by Amal Chakravorty

There is a trend all over the world to decentralise direct government control and to place the ports on a more commercial footing. The reason behind this urge to privatise the ports is the hope that commercialisation will improve the levels of efficiency, productivity, reduce the cost of maintaining a port and above all the size of public sector financial commitment. Spending by developing countries on infrastructure investment is derived from the government tax revenues. This is a huge burden on public finance. Commercial operations and competition can effectively enable the government to deliver the services needed to meet social objectives, such as economic growth and poverty reduction.

Growing demand

The increasing involvement of the private sector in the management of port facilities stems from a growing demand for expansion and modernisation of port infrastructure to improve handling efficiency and to accommodate larger ships and cargo flows. The potential of the lucrative container trans-shipment business for strategically located, well equipped and efficiently managed hub ports has provided strong incentives to invest in port modernisation. The economies of scale in the shipment of cargo has led to the consolidation of distribution and logistics companies and to the emergence of global players. These shipping companies hold considerable market power related to the adjustment of port facilities to meet their specific needs. Similarly, global players are also emerging in the field of terminal operations, with a few operators expanding across regional boundaries.

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Posted by pichu at July 13, 2006 8:09 AM