Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation (COMCEC) Evaluating the Ownership, Governance Structures and Performances of Ports in the OIC Member Countries COMCEC COORDINATION OFFICE January 2015 Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation (COMCEC) Evaluating the Ownership, Governance Structures and Performances of Ports in the OIC Member Countries COMCEC COORDINATION OFFICE January 2015 This report has been commissioned by the COMCEC Coordination Office to Dr. Khalid BICHOU from Bichou Consulting. Views and opinions expressed in the report are solely those of the author(s) and do not represent the official views of the COMCEC Coordination Office or the Member States of the Organization of Islamic Cooperation. Excerpts from the report can be made as long as references are provided. All intellectual and industrial property rights for the report belong to the COMCEC Coordination Office. This report is for individual use and it shall not be used for commercial purposes. Except for purposes of individual use, this report shall not be reproduced in any form or by any means, electronic or mechanical, including printing, photocopying, CD recording, or by any physical or electronic reproduction system, or translated and provided to the access of any subscriber through electronic means for commercial purposes without the permission of the COMCEC Coordination Office. For further information please contact: COMCEC Coordination Office Necatibey Caddesi No:110/A 06100 Yücetepe Ankara/TURKEY Phone : 90 312 294 57 10 Fax : 90 312 294 57 77 Web : www.comcec.org Table of Contents Executive Summary ................................................................................................................................................ 1 1. Introduction ....................................................................................................................................................... 3 1.1 Study Background .............................................................................................................................................. 3 1.2 Scope of the Study .............................................................................................................................................. 3 1.3 Approach and Methodology........................................................................................................................... 4 1.4 Structure of the Report .................................................................................................................................... 5 2. Introduction to Port Systems ....................................................................................................................... 7 2.1. Facilities and Services ...................................................................................................................................... 7 2.2. Terminal Operations ......................................................................................................................................... 8 2.3. Hinterland and Logistics Extensions ...................................................................................................... 10 2.4. Ownership and Institutional Structures ............................................................................................... 11 3. Market Structure and Competitive Performance .............................................................................. 15 3.1. Sector Capacity and Services ...................................................................................................................... 15 3.1.1. Maritime Transport ........................................................................................................................................ 15 3.1.2. Ports ...................................................................................................................................................................... 18 3.2. Sector Developments and Trends ............................................................................................................ 20 3.2.1. Shifts in Trade Patterns and Increased Share of South-South Trade ....................................... 21 3.2.2. Larger Ships and Cargo Concentration .................................................................................................. 21 3.2.3. Containerisation, Automation and Technological Change ............................................................ 22 3.2.4. Global Consolidation Strategies ................................................................................................................ 22 3.2.5. Developments in International Maritime Infrastructure .............................................................. 23 3.2.6. Focus on Performance Differentials and Competitive Benchmarks ......................................... 23 3.2.7. Emphasis on Port Safety and Security ................................................................................................... 23 3.2.8. Relationship to Landside Logistics, Hinterland and City-Interface .......................................... 24 3.2.9. Port Environmental Concerns and Climate Change Impacts ....................................................... 24 3.2.10.Ports Skills Gap ................................................................................................................................................. 25 4. Ownership Structure and Institutional Performance ...................................................................... 27 4.1. Organisation of the Port Sector in OIC countries .............................................................................. 27 4.1.1. The Landlord Model ....................................................................................................................................... 27 4.1.2. The Public Service Model ............................................................................................................................. 28 4.1.3. The Hybrid Landlord-Public Service Model ........................................................................................ 28 4.1.4. The Autonomous Model ............................................................................................................................... 29 4.1.5. Other Models ..................................................................................................................................................... 29 4.1.6. Institutional Structure of Port Terminals under Study .................................................................. 30 4.2. Private Sector Participation and OIC Ports .......................................................................................... 31 4.2.1. Forms of Private Sector Participation in Ports................................................................................... 32 4.2.2. Economic Benefits of Private Sector Participation ........................................................................... 35 4.2.3. Private Sector Participation in OIC Ports .............................................................................................. 36 4.3. Analysis of Institutional Port Performance ......................................................................................... 38 4.3.1. Institutional Structure and Fragmentation.......................................................................................... 38 4.3.2. Ownership and Service Commercialisation ......................................................................................... 40 5. Regulatory Framework and Governance Performance................................................................... 43 5.1. Regulatory Performance ................................................................................................................. 43 5.1.1. Technical Regulation...................................................................................................................................... 43 5.1.2. Economic Regulation ..................................................................................................................................... 47 6. Operational Structure and Port Efficiency ........................................................................................... 53 6.1. Methodology and Data .................................................................................................................... 53 6.1.1. Methodology ...................................................................................................................................................... 53 6.1.2. Data and Variables .......................................................................................................................................... 54 6.2. Efficiency Results and Analysis ..................................................................................................... 55 6.2.1. DEA Benchmarking Analysis ...................................................................................................................... 56 6.2.2. Productivity Change Analysis .................................................................................................................... 64 6.3. Analysis of Logistical Inefficiency ............................................................................................................ 71