The Transport and ICT SOUTH ASIA S CONTAINER PORTSGlobal Practice Smart Connections for All A Comprehensive Assessment of Performance, Drivers, and Costs Matías Herrera Dappe Senior Economist
Trade is critical to economic growth Ports are critical to trade The performance of ports has a direct impact on the cost of freight maritime transport and hence on competitiveness and trade. 2 Increase in average efficiency on a scale where is most inefficient and 1 most efficient
South Asia and its container ports
Comprehensive assessment of South Asia s container ports Outline: I. Operational and economic performance of the 14 largest South Asian container ports Performance Drivers II. Key performance drivers: Private sector participation, Governance of port authorities, and Competition in port sector Port Performance III. Quantify impact of performance on competitiveness of seaborne trade. Trade Competitiveness
Port Performance
Turnaround time (days) Days Operational performance: Increased waiting time, but higher efficiency at berth 2.5 2 2 212 1.5 1.5 8 7 6 5 4 3 2 1 Turnaround time Time at berth Waiting time Averages mask wide regional differences Pakistan and Sri Lanka performed better than Bangladesh and India in terms of time efficiency Bangladesh India Pakistan Sri Lanka Source: Ministry of shipping of India, and port authorities' websites But, there was convergence on turnaround time during 2-212
Index Economic performance: Better than it was... Benchmark: The 62 largest container ports in the Indian and Western Pacific Oceans for the period 2-21 including 14 largest container ports in South Asia Findings: The main driver of productivity improvement was increase in average efficiency in the use of port facilities 2 1.8 1.6 1.4 1.2 1.8.6.4.2 Southern and East Africa East Asia TFP Change Technical change Middle East South Asia Efficiency change
Average pure efficiency scores Economic performance: There is still much room for improvement.5.45.4.35.3.25.2.15.1.5 2 21 22 23 24 25 26 27 28 29 21 Southern and East Africa East Asia Middle East South Asia However, the average conceals large differences among ports Mumbai and Tuticorin (India) pure efficiency decreased significantly during 2-21 Colombo (Sri Lanka), JNPT, Mundra (India), and Qasim (Pakistan) improved remarkably their pure efficiency over the decade JNPT and Colombo are the top performers in South Asia, but they are still far from top performers in the Indian and Western Pacific Oceans
Private Sector Participation
Average operational performance 2-1 (Days) Landlord ports tend to attain higher performance than Public Service and Tool ports, but their performance varies widely 5 Landlord ports Public service or tool ports 4 3 2 TAT 1 WT
Average economic efficiency 2-1 Average operational performance 2-1 (Days) Higher levels ($) of private participation are related to higher economic and operational performance 2.5 2 1.5 1 TAT WT.5.7.6.5.4.3.2.1 High Medium Low High Medium Low Level ($) of private participation
Governance
Average Index Port authorities have emerged as fundamental determinants of port performance A professionalized governing authority, a well-placed strategic plan, and a competent bureaucracy are critical aspects of good long-term planning and management of ports.8 Components of Board Governance in South Asia.7.6.5.4.3.2.1 Size Private Sector Membership Professionalization Transparency Note: Indexes range from (worst performance) to 1 (best performance)
Average economic efficiency 2-1 Average operational performance 2-1 (Days) Strong governance of port authorities is related to higher (operational) port performance 3 2.5 2 1.5 1 TAT WT.5.8.7.6.5.4.3.2.1 High Medium-high Medium-low Low High Medium-high Medium-low Low Board Governance Index
Competition
Average economic efficiency 2-1 Average operational performance 2-1 (Days) Strong port competition is related to higher port performance in South Asia 3 2.5 2 1.5 1 TAT WT.5.7.6.5.4.3.2.1. Low Medium High Low Medium High Competition Index
The way forward
While there have been improvements and modernization in South Asia s port sector, more can be done to meet the competitiveness challenge A three-pronged approach that: Encourages private sector participation through a welldeveloped enabling environment including further adoption of the landlord port model Strengthens governance of port authorities boards through increased professionalization of its directors, open process of appointments and inclusion of independent members, among others. Strengthens competition between and within ports, in part through transparent and competitive concession bidding i.e. competition for the market. has the potential to further improve port performance and export competitiveness
Improving performance of container ports can increase export competitiveness If the container ports of Bangladesh, India and Pakistan had been as efficient in using their facilities as the port of Sri Lanka during 2-27
Thank You
Competition environment in South Asian container port sector Measure Hypothesis Rationale Country market share Geographic concentration Containerization Transshipment Intraport market structure Higher levels of concentration lead to lower levels of competition. The greater the number of ports that serve the same hinterland and are managed by different terminal operators, the greater the competition among them. Ports with large shares of containerization face greater competitive pressures. Ports with high transshipment levels face greater international competitive pressures. Ports with more than one terminal managed by different operators face greater competition. Ports that continuously enjoy higher market shares for a long period face lower competition. The existence of ports competing for the same hinterland increases competition when these ports are managed by different terminal operators. International logistics networks and globalization of container liners create competition among specialized ports in the fight to attract and retain shipping companies. Port competition relies not only on neighboring facilities but also on international hubs. As the hinterland may not be of relevance, ports struggle to maximize efficiency and minimize costs to better serve deep-sea traffic needs. The more terminals operated by different companies, the more competitive the environment at the port.