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Summary

So far this century South Asia has enjoyed the second-highest economic growth in the world (close to 7 percent average annual rate since 2000), and increasing international trade has played an important role.

But the region is still a small player in world trade, partly because shipping a container into or out of South Asia is relatively expensive and slow.

According to the , increasing the competitiveness of South Asia¡¯s exports will require an improvement in the performance of its container ports, as over three quarters of the region¡¯s trade is transported through ports.   

Overall South Asia had improved the performance of its container ports in the decade after 2000, but still struggled to catch up with other developed and developing regions. South Asia has reduced the gap with East Asia, but some ports in India and Bangladesh took more than three times longer to turn around a container ship than the world¡¯s most competitive ports ¨C Hong Kong, Shanghai and Singapore.

The report proposes a three-pronged approach to improve the performance of container ports: (i) Encourage private sector participation within a well-regulated and administered landlord port model; (ii) strengthen the governance of port authority boards; and (iii) promote competition between and within ports, in part through transparent and competitive concession bidding.

Findings

• Although container traffic has grown by a factor of more than four in South Asia since 2000, the region is still a minor player in global container port traffic, with a market share that grew from 2.1 percent in 2000 to 2.9 percent in 2013.
• On the World Bank¡¯s Logistics Performance Index, South Asia trails both East Asia and middle-income countries, particularly in infrastructure. According to the WB¡¯s Doing Business report, South Asia also trails East Asia on cost and time for exporting or importing a container.
• Tariffs and terminal handling charges at most large South Asian container ports are lower than those at ports such as Dubai, Salalah in Oman and Singapore. But indirect costs associated with delays, loss of markets and customer confidence have had a big effect on customer choices.
• Growth in container traffic increased congestion in South Asian ports between 2000 and 2012, but efficiency measures at the berthing stage helped offset longer waiting times and helped keep many South Asian ports competitive.
• More efficient use of port facilities, together with improvements in the scale of operations, were the main drivers of increases in productivity in South Asia. These increases helped South Asia catch up with East Asia in terms of efficiency in the use of facilities. On average, South Asian container ports experienced the largest improvement in productivity among ports in the Indian and Western Pacific Oceans (80 percent versus 55 percent for East Asia) between 2000 and 2010.
• The report finds that some ports - specifically Colombo in Sri Lanka, the fast-expanding Mundra and Jawaharlal Nehru Port in India and Port Qasim in Pakistan ¨C improved the use of their facilities in the decade after 2000, while India¡¯s Mumbai and Tuticorin fell behind. Chittagong (Bangladesh) and Kolkata (India) had the longest vessel turnaround times in the region.
• If South Asia¡¯s container ports were as efficient as the most efficient ports in the world, in 2010 South Asia¡¯s container ports could have handled more than double the number of containers using the same facilities. This is undoubtedly an inefficient use of past investments.
• The report finds that if every South Asian container port performed as well as the region¡¯s best, maritime transport costs for South Asian exports would decrease by up to 8.8 percent and exports would increase by up to 7 percent.

Recommendations

There has been improvement and modernization in the South Asian port sector, but the countries need to do more to meet the growth and competitiveness challenge.

Three interrelated policy actions to improve performance in the port sector are:

• Encourage more private sector participation within a well-regulated and administered landlord port model. In this arrangement, which has been increasingly adopted, the port authority acts as a regulatory body and landlord while private companies operate the port, provide the services and employ the workers.
• Improve the governance of port authorities, with a more transparent appointments process and independent board members.  Effective boards respect the interlinked nature of the public and private contributions to ensuring timely and efficient movement of cargo through ports.
• Foster a competitive environment, both within and between ports. The report recommends stimulating competition at the initial concession stage ¨C through open bidding ¨C and through port policy objectives that introduce new operators as the port expands.  Governments should also encourage competition between ports to attract business within the country, as has happened in northwest India.

The report states these reforms would be most effective if carried out together, rather than piecemeal.