Forecasting throughput at a transshipment hub under trade dynamism and uncertainty in major production centers

The demand for port services is intricately tied to international trade between production centers and the global market. This paper introduces a unique econometric forecasting model tailored to predict container port throughput at a transshipment hub, leveraging the dynamic and uncertain nature of international trade flows, originating from three global production centers: China, the USA, and Germany. The paper examines how the trade flow dynamics of these centers impact a transshipment hub, especially in scenarios where the hub is strategically positioned along major shipping routes, serving as the sole container transshipment facility in a region. The validation of the model is conducted through empirical testing using time series analysis of trade flows from the above three major production centers to the South Asian port region. The Port of Colombo (PoC) is used as the regional hub port. The model incorporates external shocks to assess their influence on the demand for the services of the hub and its resilience to global disruptions. Findings indicate the substantial influence of China, with a notable impact on exports to the USA from South Asia and imports from Europe and Central Asia to China, establishing positive and long-term relationships with PoC. Furthermore, the paper offers insights into PoC’s resilience during crises such as the Red Sea incident, leveraging its strategic location. The findings not only contribute in developing PoC’s strategic position, but they also lay the groundwork for future studies on global trade patterns and the adaptability of transshipment hubs in the face of dynamic demand.