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Container Port Performance Index: Some Thoughts for Action

and , October 12, 2022, 0 Comments

container-port-performance-index-marketexpress-inIn the times when supply-chain resiliency is an important pillar of any nation’s external economic engagements, the release of the Container Port Performance Index Report 2021 is not only timely but is indeed eye-opening for all stakeholders involved in logistics planning and execution.

CPPI is a comparable index of global container port performance of key ports in the world and is intended to serve as a reference point for national governments, port authorities and operators, development agencies, supranational organizations, various maritime professionals, and other public and private stakeholders in trade, logistics, and supply chain services of a country.

India’s policymakers cannot be oblivious of these maritime performance indicators, especially when the report cites a very low rank to Indian container ports, Pipavav (26), Mundra (48), JNPT (54), Hazira (68), Chennai (79), Krishnapatnam (95), Visakhapatnam (98) and Cochin (99) among the top 100 rankings in the index. It is based on total port hours per ship call, defined as the elapsed time between when a ship reaches a port to its departure from the berth having completed its cargo exchange. Container Port Performance Index (CPPI), has been produced by the Transport Global Practice of the World Bank in collaboration with the Maritime, Trade and Supply Chain division of S&P Global Market Intelligence. The CPPI index and underlying data is aimed to identify gaps and opportunities for improvement that would benefit all key stakeholders in global trade, including governments, shipping lines, port, and terminal operators, shippers, logistics companies, and consumers. 

The report challenges us to deliberate on the ways and means to improve Indian container ports. India’s maritime trade is more than 90% of the total and the performance of maritime ports is a crucial element in the cost of international trade. Unfortunately, ports and container terminals of all major and non-major ports in India are often sources of shipment delays, supply chain disruptions, additional costs, and reduced competitiveness of Indian goods in the international markets. The rank of Indian ports in the CPPI index indicates that Indian container ports are characterized by limitations in spatial and operating efficiency, limitations in maritime and landside access, inadequate oversight, and poor coordination between the public agencies involved, resulting in a lack of predictability and reliability. The poor performance of container ports and terminals has its “blue-chip effect” i.e., demand changes at the end of a supply chain lead to inventory fluctuations along the entire supply chain operations which could disrupt the entire schedule.

The ranking of Indian container ports & terminals provides us guidance on how poor performance of container terminals can increase the cost of imports and exports, reduce the competitiveness of Indian goods, and inhibit participation in GVCs, economic growth, and poverty reduction instead of facilitating the external trade. The CPPI index identifies the two areas to improve upon, leveraging smart digital technologies and using green fuels for maritime operations which have been the key facilitating factor in the high port performance of high-ranked ports, especially from the Middle-East Region. 

In the context of the above, let us deliberate how India can convert its core maritime problems into opportunities, firstly, Indian container ports face an infrastructure problem with the ever-increasing size of container vessels, growing container trade volumes, and associated challenges such as shortages of containers. Furthermore, the container ports are stressed with issues of navigable draft and small port sizes. Efforts should be made to deepen and widen port waters. Secondly, we need to plan better for our future needs, considering India’s external economic engagements are growing with exports and imports touching a record high in 2021-22. Growing trade volumes puts pressure on Indian container ports since they are often unable to accommodate the number of vessels required to keep-up with the increased shipping activity and traffic.  

The growing container trade volumes also cause many other issues for ports, for instance, when a vessel arrives at the dock, certain resources and crew must be available. If the port does not have an accurate Expected Time of Arrival (ETA) for each ship, they are wasting resources since crewmen may be waiting around or simply unprepared when the vessel arrives.  Thirdly, the Indian container ports have been unable to keep up with demands, resultantly, container terminals are not able to take advantage of evolving economic opportunities. Indian container ports are unable to accommodate larger vessels and higher cargo volumes thus losing maritime business to nearby transshipment hubs.

Fourthly, the evolving national, inter-governmental and international regulatory compliance is an important issue to address. Indian container ports should rise to the occasion to comply with different and proliferating maritime regulations regarding the environment and water quality by using smart technologies. Indian container ports must comply with the evolving regulations, especially on safety & security, decarbonisation, and environmental compliance.

Fifthly, the container ports are easy targets for miscreants and the jobs of those involved in maritime trade can be dangerous. Along with addressing the external security threats, the container ports must imbibe global best practices on operating large equipment, gantry cranes, heavy stevedoring machinery, and dealing with HAZMAT cargo such as sulfuric plants which could potentially be a source of toxic gases.  Sixthly, sustainability and environmental concerns are becoming more important. India is at the forefront of limiting CO2 gases under the Conference of Parties Conference, under the aegis of the UNFCC (Paris Agreement).  Indian container ports must be prepared to decarbonize their maritime operations and contribute to taming harmful gases for our environment. India can leverage ‘Green Hydrogen’ widely termed as the fuel of the future by India’s policy planners. Indian container ports must not only be focussed on their economic goals but should also shoulder the environmental and social responsibilities bestowed upon them with engagement in the maritime business. 

Point seven is the most important as enhanced use of digital technologies in container port operations can be a game changer provided Indian ports should embrace digital transformation, i.e. each stakeholder connected digitally and communicates and coordinates digitally. The digital transformation in container port operations can make ports and vessels more productive, predictive, autonomous, transparent, and cost-effective.

Finally, the container ports must garner the support of the local community as envisaged under India’s ambitious ‘Sagarmala Program’. For sustainable trade to happen, the container ports in India must work coherently to end the key challenges associated with port development which are pollution, environmental disruption, protection of fauna & flora (mangroves), hinterland connectivity, and area development, optimal use of coastal land which can help them garner greater community support. These steps will help Indian container ports not only improve upon their rank in CPPI but be a pivotal stakeholder in India’s growth story. 

The opinions expressed in this article are the author’s own and do not reflect the view of MarketExpress – India’s first Global Analysis & Sharing Platform or the organization(s) that the author represents in his personal capacity.