May 16, 2017 (LBO) – South Asia could grab a bigger share of international trade, but inefficiencies in its ports threaten to hinder progress and stop it from matching other regions like East Asia, a new World Bank report shows.
The report recommended South Asian countries, Bangladesh, India, Maldives, Pakistan, and Sri Lanka, to build greater private sector participation, improve governance of port authorities and create more competition within and between ports.
“Experience from across the globe, including the South Asian experience, indicates that a comprehensive approach that tackles several interrelated angles yields greater benefits than isolated improvements,” said Karla Gonzalez Carvajal, South Asia Manager, Transport and ICT Global Practice at the World Bank.
While some South Asian countries took great strides to improve performance at container ports amid a worldwide boom in sea-borne trade, the region as a whole has lagged and its ports are seen as expensive and slow, the report said.
“Specifically Colombo in Sri Lanka, the fast-expanding Mundra and Jawaharlal Nehru Port in India and Port Qasim in Pakistan – improved the use of their facilities in the decade after 2000,” said the report, Competitiveness of South Asia’s Container Ports – a Comprehensive Assessment of Performance, Drivers and Costs.
“While India’s Mumbai and Tuticorin fell behind. Chittagong (Bangladesh) and Kolkata (India) had the longest vessel turnaround times in the region.”
The study of the status, structure and deficiencies of the region’s container ports found that if ports in Bangladesh, India and Pakistan had been as efficient as those of Sri Lanka it could have cut shipping costs by up to nearly 9 percent, boosting the value of the region’s exports by up to 7 percent.
As China is shifting out of labor-intensive sectors such as apparel, South Asia has the potential to capture a growing share of the global market.
This may in turn attract more foreign direct investment, increase trade and create new jobs for South Asia’s growing labor force.
“But tapping into these opportunities will require removing bottlenecks in transport logistics, last mile connectivity, and ports in particular, to reduce the high logistics costs in the region” said Jose Luis Irigoyen, senior director, Transport and ICT Global Practice at the World Bank.
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 added.
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.
“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.”