Can regional ports be more efficient?
The level of efficiency of ports impacts the costs of import and export, thereby affecting the competitiveness of national economies. Port efficiency also impacts growth in price levels and, hence, the level of poverty. The main trends in the Caribbean maritime sector are the increasing vessel sizes and consolidation among shipping lines. These trends are expected to continue.
In fact, double transhipment moves inside the Caribbean Basin (which already occur) are likely to become more prevalent as shipping lines aim to optimize use of the larger vessels. In order to do so, shipping lines will call only at several large and conveniently situated ports with the largest vessels.
Consequently, medium-sized vessels will serve several regional hubs, and small vessels will be employed to serve small regional ports. As such, regional transshipment activity will likely increase and a new regional hub would possibly emerge among the Organisation of Eastern Caribbean States (OECS) ports.
The OECS are small island economies with limited growth potential. Most OECS countries are therefore advised to optimise the current operations within their means. The continental ports of Belize, Guyana and Suriname need to improve nautical accessibility and the quality of infrastructure. As these continental ports face high growth expectations, there is a need for the upgrade of the infrastructure facilities and nautical accessibility.
With higher volumes, the ports should aim to capture the effects of economies of scale through larger vessel sizes and consolidated operations. The larger island ports of Bridgetown and Port of Spain need to focus on labour restructuring and attracting the private sector. Both ports have substantial volumes which would generate interest among private sector parties.
Currently the efficiency of these ports is mainly hampered by traditional labour practices. The implementation of port reform, however, should be guided by a long-term vision of port development in the respective countries. The port of Nassau represents a mature island port. The port is functioning highly efficiently. This could warrant the shift of additional responsibilities to the private sector.
It is recommended that policy makers take into consideration the regional and competitive environment. Port development projects are capital intensive and require prudent investment decisions. It is therefore crucial to assume a regional perspective and to understand the regional dynamics and the role of the respective ports. The highly connected OECS ports should especially consider a regional perspective strategy.
Allow the port organisations a higher degree of autonomy. Political interference is found to limit the port authority’s ability to operate efficiently or to establish a long-term vision. A higher degree of autonomy can be realised through private sector involvement.
The ports of Paramaribo and Nassau are prime examples of private sector involvement leading to a high degree of efficiency. Recognise the need for labour restructuring and work towards a viable long-term solution. In numerous ports, labour is still functioning under traditional conditions devised in the breakbulk era.
High labour costs weigh heavily on the port operations. This situation is unsustainable in the long term. It is recommended that policy makers move towards a long-term solution. Embrace a long-term vision concerning port development. In a number of countries, there is no long-term port development vision that is embraced by the various stakeholders and being executed. The lack of a common long-term vision hampers development as investors are uncertain of the future.
Information taken from the new Caribbean Development Bank study Transforming The Caribbean Port Services Industry: Towards The Efficiency Frontier.