Port Efficiency: Meaning and Issues around Port Efficiency in India

A port works not only as a node in the entire transportation network but also as an economic unit that provides a transfer service. In competitive environment, the ports not only compete on the basis of this service amount called “throughput” but also on their location and operational efficiency.

Apart from the throughput, the two key operational efficiency metrics include “turnaround time” and “berth productivity”.

Turnaround time

The turnaround time refers to the duration of a ship’s stay at a port calculated from its time of arrival to time of departure. The lesser the turnaround time, better is port efficiency. Thus, one of the policy goals in port development is to reduce turnaround time.

Berth productivity

In all major ports there are many docks to birth the ships to load and unload them. However, if there are many ships, then there may not be enough docks to berth them and some of the ships may need to wait outside the docks. Thus, if there are not enough docks available, the ships will need to wait and this would increase the turnaround time. Thus, less number of docks would mean less berth productivity and more turnaround time. The policy challenge in port development is thus increase berth productivity by making available more docks, which would further reduce the turnaround time.

Port Efficiency in India

There is no doubt that the average turnaround time for vessels in all South Asian container ports has come down in last few decades. But there are regional and intra-national variations. For example, the vessels in Chittagong and Kolkata take much longer time than the Colombo or Cochin ports. The below table shows the turnaround time of various ports in South Asia since 2000 till 2012.

We note here that the average turnaround time of all 12 major ports of India has reduced from 2.61 days to 2.08 days in last five years. The average turnaround time in major Indian ports was 4.38 days in 2009-10 and was relatively higher in some ports like Paradip, Kolkata, Vizag and Kandla.

As discussed above, lowering of the turnaround time shows sharp improvement in operational efficiency but still India’s most ports, these ports are still trailing behind benchmarks of some of the major ports such as Port Klang, Singapore, Rotterdam and so on. The 2014 figures are shown below:

The two key reasons for higher turnaround time and thus less efficiency of the Indian ports include lower levels of technology & lack of coordination amongst stakeholders. To improve the efficiency, the government had hired a benchmarking consultant and out of the total 116 initiatives recommended, some 70 have been implemented so far and remaining will be implemented till 2019. At the same time, we note that viability of the ports is a major issue which hampers implementation of major initiatives. Most of the ports on Eastern peninsula are struggling for profits.