investments in infrastructure are made.
Systemic Risks to Global Supply Chains
Disruptions at a single port can ripple through global supply chains, especially in energy-related sectors. This interconnectedness magnifies the strategic importance of port resilience. “The interconnected nature of global supply chains means that disruptions in one port can ripple through the entire system, affecting energy availability and economic security worldwide,” JP Morgan said. Without proper planning, ports could become obsolete, threatening both trade and energy security.
Adaptation Efforts Lag Behind Mitigation
While mitigation of greenhouse gas emissions is gaining momentum, adaptation planning for ports is falling behind, JP Morgan warned. As part of climate resilience strategies, ports could explore natural solutions. “Ports could consider creating flood plains, such as restoring wetlands or coastal ecosystems,” JP Morgan said.
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Source: S&P Global
