Measuring efficiency of Indian major ports for development of performance index

Abstract

The growth trends of Indian economy have attracted business investments resulted in growth of trade volumes. With the increase in trade volume shipping has become the natural option for foreign trade as it has advantages of being safe and cost effective in movement of heavy cargo between long distance destinations. And the entire shipping business is heavily depended on existence of vibrant ports that enable smooth connectivity between the sea and land. Existence of efficient ports that maintain high level of infrastructural setup results in swiftness in handling cargo. Thus, the working of port sector has been a matter of interest for both the governments and industry alike. Sea ports have been a source of international trade from ancient times when the European merchants traded with Asian counterparts. The discoveries of sea routes and trade destinations have given opportunity for evolution of ports across the world, including India, which has ably helped exchange of goods across the world. Growing demand of port sector mandated them to perform better in the competitive markets. This has led to a focus on evolution of port performance indicators proposed by UNCTAD. Soon, experts in industry as well as researchers working on port performance have started assessing efficiency and productivity of world ports on the basis of available indicators. On the other hand, privatisation has been considered as a viable mode to improve port efficiency and was started during the second half of 20th century by most countries. Advent of private projects has resulted in efficiency gains in areas of service provisions, operations, and financials at most of these ports. The process of private participation at major ports in India has initiated during the middle of 1990’s with an aim to improve their efficiencies. However, it is imperative to know if the ports have improved in their efficiency and productivity levels due to privatisation. Taking as a cue this research framed the following business problem. Reforms in the form of private participation at major ports of India were started in 1995-96 (Maritime Agenda 2020) to improve their performance. In spite of the reform program, the port sector is still struggling with lower efficiencies leading to business losses in industries that are directly and indirectly depended on it. An attempt to gather available literature on port efficiency and productivity has initiated with a few key words such as ‘port performance’, ‘port efficiency’, ‘port productivity’, ‘port reforms’, etc. was made. A total of over 250 research works from over 25 journals of international repute were gathered. The gathered research works are segregated broadly into themes of ‘port performance indicators’, ‘port efficiency – World ports’, ‘port efficiency – Indian ports’, ‘port productivity – World ports’, ‘port productivity – Indian ports’, ‘port sector reforms’. The review of literature brought out certain outcomes that port performance can be assessed through operating and financial indicators with a backdrop of physical infrastructure at individual port; research studies assessing port efficiency either considered limited timeframes or limited number of variables. Existing studies also reveal that for improvement in efficiency and productivity, privatisation need to be supported with strong regulatory and economic policies;. The overall gaps traced from literature review covering themes include, existence of limited research works covering holistic performance of ports and non-existence of studies covering the reform period.