OECD estimates USD 830 bln required for
ports infrastructure upgrade worldwide

10 June 2011

It projects China having the maximum increase in maritime container volumes in terms of TEU throughput, followed by USA and India. OECD cautioned that the present infrastructure cannot meet future requirements. Majority of the current gateway and corridor infrastructure are not equipped to handle a 50% rise apart from doubling or tripling of passenger and freight in 20 years. Thus additional capacity is imperative. The report projects total annual investment in infrastructure capex for:

• Ports of USD 33 billion in 2015 and USD 40 billion in 2030
• Airports of USD 2.2 trillion till 2030 or USD 70 billion per year in next four years, subsequently USD 120 billion per year till 2030

Thus such augmented financial requirements cannot be met only by traditional modes of public finance as post the financial crisis, banks have curtailed credit growth and will be further restrained when new regulations like Basel III becomes effective. It is probable that a more active role is played by institutional investors like pension funds, insurance companies and mutual funds for bridging the 'infrastructure gap'.

This may require a redefinition of broad infrastructure tag which encompasses ports, airports, toll roads, schools and hospitals all in one, into a more segregated and clearly defined asset class facilitating pension fund advisers to appropriately review their risk profile as secure long term revenue providers. At end of 2009, these institutional investors held assets above USD 65 trillion in OECD countries and could thus play a vital role in financing long term projects like green energy and infrastructure projects.

This is OECD's initial report as full report is scheduled for late summer 2011 publication. It is an update of the 2007 edition with:

• New sections on ports and airports
• Case studies comprising Rotterdam, the Bosporus gateway, French and Indian ports
• Review of gateway ports, hubs and their inland transport connections and their ability to meet rising demand in the near future

TT Club, press release