What Makes a High Performer?
The World Bank puts immense effort into its Container Port Performance Index. The index, compiled annually with the help of S&P Global Market Intelligence, ranks ports based on how much time a container ship spends, on average, from its arrival at the pilot station to its exit beyond port limits after discharging and loading cargo. This is not a simple undertaking, as the authors need to adjust for differences among ports in average vessel size, the average number of container moves per port call, and other factors. To no one’s surprise, Yangshan Port near Shanghai, the world’s largest container port, ranks first in the index for 2023, released June 4. More bewildering, the largest U.S. port, Los Angeles, ranks 375, some 155 places behind Port au Prince, in Haiti, and more than 300 places behind Beirut.
The purpose of this exercise, according to the report, “is to pinpoint areas for enhancement.” The authors contend that “development of high quality container port infrastructure operating efficiently has been a prerequisite for successful export-led growth strategies.” Their work seems intended to encourage public officials to invest in automation to boost port efficiency and move higher in the ranking.
I’m no expert in port management, but I confess to misgivings about this approach. At one major port I visited recently, a highly automated terminal moves fewer containers per crane per hour than a less automated terminal nearby. At another, a manager acknowledged that his terminal had automated too many operations and would have been better off doing less. A third is staggering under the high fixed cost of software to manage equipment that operates far below capacity. A recurrent theme in my conversations with port and terminal managers is that automation of the various tasks in a port needs to be pursued selectively. New equipment and software do not always lower costs or speed up supply chains.
The danger of the Container Port Performance Index is that public officials, eager to raise their port’s ranking, will encourage investments that don’t make financial sense. The authors acknowledge that their index is not the only way to evaluate port performance. One metric they might incorporate is return on investment. The ports that deserve high rankings are not those that have spent the most to become more efficient, but those that have spent wisely.
Tags: containerization, ports, productivity