The economics of port transport: improving seaport

TRAN-1036. Business Research Project (Maritime MBA) -2010

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THE ECONOMICS OF PORT TRANSPORT: IMPROVING SEAPORT FACILITIES IN BANGLADESH - A CASE STUDY.

RAZON CHANDRA SAHA

2010

The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 1


-----------------------------------------------------------------------------------------------BUSINESS RESEARCH PROJECT (MARITIME MBA) - TRAN-1036-M01-2010

The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study.

Razon Chandra Saha (Student ID. 000575867) 2010 Supervisor: Professor Sarah Palmer Greenwich Maritime Institute University of Greenwich London , UK



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Declaration

I hereby declare that this work ( Dissertation. The Economics of Port Transport : Improving Seaport Facilities in Bangladesh- A Case Study) has not been previously accepted in substance for any degree and is not being concurrently submitted by another candidate or any other

persons

for

obtaining

any

degree

or

research

jobs.

I further declare that this dissertation is being submitted in partial fulfilment of the requirements for the degree of MBA in Maritime Management and it is the result of my own independent work except where otherwise stated. Other sources are acknowledged by explicit references

as

per

standard

referencing

policy.

A

bibliography

is

appended.

Finally, I hereby give consent for my dissertation to be available for photocopying and inter library loan, and for the title and abstract to be made available to outside organizations.

Declared By

Razon Chandra Saha MBA in Maritime Management, Session- 2009-2010, ID# 000575867. Greenwich Maritime Institute, University of Greenwich, London, UK.



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Acknowledgements This dissertation is a artefact of two years of effort and a labour of love on the part of many especially my supervisor Professor Sarah Palmer . In the beginning of my desire for studying MBA in Maritime Management in 2009, application submitted to GMI for this course and specific research for developing Bangladesh maritime industry. Fortunately, I had received an offer from the university and enrolled for the session 2009-2010. Finally, I had conducted the theoretical part and got approval for this research work. In this connection, theoretical or pure research conducted from June 01 2010 to August 29 2010 in UK and practical or applied research completed from September 01 2010 to December 03 2010 in Bangladesh. I am happy to acknowledge those people who assisted with shaping the contributions for developing this work. I am greatly indebted to Professor Sarah Palmer, Emeritus Professor of Maritime History at the University of Greenwich as my supervisor for her sincere cooperation to complete the research successfully. I do also convey my best regards and gratitude to John Whiteley of Business School at the University of Greenwich for his valuable support and favours to me always. I also express my special thanks to Suzanne Louail, Administrator of Greenwich Maritime Institute at the University of Greenwich for her big support, helpful information and valuable suggestions in preparing this report. I would like to dedicate this work to my lovely father Debesh Chandra Saha who expired during my research on September 25 2010 for his supporting role for taking higher shipping education in UK.

RAZON CHANDRA SAHA.



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TABLE OF CONTENTS CHAPTER 1 INTRODUCTION.............................................................11-14 CHAPTER 2 CONTEXT: COUNTRY PROFILE................................15-31 2.1 Bangladesh: An Overview................................................15-18 2.2 The Bangladesh Economy................................................19-22 2.3 The Transport System.......................................................22-25 2.4 Bangladesh Seaports- Existing and Proposed..................26-31 CHAPTER 3 CONTEXT: DEMAND AND SUPPLY IN PORT TRANSPORT...........................................................................................32-37 3.1 Demands for Port Services at National Level...............................32-33 3.2 Demands for Bangladesh Port Services at Regional Level................34 3.3 Demands for Bangladesh Port Services at International level......34-35 3.4 Supply of Port Facilities in Bangladesh...................................35-37 CHAPTER 4 RESEARCH OBJECTIVES .......................................38-39 CHAPTER 5 LITERATURE REVIEW ...........................................40-66 5.1 International Trade and Economic Growth....................40-43 5.2 The Logistics Chain........................................................43-46 5.3 Shipping Trade and International Business....................47-52 5.4 Port- The Centre of Logistics..........................................52-54 5.5 Infrastructure and Port Development..............................54-61 5.6. Seaport Development in Bangladesh.............................61-65 5.7 Conclusion .....................................................................65-66 The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 5


-----------------------------------------------------------------------------------------------CHAPTER 6 RESEARCH METHODOLOGY..............................67-75 6.1 Research Orientation......................................................67-70 6.2 Methodology..................................................................70-71 6.3 Data Collection...................................................................72 6.4 Data Compilation................................................................72 6.5 Research Questions.......................................................73-74 6.6 Ethical Issue..................................................................74-75 6.7 Limitation............................................................................75 CHAPTER 7 RESULTS OF PRIMARY RESEARCH.................76-83 7.1 Port Success ..................................................................76-77 7.2 Barriers to Port Development........................................78-79 7.3 Derived Demand of Port Transport...............................79-80 7.4. Port Privatization...........................................................81-82 7.5. Miscellaneous...................................................................83 CHAPTER 8 ANALYSIS...............................................................84-90 CHAPTER 9 CONCLUSION........................................................91-92 CHAPTER 10 RECOMMENDATIONS.......................................93-95 APPENDIX-1. SURVEY STATISTICS..............................................96 APPENDIX-2. TIME TABLE.............................................................97 REFERENCES................................................................................98-112 BIBLIOGRAPHY..........................................................................113-115



-----------------------------------------------------------------------------------------------LIST OF TABLES Table 01. The global outlook –GDP edited by author ............................................................19 Table 02. Basic economic facts of Bangladesh........................................................................20 Table 03. Entry Points of Bangladesh......................................................................................25 Table 04 .Performance of Chittagong Port...............................................................................27 Table 05 . Seaport Services from Bangladesh developed by author........................................32 Table 06. Port Transport facilities in Bangladesh compiled from various sources by author.35 Table 07. Listed Off-dock or ICD at Chittagong Custom House and Chittagong Port.........36 Table 08. Models of Port Organization....................................................................................55 Table 09. Research Participants List .......................................................................................96 Table 10. Research Schedule...................................................................................................97

LIST OF figures Figure 01 (Map) World map showing the location of Bangladesh........................................15 Figure 02 ( Map) Political Map of Bangladesh ....................................................................16 Figure 03 ( Graph) Bangladesh foreign exchange reserve up to June 2009 .........................19 Figure 04 ( Diagram) Banglaadesh development diamond .................................................21 Figure 05 ( Chart) Bangladesh Export and Import Levels.....................................................21 Figure 06 ( Diagram) Bangladesh Economic Ratio...............................................................22 Figure 07 (Diagram) Transport Systems of Bangladesh developed by author......................23 Figure 08 ( Map) Map of Bangladesh Transport Network ...................................................24 Figure 09 ( Picture) Views of Chittagong Port .....................................................................26 Figure 10 (Picture) Mongla Port ..........................................................................................28 Figure 11 ( Picture) Proposed deep seaport at Sonadia in Chittagong .................................29



-----------------------------------------------------------------------------------------------Figure 12 ( Diagram) Concept of Deep seaport financial structure........................................30 Figure 13 ( Picture) Private Off dock in Chittagong ..............................................................31 Figure 14 (Chart) Export and Import of Bangladesh by sea ..................................................33 Figure 15 ( Graph) World Seaborne Trade .............................................................................48 Figure 16 ( Graph) International Seaborne Trade, selected years ..........................................49 Figure 17 ( Diagram) Characteristics of Sea Transport Services ..........................................49 Figure 18 (Diagram). Port capacities and demands ................................................................50 Figure 19 ( Diagram) Intermodal Transport ..........................................................................53 Figure 20 (Diagram). Delphy survey on port effectiveness ...................................................57 Figure 21 ( Diagram) Port performance components ............................................................59 Figure 22 (Diagram). Performance objectives in operations .................................................60 Figure 23 ( Chart) Maritime Profile of Bangladesh ...............................................................62 Figure 24 ( Diagram). Diagram showing the Research Methodology used..........................70 Figure 25 (Diagram). The evolution of a port .......................................................................85 Figure 26(Diagram). Factors constraining port development ................................................86 Figure 27 (Chart) Advantages of Port Privatization ...............................................................88 Figure 28 ( Chart) Disadvantages of Port Privatization .........................................................89

abbreviations A.D. Anno Domini. Year of Lord Jesus. ADB. Asian Development Bank. ASEAN. Association of Southeast Asian Nations. BBS. Bangladesh Bureau of Statistics. BHCLONDON. Bangladesh High Commission, London. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 8


-----------------------------------------------------------------------------------------------BOO. Build Own and Operate. BOT. Build Operate and Transfer. CBA. Collective Bargaining Agent. CPA. Chittagong Port Authority. CPI. Cost Performance Index. EPZ. Export Processing Zone. EU. European Union. FDI. Foreign Direct Investment. GMI. Greenwich Maritime Institute. GDP. Gross Domestic Product. GNI. Gross National Income. IAPH. International Association of Port and Harbours. ICD. Inland Container Depot. IMO, International Maritime Organisation. INGO. International Non-governmental Organisation. IT. Information Technology. ITF. International Transport Forum JICA. Japan International Cooperation Agency. JCRA. The Jersey Competition Regulatory Authority. KPI. Key Point Installation. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 9


-----------------------------------------------------------------------------------------------LCL. Less than one Container Load. LDC. Least Developed Country. MDGs. Millennium Development Goals. MPA. Mongla Port Authority. NAFTA. North American Free Trade Agreement. NBR. National Board of Revenue, Bangladesh. OECD. Organisation for Economic Cooperation and Development. PPP. Public Private Partnership. RMG. Ready Made Garment. SAARC, South Asian association for Regional Cooperation. SCM. Supply Chain Management. SOT. Supply, Operate and Transfer. TEU. Twenty Foot Equivalent Units. UK United Kingdom. UNCTAD, United Nations Conference on Trade and Development. USAID. United States Agency for International Development. VAT. Value-added Tax. WB. World Bank. WTO. World Trade Organisation.



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CHAPTER 1 INTRODUCTION Bangladesh is a least developed country but is an emerging maritime power in South Asia. It has huge potential because of recent industrialization of RMG, pharmaceutical and other products. Bangladesh has the advantages of a long coastline, with two natural seaports, well located and facing out into South East Asia. USAID (2009) stated that the world growth is driving by developing and transition economy for their basic resources of land and labour like Bangladesh. Moreover, the quantity of import and export is growing everyday and increasing the purchase capacity by national and foreign remittance income from inside and outside of the country respectively. With (UNCTAD, 2008) over 80 per cent of world merchandise trade by volume being carried by sea, maritime transport remains the backbone supporting international trade and globalization and strong demand for maritime transport services is fuelled by growth in the world economy and international merchandise trade. WTO (2006) commented, ―As over 90% of Bangladesh's internationally traded goods are carried by sea, efficient maritime transport services, as well as auxiliary services, such as port and cargo handling services, are essential for a cost-effective business environment‖. Its large population, availability of cheap labour, natural advantages, seaport facilities and modern communication facilities with the rest of the world created the opportunity to be a big contributor to world trade. Having competitive advantages in purchasing capacity and supplier of readymade garments and other finished products also recent industrialization and doing international trade with other countries, it is becoming an attractive place for investing money for doing business. Ports are important links in the logistics chain, and thus port efficiency affects to a large extent a country‘s competitiveness (Roy and Banerjee, 2010). Port economics refers to the study of port development, which has a major role in connecting the freight and vessels. Major technological changes since 1969 affected the port productivity internationally (Couper, 1986). These included changes in the numbers of workers employed in the port, management responses, social conditions and industrial relations.



-----------------------------------------------------------------------------------------------The WB (2006) Group study identified ineffective and poorly managed infrastructure in ports as one of the main constraints in Bangladesh for developing business and reducing poverty. They concluded that at that time port facilities were inefficient, corrupt and failing to keep up with demand, raising shipping costs and reducing competitiveness. Transport efficiency enhancement is one tactic that bring into play to improve the potential competitiveness of a port and would provide a genuine opportunity to lower transportation costs and improve environmental performance to help build a sustainable logistics distribution system (Wu and Lin, 2008). In Bangladesh, the maritime dependency or sea access facilities demand factor is 30% and the port sector contributes 35-40% budgetary revenue through the earnings of export-import taxes, excise duties, VAT and others ( Khanam and Misir,2008). Overall, the economy of Bangladesh is highly dependent on the transport systems and performance of the seaports. The proper and effective interconnection between seaport and users premises may decrease the transport cost as well as decreasing the value of commodity. Only the excellent operation efficiency of port and heavy infrastructure facilities of port and intermodal systems may attract the world trader to do business. Bangladesh is a member of the World Bank and striving to develop her transport system with its help. The WB (2008) Group‘s transport business strategy for 2008-2012 made the slogan for ―Safe, Clean and Affordable transport for development‖. They believe that ports serve in a part but ―To handle increasing volumes of cargoes, and of containerised cargoes in particular, the Bank Group‘s partner countries need to ensure the availability of wellfunctioning ports‖ (p-5). In addition, Bhattacharya and Hossain (2006) added that ―despite trade volume increase, the country‘s largest seaport, Chittagong, suffers from insufficient space management, shortage of handling equipment and lack of through-transit facilities for containers. These bottlenecks cause serious delays and traffic congestion. It also noted, however, ― the port authority has been taking various initiatives to improve the port‘s service which are considerate to be inadequate‖.



-----------------------------------------------------------------------------------------------By providing logistics facilities, some countries of the world, for example Singapore, have developed strong economies. Due to its geographical advantages, Bangladesh has the potential to develop such facilities. Transportation plays a vital and significant role in business. Moreover, its significance in international business is undoubtedly higher than other activities of a country. International trade is highly dependent on shipping business and it is influenced by the activities of port authority. Many countries of the world are not possessors of a maritime sector. Therefore, the proper utilization of shipping trade is welcome and economic to the port users. With the improvement of the activities of shipping business, international trade may be improved. Globalization & liberalization of trade will increase the free movement of goods among the nations in future resulting in intense competition in the market, which will be challenging for every nation but especially for less developed countries like Bangladesh. Therefore, the activities of port authorities must be updated and efficient to face that challenge and thus to make a better existence in the area of the trade. In light of the increasingly competitive environment, many ports have turned to privatization especially in developing countries in Asia characterized by shortage of capital and limited access to technology (Tongzon,1995). Due to heavy expansion of domestic trade and opportunity for international maritime trade, Bangladesh has to develop its seaports. Maritime transport depends on the facilities of seaports, which will attract the ship-owner, trader, and other stakeholders or users to do business. Seaports are the best source of earning foreign exchange. The country has a large population and having good opportunity to employ them in private and public transport department by providing maritime education and training to cope with the port sector. The revenue board will get more tax from port, shipping companies, agents and others. Unemployment will be decreased by creating jobs in the maritime and transport sector. This research aims to find out some possible solutions and recommendations for developing the Bangladesh port industry and set out a timely and economical strategy to enable the industry to play a key role in national development. It will try to explore the main factors that are useful to create a successful port and enable it to meet the growing demand for maritime access in South-east Asia and to identify barriers to the development of international seaports in Bangladesh.



-----------------------------------------------------------------------------------------------After this introduction, country profile is added in Chapter 2 for giving a short description of Bangladesh along with logistics assessment, existing and proposed port facilities. Chapter 3 describes the demand for and supply of port facilities in Bangladesh in relation to maritime transport supply and demand and its importance in a national and international context. Chapter 4 features the research objectives of the project especially why this research is doing. What are the basic aims of the research that are highly related with the title of the project and purpose of the research is named Research Objectives before the Literature Review. Chapter 5 reviewed the literature of port transport, logistics and seaport development where importance, competitiveness and performance of seaport discussed for understanding the port business and its related activities for developing the country. For a good research, methodology is playing a key role to bring the data for analysing, interpreting and taking a decision. In this research, qualitative and quantitative both methods are used for reaching a decision or making recommendations for seaport development in Bangladesh, which are structured in Chapter 6. Furthermore, Chapter 7 compiled the collected data of primary research from the participants and participants answer of selected questions. Here, the related answer quoted directily for getting real scenario of Bangladesh port transport. Compare and contrast between literature review and statements from interviewed are discussed in Chapter 8 as Analysis. These are the output of the research which helped to recommend for improving seaport facilities in Bangladesh in Chapter 10.

Finally, a

conclusion is drawn in Chapter 9 by reviewing all research activities from the beginning to the analysis.



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CHAPTER 2 CONTEXT: COUNTRY PROFILE This chapter is focused on Bangladesh for providing a brief idea of the country. The reader will get country overview, economy, transport systems and seaport facilities (Existing and Proposed) which will help to understand the position of Bangladesh as maritime nation.

2.1 Bangladesh: An Overview

Figure 01 (Map) World Map showing the location of Bangladesh ( BHCLONDON,2010) Historical Background The history of Bangladesh is an eventful combination of turmoil and peace, as well as prosperity and destitution. It has thrived under the glow of cultural splendour and suffered under the ravages of war. The territory now constituting Bangladesh was under the Muslim rule for over five and half centuries from 1201 to 1757 A.D. Then, it was ruled by British India, after the defeat of the last sovereign ruler , Nawab Sirajuddowla , at the battle of Palashi on the fateful day of June 23,1757. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 15


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The British ruled over the entire Indian subcontinent including this territory for nearly 190 years from 1757 to until Britain withdrew in 1947. During that period, Bangladesh was a part of the British Indian province of Bengal and Assam. With the termination of the British rule in August 1947, the subcontinent was partitioned into India and Pakistan. It remained so about 24 years from August 14 1947 to March 25 1971. It appeared on the world map as an independent and sovereign state on December 16, 1971 following the victory at the war of liberation from March 25 1971 to December 16 1971(BBS, 2009).

Figure 02 ( Map) Political Map of Bangladesh ( Maps,2010)



-----------------------------------------------------------------------------------------------Geography Bangladesh, officially known as The People‘s Republic of Bangladesh (BBS, 2009) lies in the north eastern part of South Asia between 20o 34‘ and 26o 38‘ north latitude and 88o 01‘ and 92o 41‘ east longitude. In size it is 1,47,570 sq km, with territorial waters of 22.2 sq. Km. The country is bounded by India on the west, north and north-east, by Myanmar on the south-east and by the Bay of Bengal on the south. At a Glance: Bangladesh ( Derived by author from BBS,2009: BHCLONDON,2010 and other sources)

a) Official Name. The People‘s Republic of Bangladesh. b) Area. 1, 47,570 sq.km. Territorial Waters 22.22 km. Economic Zone-Upto 370.40 km. in the high seas, measured from the base line. c) Population.140.6 ( as on 2006 ). d) Head of State. Mr. Md. Zillur Rahman, Honourable President of the People's Republic of Bangladesh (2010). e) Head of Government. Sheikh Hasina, Prime Minister of the Government of the People's Republic of Bangladesh ( 2010). f) Climate. Main seasons: Winter (Nov-Feb). Summer (March-June), Monsoon (JulyOct).Temp-max. 34°C. min. 8°C. Rainfall: Highest 136cm and Lowest 47cm. g) Unit of Currency. Taka.



-----------------------------------------------------------------------------------------------h) Administrative Units. Division: 6; District: 64; Police Station: 507; Union: 4484; Village: 87319. i) Life expectancy at Birth. Total population: 62.84 years. male: 62.81 years , female: 62.86 years (2007 estimated.) j) Main Minerals. Natural Gas, Lignite Coal, Limestone, Ceramic, Clay and Glass Sand. k) Main Industries. Garments and knitwear, Jute, Cotton, Textile, Tea, Paper, Newsprint, Cement, Fertilizer, Sugar, Light Engineering, Electric cables, Leather. Fish, Ship building and etc. l) Main Exports. Readymade garments and Knitwear, Jute and Jute products, Tea, Ceramic Leather and Frozen food and etc. m) Main Imports. Machinery and Equipment, Chemicals, Iron and steel, Yarn, Textiles, Food Grain and other Foodstuffs, Crude Petroleum and oil products, Scrap vessel Plastics and rubber article. n) Seaport. Chittagong , Mongla and Sonadia ( Proposed Deep Sea Port). o) Air Ports. Dhaka, Chittagong, Jessore, Rajshahi, Iswardi, Sylhet, Cox‘s Bazar, Syedpur and Barisal. p) Education. Public Universities-31, Private Universities-54, Colleges-3639, Polytechnic Institute-27, Govt Medical colleges-13, Non-govt. medical colleges-27, Secondary schools-21665, Primary schools-82020. q) Tourism. Colourful tribal life of Chittagong Hill Tracts, world‘s longest sea beach at Cox‘s Bazar, centuries-old historical sites at Dhaka , Paharpur & Mainamati Buddhist monasteries, Mohastangar, Sundarban the home of the Royal Bengal Tiger and the largest mangrove forest in the world , Tea Gardens in Sylhet, reverine life etc ( season October to March) r) Time Zone. GMT +6.00 hrs. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 18


-----------------------------------------------------------------------------------------------2.2 The Bangladesh Economy Basic Economic Facts ( BHCLONDON,2010)

Figure 03 ( Graph) Bangladesh foreign exchange reserve up to June 2009 ( BBS, 2009) Refer to the above table, Bangladesh foreign exchange reserve is increasing dramatically. Area

2008

2009

2010 ( Forecast)

2011 ( forecast)

World

1.7

-2.1

3.3

3.3

Developing

5.7

1.7

6.2

6.0

South Asia

4.9

7.1

8.2

8.7

Bangladesh

6.2

5.7

5.5

5.8

Countries

Table 01. The global outlook –GDP edited by author Source. BBS,2009 The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 19


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GDP

US$88.4 billion

GDP Growth

5.88 %

Per Capita Income

US$690

Distribution of GDP

Agriculture-18%, Industry 28% and Service 54%

Inflation (CPI)

6.66% (average)

Total Export

US$ 15.57 billion

Total Import

US$ 22.51 billion

Remittance

US$ 9.69 billion

Current account Balance

US$ 2.53 billion (As on June 30 2009)

Total FDI

US$ 1.08 billion

Foreign Exchange Reserve

US $ 7.47 billion

Table 02. Basic economic facts of Bangladesh ( FY 2008-2009 ) Source. BBS,2009



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Figure 04 ( Diagram) Banglaadesh development diamond (The World Bank, 2010a) The development diamond is showing that country exceeded the low -income group level except gross primary enrolment. Overall, the WB indicator reflects a good and happy life-style

of

Bangladesh

among

the

developing

countries

of

the

world.

Figure 05 ( Chart) Bangladesh Export and Import Levels



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Figure 06 ( Diagram) Bangladesh Economic Ratio The WB assesses the economic ratio of Bangladesh where trade is lagging behind in lowincome level but having a balance of capital and domestics savings.

2.3. The Transport System

WB (2010b) argued that efficient transport system is essential to facilitate economic growth of Bangladesh for achieving the first goal of MDGs –at least 7% percent to overcome the general poverty. By reducing the cost of transport and allocate resources among different modes of transport in a more balanced manner, Bangladesh can achieve growth. Fortunately, Bangladesh has all kinds of transport mode facilities for connecting the people and for freight transportation. The quality of the infrastructure is average but affected by seasonal factors like , flood, heavy rain and high temperature.



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Transport Systems of Bangladesh

Sea. Connected with all maritime countries of the world through Chittagong and Mongla Port.

River. The length f the river varies for seasonal water level fall-rise. This is the cheapest mode of passenger and cargo transportation in Bangladesh and also with seaports

Rail. Specially for passenger transport but performing for freight transportation of Containers and Bulk commodities. Total Length.2706 Km

Road. Length of total roads 270565 km but main road is 20735 km and these are suitable for operating bus, truck, trailer etc(BRTA,2007).

Pipeline. Only for transporting natural gas line from the source to end users. Approx. 3364 Km

Air. Domestics and international flights are operated regularly. International freight transportation of perishable cargo, Readymade garments pharmaceutical and vegetables.

Figure 07 (Diagram) Transport Systems of Bangladesh developed by author.



-----------------------------------------------------------------------------------------------The map below shows the transport system and how it interconnects within the country and outside.

Mongla Chittagong

Figure 08 ( Map) Map of Bangladesh Transport Network ( Pellegri,2008)



-----------------------------------------------------------------------------------------------More detail of the international entry points shown in the map above is shown in the table below. Here, it is clear that most immediate communication links are with India, a fast developing economy.

Name of the Point

Partner country

Mode

Benapole

India

Road

Soan Masjid

India

Road

Hilli

India

Road

Burimari

India

Road

Darshana

India

Rail

Bhomra

India

Road

Tamabil

India

Road

Bibli Bazar

India

Road

Birol

India

Rail

Rohanpur

India

Road

Chatak

India

Road

Agartala

India

Road

Teknaf

Myanmer

Road and River

Bangla Bandh

Nepal

Road

Chittagong

Over the world

Sea

Mongla

Over the world

Sea

Table 03. Entry Points of Bangladesh ( Pellegri,2008)



-----------------------------------------------------------------------------------------------2.4.Bangladesh Seaports- Existing and Proposed Chittagong Port

Figure 09 ( Picture) Views of Chittagong Port ( CPA,2010b) Chittagong is the principal port of Bangladesh, handling about 92% of import-export trade of Bangladesh (CPA,2010b). It is situated on the right bank of the tidal river Karnafully at a distance of about 9 nautical miles from the shore line of the Bay of Bengal (CPA Year Book, 2008). The seaward approach to the port may be considered to be northwards of the 10 fathom contour in latitude 22o 24` North and longitude 91o 30‘ East. Chittagong port dates back to the 4th century B. C. Chittagong was known in the 9th century onwards to 15th century as ‗SHETGANG‘, an Arabic word meaning ‗Delta of the Ganges‘( CPA,2010b). According to history, this old port had sufficient trade and was important enough to attract fleet from the Middle East Ports, China and other South Eastern countries.



-----------------------------------------------------------------------------------------------The Omani and Yemeni traders landed of the port of Chittagong in the 9th century A. D. During the 16th century, the Portuguese took great interest in the locality around Chittagong which was then popularly known as ―PORTE GRANDE‘. The present location of the Port was, however, established in the year 1887 and by 1910, four jetties were constructed to handle 0.5 million tons of cargo annually ( CPA,2010b).

At that time, Port Commissioners, and Port Railway administered the port jointly. To do away with the dual administration of Port Railway and Port Commissioners, the ‗Port Trust‘ was formed in July 1960. The Liberation of Bangladesh in 1971 set a new trend in the external trade of Bangladesh and to cope with the rapid development and expansion of the Port, the government promulgated the Chittagong Port Authority Ordinance in 1976 and dissolved the Port Trust thus Chittagong Port Authority came in existence.

STATISTICAL INFORMATION OF CHITTAGONG PORT YEAR

IMPORT IN MT

EXPORT IN MT

CONTAINER HANDLING IN TEUS

2004

19413460

2458972

688771

2005

22989122

2895769

783353

2006

23936103

3089550

876186

2007

24236261

3392974

958020

2008

24492707

3704862

1069999

Table 04 .Performance of Chittagong Port ( CPA,2010a). From the above statistics of Chittagong port, it is clear that seaborne trade of Bangladesh is increasing enormously in both cargo and container. Within 5 years the export is nearly double.



-----------------------------------------------------------------------------------------------Mongla Port.

Figure 10 (Picture) Mongla Port ( MPA,2010) Mongla seaport is second port of Bangladesh. It is situated on the south-western part of the country at the confluences of pusher river and Mongla Nulla approximately 71 nautical mile upstream of the Bay of Bengal. The port directorate was changed in several times and finally name d as Mongla Port Authority since 8 March, 1987. Mongla (Amin 2009) is an important seaport that has accomplished the activities like import and export of various goods inside and outside of Bangladesh Mongla Port Authority signed a memorandum of understanding worth around Tk 21,000 crore ($ 3 billion) with a Singaporean company named Associates Pte Ltd's to develop the second largest seaport of the country. Power plant, water treatment plant, industrial park, dredging system, container terminals and other infrastructure will be set up over 20 years for serving the nation also playing a vital role in importing and exporting goods to various countries, including India, Nepal, China and Bhutan ( The Independent,2009).



-----------------------------------------------------------------------------------------------Sonadia Island Deep Seaport ( Proposed)

Figure 11 ( Picture) Proposed deep seaport at Soandia in Chittagong ( Bangladesh2 day,2009)

The government has plans to build the country's first deep seaport at Sonadia Island near Moheshkhali of Chittagong( Bangladesh2 day,2009). Pacific Consultant International – a Japanese firm conducted the feasibility study of deep seaport in 2006 and Bangladesh is going to establish such port that would revolutionise Bangladesh's trade through sea routes with the South Asian region ( Bangladesh2 day,2009). In addition, it would help transport of goods to India's seven south-eastern states, Kolkata port and Haldia port, Nepal, Myanmar as well as to Kunmin province of China. The new port would be a public/private project, as shown in the diagram below, financed with the assistance of the Chinese government among others and also private capital



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Figure 12 ( Diagram) Concept of Deep seaport financial structure (Bangladesh2 day,2009) According (to an initial estimate, the three-phase construction will cost Tk 600 billion. Japan International Cooperation Agency (JICA), Asian Development Bank (ADB) and the Chinese government have agreed to finance the project. According to the plan, the first-phase construction, involving around Tk 130 billion, will end in 2020. In the first phase, five international-standard general jetties, capable of loading and unloading 74.1 million tonnes of goods a year, will be built. The second-phase construction will be done by 2035 at a cost of Tk 260 billion and the third-phase one by 2055 at Tk 210 billion. At the end of the thirdphase construction, the port's annual loading-unloading capacity will stand at around 325.2 million tonnes.



-----------------------------------------------------------------------------------------------Inland Container Depots(ICD)

Figure 13 ( Picture) Private Off dock in Chittagong ( The Daily Star,2009a)

At present, there is an ICD at capital city Dhaka owned by CPA and connected with the port by railway. The National Board of Revenue also permitted private off-dock (Details in Chapter 3) and hinterland facilities to the EPZ‘s also shipper premises.



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CHAPTER 3 CONTEXT : DEMAND AND SUPPLY IN PORT TRANSPORT The geographical location of Bangladesh can be treated as attractive to international traders as it is located beside the Bay of Bengal. The bay comprising the two ports Chittagong & Mongla covers a great portion of the boundary area of Bangladesh. With the expansion of market economy, movement of various products locally and internationally and others, it is increasing day-by-day demanding a proper transportation system. Seaport development & avail the opportunities are the main source to reach the destination. National

Regional

International

Bangladesh

India, Nepal, Bhutan

Thailand, China, Myanmar and rest of the world

Table 05. Seaport Services from Bangladesh developed by author.

3.1 Demands for Port Services at National Level

The Bangladesh economy is rapidly getting integrated with the rest of the worlds and exportimport trade has been increasing by 20-25 percent in recent years ( Rahman,2007). He viewed that ―With acceleration in the economic development its foreign trade is bound to grow at an even faster rate. If the expansion of the port facilities does not keep pace with the need of the growing economy its growth potential would suffer‖. Seaport development means the strong connection of intermodal system. Intermodal system may be developed by creating infrastructure in all over the country.



-----------------------------------------------------------------------------------------------River container port nearby capital Dhaka is the derived demand of Bangladesh. Deep seaport will connect with this for making shipping access from the capital economically and timely. Bangladesh‘s port logistics business, especially in container handling, has been chalking up at the rate of 12 percent where Chittagong port handled 1.26 million TEUs in 2010 financial year (The Financial Express,2010) .

Figure 14 (Chart) Export and Import of Bangladesh by sea ( Compiled from BBS,2009) From 2004 to 2008 the trade growth of Bangladesh was approx 132% but seaborne trade growth was approx 152%. This is only for domestic‘s cargo movement especially for import and export trade (BBS,2009). Recent industrialization and promotion of specialized industry like RMG, pharmaceutical, agricultural product etc increased the demand for port services. As per CPA ( 2010a), in 2005, Chittagong handled 0.78 million TEUs but in 2010 it is 1.26 million approximately 62 % increase within 5 years . This statistics showed that the demand for port transport is increasing the day by day.



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3.2 Demands for Bangladesh Port Services at Regional Level The Port of Haldia is a major seaport and industrial city in West Bengal, India and Calcutta port which played an important role in the economic development declined in importance relative to other major ports of India which is mainly attributed in the existing literature to some supply constantly like deficiency in draft, declining port productivity, high detention time of ships visiting the port and frequent labour unrest(Sau, 1999). Dahal (2006) added that administrative hassles and time consuming handling of customs incurred heavy freight cost for Nepal for taking the seaport facilities from the Indian port. Even this problem is also for domestics cargo of seven sisters due to the far distance and geographical advantages. As a result, the Chittagong port became very important in this region . Azad (2008) expected to export the port service and allow other countries like Nepal, Bhutan and India for using the Bangladeshi port facilities on payment of services charges. In a study, De et al (2006) found that Nepal and Bhutan faces substantial trade cost and they have shown keenness to use two seaport of Bangladesh. Bangladesh Prime Minister Sheikh Hasina said that the country's two seaports of Chittagong and Mongla will be ready this year for use by its neighbours India, Nepal and Bhutan. She expected an annual royalty of US$ 10 million for allowing use of the seaports, located in the country's south-eastern and southern region ( Hasina, 2010).

3.3

Demands

for

Bangladesh

Port

Services

at

International level Gwilliam (1993) expressed that ―By its nature shipping has always been an international business‖ (p-2). Investors are very alert about shipping services through seaports and wanted easy shipments and clearing of their cargo.



-----------------------------------------------------------------------------------------------As Bangladesh is an import based country having few nationally owned vessels, ship-owner requires sound and reliable shipping facilities for sending their vessel to Bangladeshi ports. Now-a-days, mega seaport influenced to establish industrial park nearby. Connectively, foreign investment will come rapidly to develop industry. China and Myanmar are highly interested to use Bangladeshi seaport for their convenient and closest access to the seaport.

3.4 Supply of Port Facilities. Existing Port Facilities. SL NO

NAME

PLACEMENT

REMARKS

01

Chittagong Port

Existing

All

02

Mongla Port

Existing

03

Sonadia deep seaport

Proposed

04

14 off docks

Existing

05

All EPZ

Existing

06

Dhaka ICD

Existing

07

Narayangong

Inland

kinds

of

Port

transport.

Only for container.

Container Under

Terminal

Construction

08

Shipper Premises

Existing

09

Joydebpur ICD

Proposed

Table 6. Port Transport facilities in Bangladesh compiled from various sources by author.



-----------------------------------------------------------------------------------------------At present , there are two seaports for minimizing the national demand. No transit facilities or regional shipping trade via Bangladeshi seaport. However, ICD facilities are available outside the port protected area and these are responsible for empty container storage, selected import commodity discharge and export stuffing. Sl No

Name of the Off-dock ( ICD)

Remarks

01.

Esack Brothers Industries Limited,, Chittagong

02

Chittagong Container Transportation Co. Ltd

03

K&T Logistics Ltd

04

QNS Container Services Ltd.

05

Ocean Containers Ltd

06

Vertex Off-Dock Logistic Services Limited

07

Shafi Motors Ltd

Specialized

08

Summit Alliance Port limited –West

container storage, private venture, as

09

Summit Alliance Port limited –East

10

KDS Logistics Ltd.

11

Golden Container Ltd

12

Iqbal Enterprise

13

PortLink Logistics Centre Ltd

14

Incontrade Limited

15

Chittagong Port

No Staffing facilities, LCL delivery.

16

Dhaka ICD

At capital city Dhaka connecting by rail

Shippers Premises and EPZ

and road with Chittagong Port For specialized industry where custom

17

for

Import,

Export,

Chittagong port premises

facilities are available. Table 7.

Listed Off-dock

or ICD at Chittagong Custom House and Chittagong Port.

Source.NBRCTG,2010 The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 36


-----------------------------------------------------------------------------------------------All ICD are located in Chittagong except the Chittagong port ICD in capital city of Dhaka. Actually, Chittagong port is performing fully where Mongla port is operating partially.. As ICD‘s are located near port area, all containers are easily transfer from the vessel quay or port yard to ICD yard and direct loading of export laden and empty containers from the ICD.

Planned Port Facilities. Preliminary, the planned deep seaport and Chittagong port will face heavy competition with the regional ports of India. Furthermore, Myanmar is another competitor of Bangladesh in maritime trade. Myanmar is planning to build a deep- sea port in Kyaukphyu, western coastal Rakhine state, to facilitate maritime trade with neighbouring countries (People‘s Daily, 2007) . Moreover, competition may be extended to the regional hub of Sri Lanka, Singapore and Malaysia. BIWTA has built container terminals at Pangaon and Khanpur and will develop a similar facility at Chittagong port( The Daily Star,2010) . A part of the port containers will move through BIWTA container terminals and a big part by railway. Using the Mongla port , one water transit route between India and Bangladesh is KarimgonjBhairab Bazar-Narayanganj-Mongla-Kolkata and the other is Gwahati-Patgaon-NarayanganjAricha-Mongla-Kolkata. Following its publicized stance of agreeing to allow India, Nepal and Bhutan to use its two sea ports, Bangladesh plans to persuade China to use Chittagong port as a commercial outlet for its southern Yunnan province (The Economic Times ,2010).However, as per estimates of the port authorities, at present, Bangladesh makes use of only60% and 25 % of the total capacity of Chittagong port and Mongla port respectively and by this existing facilities she can sell remaining 40% and 75% of the port service easily to neighbours (The Daily Star,2010).



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CHAPTER 4 RESEARCH OBJECTIVES

This chapter will try to find out the aims and objectives of the research for developing a network chain for integrating the Bangladesh transport systems especially on port transport. The focus of this research is to find out s how Bangladesh can improve developing international standard seaports in which she can control or handle cargo efficiently and economically. As seaport is the centre of maritime activities and shipping business are running within the seaport area, country need to create such port facilities and business environment for attracting the world shipping companies to invest in Bangladesh. In addition, infrastructure of the country and liberal shipping policy also helps to do business in international environment. The PPP initiative for the development of Bangladesh reflects the fact that infrastructure is one of the leading constraints on Bangladesh‘s growth today ( Moriarty,2009) . Overall, intermodal and multimodal systems, from the deep seaport to general seaport facilities - rail, road and river connections, are not structured properly for managing the transport chain even where these facilities are available. To develop the intermodal infrastructure and support the multimodal systems of the country there is also a need to develop the seaport handling facilities. Staying with the international port and shipping trend, now-a days, ports and terminals are trying to: A) Improve port efficiency that means quick handlings of cargo and container and decreasing the turn-around time of the vessel. B) Lower cargo handling cost. This is the easy calculation for choosing or avoiding the port. C) Integrate port service with other components of the global distribution networks (Khanam and Misir,2008 ) .



-----------------------------------------------------------------------------------------------More significantly, the development of container port is essential. As most of the import and export mixed cargo passes through container ports, improving the efficiency of a nations container port is a challenging yet critical task (Roy and Banerjee,2010). In addition, energy ( oil , coal etc) is the crucial factor for growing the industry and specialized port and berths are required to mitigate the problem. Overall, good port infrastructure is required to serve the nation. The basic aims of the research are as follows:To identify the major problems like turnaround time, congestion, yard space, cargo handling equipment, efficiency and others of

Bangladeshi port

or barriers to increase the port

efficiency. Ascertain the needed requirements for improving seaport facilities to set a world standard because shipping is the international business. Need to analysis the basic requirements of international shipping companies and terminal operators for doing shipping business in Bangladesh. To establish a model of supply chain management lead by maritime transport operators combining with other modes of transport. To determine the marketing and pricing strategy of seaport in two parts nationally and internationally for playing a role in GDP. Identify the possibilities of port privatization in Bangladesh especially for second largest seaport Mongla. Identify whether the factors such as social, economical, political will hamper the seaport development of Bangladesh. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 39


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CHAPTER 5 LITERATURE REVIEW The primary concern for a literature of maritime transport regime is to create an altogether more efficient maritime transport system as part of the trend towards a freer economy structure as a whole (Chia et al., 2003). This literature review divided into six parts for understanding the economics, maritime economics and port economics regarding port financial matter along with the relationship between international trade and economic development which are featured in first part. Furthermore, second part is discussed the logistics activities at port in relation to the global supply chain management, management of transportation where infrastructure and intermodal systems helps port to increase the efficiency by changing the commodities frequently to/from port area that means to transport goods where trade cannot take place-the logistics chain. In addition, seaborne trade in third part reviewed the present basic scenario of international business and shipping trade. In fourth part, the literature tried to find out the connections between ports and development like ancillary industries, employment opportunities and others, overall, Port as the centre of logistics. Furthermore, in fifth part the literature reviewed the needful develop-investment, dynamic management, lack of regulation, privatization of port where port effectiveness, competitiveness, performance are highlighted for understanding the role of seaport in international context. Finally, a brief literature added about the role of Bangladeshi seaports and transport system for trade facilitation and what strategies Bangladesh should take for developing her port facilities considering the derived demand of trade.

5.1 INTERNATIONAL TRADE AND ECONOMIC GROWTH

Shipping plays a vital and significant role in national economy. The very beginning of modern economics described about the literature of living standards that is interested on trade and development. Clark et al (2001) found the lack of initial consensus among researchers on the relationship between trade and growth has been mirrored by differences in the actual trade strategies of developing countries.



----------------------------------------------------------------------------------------------Globalization and liberalization of trade also brought the competition for sustaining on the international trade in all context developed or developing country. Basic needs of any place is mitigating by importing from other place in a cheap rate along with quality product. This is happening because of easy access to the seaport for transporting the cargo at low cost. This economics of commodity transportation or minimizing the sea transport cost or together created the environment for doing international business. Globalization is a break with the past, challenging accepted modes of thought and their translation into business practice which reflect the reach of processes that are increasingly influencing our lives broadly intended to imply a shift in the basic assumptions that have underpinned international business and trade on the basis of comparative advantages (King, 1997). It is describes as a holistic approaches to international business strategy for supplying against the demand at a cheap rate in the competitive market. The Economist Anderton (1993:p7) inaugurated economic scarcity as ―there are only a finite (or limited) number of resources such as workers, machines, factories, acres of land and resources of oil in the planet earth. Because these resources are finite, it is not possible to produce an infinite number of goods and services‖. The basic economic problem is arising day by day because human wants are not limited. Moreover, the numbers of human being are increasing irregularly and most of the countries are unable to control it. In addition, all resources are not equal for all. It is vary person to person, country to country. Globalization and wants of people changed the definition of import (Shortage item to be brought from abroad) and export (Surplus item to be transported to abroad commercially). To balance the want and resources in a specific country, import and export activates are not only a trade but also it is extremely a commercial matter for a country. As a result, economical condition of a country depends on its natural and artificial resources, population, activities of trade and others. Economic efficiency plays a vital role in promoting economic growth and development at the rate of higher return in business, for labour, overall , is higher real wages and increased employment ( JCRA,2006). Hopefully, in respect of consumer welfare, it leads to lower price, higher quality goods and level best service for full pledged satisfaction.



-----------------------------------------------------------------------------------------------Branch (1998:p-198) stated that ―Governments and trading blocs such as ASEAN, NAFTA and the EU give a high priority both to developing their regional economics and to fostering international links with other nations and trading blocs through the vehicle of international links with other nations and trading blocs through the vehicle of international trade‖. Macroeconomics concerned with growth theory or the evolution of an economy‘s productive capacity over the time and how fully the economy use its productivity capacity (Monteil, 2009). The most immediate macroeconomics consequences of the development of infrastructure developed the transport sector which is denoted as a determinant of economic growth(Quinet andVickerman, 2004) . Shipping is an international business where foreign exchange performed as the leading variables for importing and exporting commodity. In a study, Lane (2001) expressed that home and foreign price levels are sticky, a movement in the nominal exchange rate shifts the real exchange rate and delinks home and foreign consumption growth where home and foreign output rises since the domestic demand expansion raises demand for imports at the fixed relative price of imports in terms of domestic currency. Foreign exchange rates which helps to make decisions in domestics development but before going for developing need to analyse the supply and demand for assessing the strength of the country. Monteil (2009) addressed three questions to derive the supply and demand for foreign exchange, which are as follows:1)

What determines the relative attractiveness of domestics versus foreign goods?

2)

What determines the relative attractiveness of domestics versus foreign assets?

3)

What rules govern central bank transactions in the foreign exchange market?

As Bangladesh is import-based country and depends on the foreign loan or financial assistance, before taking any investment decision, need to assess the above questions.



-----------------------------------------------------------------------------------------------However, McConville (1999:p 15) defined ―Maritime Economics is a discipline or field of study connected with the manner in which existing material and human resources are used in the industry and how they changed and develop over time. Maritime Economics theory consists of a body of concepts and principles which assists in the explanation of the industry‘s progress‖. Drewry (1996) shipping consultants featured that shipping finance is a high risk but low return business. Therefore, economics of shipping is very hard and complex by its nature. McConville (1999) argued that there is no country in an international economy who is self sufficient in the commodities that its population needs and expects. He functioned that the maritime transport as a bridge between producers and consumers for minimizing the gap of needs and expects. Structural changes in international trade and the evolution of maritime transport have a direct impact on port growth and expansion (Gallegos,2010). Globalization, or the expansion of markets and hence of the economic prospects of societies, is taking place not only because of the supra-national nature of markets, but also because of the flow of foreign investment and the strategies of multinational enterprises.

5.2 THE LOGISTICS CHAIN.

Logistics is defined by Branch (1998) as the time –related positioning of recourses for ensuring the materials, people, operational capacity and information are in the right place at the right time in the right quantity and quality and at the right cost. Fragmented in 1960, logistics is fully integrated in 2000 where transportation is the main wings of physical distribution reviewed by Bardi et al (2006) in their study of transportation. However, this part is designed for featuring the role of port in supply chain on the context of logistics. .Quinet & Vickerman (2004) expressed that transport has a key role in economic activity which contributes to a share of national output. Also added that it is a derived demand and growth of the economy as a whole; it is necessary to understand the nature and the intensity of this link and improvements themselves can determine the rate of growth of the economy. Moreover, transport is like any factor of production, which can be substituted for others, dependent on technology and on relative factor prices. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 43


-----------------------------------------------------------------------------------------------Transportation is the operational area and primary responsibility of logistics across the supply chain that geographically moves and positions inventory which traditionally received considerable managerial attention (Bowersox et al. ,2007) . In a study of transport economics, Hensher and Brewer (2001: p-3) expressed that ―Risks and opportunities, challenges and rewards pressure the economic world of transport and logistics management‖. Pallis (2002: p-1) stated, ―In fact, the maritime transport system has been a highly institutionalized and politicised economic sector. Precisely because of its strategic economic significance, national governments are performing as market (de)regulators, as well as maritime infrastructure investors and owners‖. Ocean freight transport industry has changed its structure as a result of the new trends and preconditions that came with the introduction of the container and the rise of inter-modality (Jarzemskis and Vasiliauskas, 2007). Pedersen (2001) explains that during the 1990 transport and communication appear slowly to be on their way into the mainstream again, but now transformed into a much broader concept of logistics, which has become an increasingly important element in the organisation and restructuring of the globalizing economy. From being an external factor, transport has become an integrated part of the production and distribution system. Kumar and Hoffmann (2002) stated that the trade in merchandise and unfinished goods increases faster than the worlds GDP, and so does the demand for maritime transport services which part of the global logistics chain that determine a good‘s competitiveness. At the same time, the maritime business is itself strongly affected by globalization. Trade in maritime services is one of the most liberalized industries, and its ―component‖ such as vessels, flag registration, class inspections, insurance and the work of seafarers, are purchased globally. The role of ports within the supply chain has taken several different forms and development paths for supporting the all logistics partner of transport( Pettit and Boresford 2009). The Supply Chain Management (Martino and Morvillo, 2008) supports the development of partnership between the actors of the chain and considers the integration of activities and resources along business process as source of competitive advantages.



-----------------------------------------------------------------------------------------------In a particular context of port competitiveness, SCM approach is given the traditional hostile relationship between port actors for overcoming the complexity on shipping trade. In order to model the distribution of goods between two places , Tavasszy (1997) assumed that shippers combine locations of demand and supply in a rational way for maximizing the profit resulting from the interaction and this profit is determined by the balance of costs and benefits coming from production, transportation and consumption or selling. Procuring the raw materials and delivery of finished goods or transferring commodity, transport cost is the main operating cost which determines the value of the product. Internationally, setting a factory or investing in a foreign environment maritime access and port efficiency are the important determinants because of commodity transportation economically and timely. Global supply chain management is highly depends on the performance of seaport and intermodal system of the producing country. Transportation (Bardi et al.,2006)

is an integral activity for a modern society which

influenced in every aspect of our lives for determining the value of goods by adding time place and quantity utilities to them. Overseas sourcing and marketing by manufacturing and merchandising firms are increasing the importance of global transportation. Moreover, the activities of them are growing by cantering the port for procuring raw materials and shipment of finished goods. The most primitive industrial processes are maintained through a good supply chain for placing the raw materials and shipped the finished product in factory and vehicle respectively. The relationship (King, 1997) between the supplier of raw materials and the consumer of finished products involves a complex network of linkage, both within and between individual companies by a system of supply chain which linked together by the feed-forward flow of materials and the feed-back of information. Stopford (2009) believes that shipping is concerned with international trade; it inevitably operates within a complicated pattern of agreements between shipping companies, understandings with shippers and the policies of government. The demand for sea transport is complex and variable because it is a measure of the comparative advantages enjoyed by one country over the other (Evans and Marlow, 1986). Most probably maritime industry is the only industry where investment is very high but return is very low and time factor investment comparing with any others.



-----------------------------------------------------------------------------------------------For a complete analysis of a freight transportation problem with all its alternative solutions and operating dimensions, Demilie et al (1997) argued for separate operation of transports by different means on the same infrastructure, loading, unloading, moving, transporting and transiting of commodity, particularly, the goods transfer operation from one mode or means to another must be included to analyze the alternatives offered by multimodal transports. Political thinking and government action or initiative can change people‘s perception of transport but as a service industry it is also conditioned by events which although peripheral to itself, can still cause large changes on the transport network( Gubbins,2003). In the context of transport networks, Capineri & Rietveld (1997) identified three main possible scenarios which are as follows:i)

A growth scenario that means traffic will still increase because of its demand, So that traffic control or separation scheme is the derived demand and basic part of the management of transportation.

ii)

A substitution scenario like modal change, public versus private. Creation of modal facilities such as artificial canal for reducing road traffic. Proper management of transport by privatization or handing over the responsibly for better management or avoiding traditional approach.

iii)

Finally the multimodal scenario which will help to fulfil the demand of shipper and consignee for sending and receiving commodity on her premises in a package program.



------------------------------------------------------------------------------------------------

3.3 SHIPPING TRADE AND INTERNATIONAL BUSINESS

Recent environmental changes over the world and rapid advancement of ocean technology are shifting the perception of maritime industry( Kwak et al 2005). In addition, economic depression what relocated the economy from developed to developing also diverted the course of marine trade towards developing country like China or other Asian country. The development of port and shipping sector is lagging behind in Bangladesh. Due to financial crisis and inability to improve the shipping policy, the country is s depends on the foreign shipping company. for

due to its Legislative ( Drewry, 2000) control of shipping has

effectively shifted from national level to international level also moving from rules devised and implemented by individual national administrations with a few international agreements, to a complex and growing set of global requirements. In (Francois and Wooton, 2000) the maritime world, the oceans are populated with shipping conferences which meet regularly to set rates, analyze market conditions, and assess other developments like fuel prices and port charges for constructing the market structure and business environment.

On (UNCTAD, 2009) the heels of the unfolding global financial crisis and economic downturn started from 2008 decelerated the growth of world economy and global merchandise export and import. Reducing the global production as well as demand or lowering the levels of trade has undermined the growth of seaborne trade. In addition, climate change and greenhouse gas emissions from international shipping are adding a further challenge to the maritime sector. The seaborne trade is highly depends on the world GDP growth which is indicating a tough time of world development.



------------------------------------------------------------------------------------------------

Figure 15 ( Graph) World Seaborne Trade (UNCTAD 2009) Demand for maritime transport services is expressed in ton-miles which reflect as cargo volume and distance travelled by the ship geographically for minimizing the demand of consumers from suppliers. However, this economic downturn highly affected by developed countries that can control or overcome the crisis. UNCTAD (2009) reported that in 2008, major loading areas were located in developing country - 60.6 % and Developed country-33.6 % and transition economics -5.9%. Asia dominated the export area approx 40 percent and role of China is remarkable for keeping the GDP growth continuously.



------------------------------------------------------------------------------------------------

Figure 16 ( Graph) International Seaborne Trade, selected years ( UNCTAD 2009) From the above graph, it is clear that seaborne trade is increasing every year. Due to the purchasing power of Asian country, trade is going to this region. As a proud member of Asia, Bangladesh needs to develop the port organisations for doing seaborne trade internationally. Ownership

Intangibility

Perish ability

&

&

Variability

SEA TRANSPORT

Inseparability

Adaptation

Figure 17 ( Diagram) Characteristics of Sea Transport Services ( Plomaritou,2008) The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 49


-----------------------------------------------------------------------------------------------Sea transport service having a number of distinctive characteristics which differentiated them products and have implications in the manner in which they are marketed like intangibility ( Plomaritou,2008) which cannot be assessed by using any of the physical senses) , perish ability ( Cannot be stored, resized or relocate), ownership (Merely buying the right of service process, no ownership transfer) , inseparability ( service is not separate able) , Variability (Always Unique and is never exactly repeated) and inability to own a service or adaptation. Francois and Wooton (2000) raised a question about tariff and its affect on trading in international trade and argued that with a competitive shipping industry, the beneficiaries of trade liberalization would be the consumers in the importing country and the exporting producers. With a less-than-perfectly-competitive shipping industry, the benefits of the more liberal trade regime are partially captured by the shipping firms. Drewry (1996) reflected on cycles in shipping and shipping finance that the importance of capital inflows to the shipping industry and their role in determining shipping supply and thereby earnings and asset values cannot be stressed too empathically.

Utilization Rate

Foreign Trade Traffic

Port Investment

PORT

Transit Traffic

Port Capacity

Demand Estimation

Market Shares

Figure 18 (Diagram). Port capacities and demands (Ruute, 2008) In a study, Ruute (2008) stated that the port capacities and demands are endogenously. In addition, Button (1993) expressed that ―Longer time fluctuations in the demand for shipping services reflect the state of business cycles in the trading nations‖.



----------------------------------------------------------------------------------------------An important determinant of maritime transport costs is seaport efficiency which reduces shipping costs because inefficient ports increase cargo handling costs (Clark et all, 2004). However, seaport development is high investment factor but will make a scope to increase trade with others internationally. Shipping is a truly global industry where seller and buyer perform international marketing. In 2004, merchant (Stopford,2009) shipping shared 31% of total marine activities of the world where port shared only 2%.Hovever, total 47 % vessel operations are controlled by port authority. Therefore, port is the important element foe driving the shipping market nationally and globally. Stopford (2009) identified three major cycles in shipping market and these are as follows:1) Short business cycles lasted for 5 to 10 years. 2) Seasonal cycle which superimposed on short cycles and 3) Long cycle as secular trend lasted for 60 years. Upon based on the shipping cycles, shipping market is fluctuating over the demand and supply of the vessels and port is falling into trouble when the indicator is showing the high or low volume of cargo handling. The infrastructure and human resource are perishable and low utilization countered huge loss. On the contrary, sudden big volume may affect the general operations and procurement of costly equipment also experienced people is time factor. World port business is very competitive for its nature; there are three types of stake holders who want to set their premises for business and other purposes which are as follows: 1) Government as social port organisation for the benefit of domestics port users. Local partnership with local business person or trade body fully or partly. 2) Professional operators like DP worlds 3) Shipping Lines like APM terminals, they are crazy for container operations specially.



-----------------------------------------------------------------------------------------------Vertical ( Reeven,2010) separation without intra-port competition is the most profitable organisational system for the port industry. It is also the most expensive one for its customers (shipping lines, and so on) in terms of the total amount in port dues and service charges (for example, terminal handling fees) they pay. A strong (Meersman et al , 2010) decline in economic output and international trade has transformed globally into negative growth in the transport industry especially in maritime transport and ports. Obviously seaports, generally used by world trader and shipping companies shall remain crucially important links in successful supply chains. It is inevitable that continuous trial for economic growth, the flow of goods may reasonably be assumed to continue to grow in the longer run. Hopefully, the demand of shipping trade will increase as it has the derived nature in servicing the world transport.

5.4 . PORT –THE CENTRE OF LOGISTICS Seaports (Alexandersson and Norstorm,1963) are point where the physical equipment for the transfer of goods from water to land transportation or vice versa and from large ocean-going ships to small coastal vessels or river barges is

installed, where almost all economics

activities directly connected with shipping are located, where heavy manufacturing industries dependent on cheap transportation of bulky or containerised raw materials or product tend to locate, where most ships are being built and repaired and where most sailors and seaman have their homes and families. Cho et al (2010) argued for flexible. Reliable, transparent and efficient intermodal transport solutions because intermodal transport in increasing. They also concerned about third party logistics provider who play important role in intermodal systems for moving the cargo from origins to destinations using two or more transportation modes such as air, ocean, rail and road. Intermodal and sea related transports are famous to solve the port system problems. Infrastructure of the country and well structured and managed seaport can supply the better service to the shipper for minimizing the transport cost and save time.



------------------------------------------------------------------------------------------------

Figure 19 ( Diagram) Intermodal Transport ( Cho et al 2010) From the above figure, it is visible that all modes are interconnected with the port where easy and cheap accesses are available to help other nodes. For this reason, port performance is very important for catching the chain of intermodal system. Seaports serve hinterlands through various inland modes such as road, rail, inland waterways and pipeline to/from cargoes to the consumer or exporter ( Langen and Chouly,2004). The quality of the access to and from the hinterland differs between seaports and affects their competitiveness and easy access is attracting the shipper. The quality of the hinterland access depends among others on the behaviour of a large variety of factors, such as shipping lines, terminal operators, forwarders, the port authority and the national/regional government. Therefore, effective hinterland access is at least partially an organisational challenge and medium of reducing transport cost as well as low pricing of the product. Borger et al ( 2008) analysed that shippers or buyers are always bothered in two types of cost : the costs of using port services and the cost of hinterland transport towards the final destination. Enhance, the role of port and condition of infrastructures as well as proper management of transport are highly appreciated for performing in supply chain to get excellent outcomes.



-----------------------------------------------------------------------------------------------For global trade, intermodal system is developing and it is often the only options because factories and markets may not be next to ports. Here, port is the centre or coinciding point for making a plan or estimation of commodity to be delivered or received finally. Maritime transport is the main mode of transport system that coordinates other modes of transport especially for intermodal system and Seaport is the centre of all modes where all kinds of transport interconnected individually. For a strong communication system of a country and the success of supply chain management is highly depends on the infrastructure of the country and development of the transport systems also their frequent movement without any traffic disturbance. The operations strategy of the main transport provider plays a pivot role to bring the integrated systems by which the country may get comparative advantages to minimize the transport costs and decrease the valuable time on route. Intermodal ( Bowersox et al 1997) operators use multiple modes of transportation to take advantages of the inherent economics of each and thus provide integrated service at the lowest total cost. Here, time and cost are the main determinants to the customer but fully depends on the infrastructure condition of the ways where the cargo will move. In order to obtain a measure of transport costs in a specific mode in a uniform manner, available mode must be considered for minimizing the transport time. This cost and time along with the easy access of available mode will show for using the best option to load the cargo at port as per Byers demand. In general, the value of time will vary among different goods because of differences between good in terms of their physical characteristics and logistical circumstances of the shipper and consignee ( Tavasszy,1997).

5.5 INFRASTRUCTURE AND PORT DEVELOPMENT In almost all countries of the world government is taking the full responsibility or playing a significant role in building and managing the infrastructure for making effective network design supporting the transport sector (Chopra and Meindl,2007). Now-a-days, indirect investment of government, FDI , Public Private Partnership, BOT, etc are remarkable for developing the infrastructure as seen economic development of the country with the help of international donor like WB, ADB etc.



-----------------------------------------------------------------------------------------------Port Authority Responsibilities Port Type

Infrastructure

Superstructure

Operations

Comprehensive

YES

YES

YES

Tool

YES

YES

NO

Landlord

YES

NO

NO

Table 8. Models of Port Organization ( Barton and Turnbull, 2002) A useful counterfactual to consider in evaluating optimal port governance mechanisms is private ownership of port facilities In Bangladesh, the major two ports are comprehensive and operated by government(Vining and Boardman,2008). Recent changes to privatization, diverting the personal operations of selected quay or terminals to private competitive operators. In a study of port investment, Goss (1968) argued that there is wider spread agreement that port facilities in many countries need improvement, partly to serve increased volumes of trade and partly because it appears that substantial economics in the cost of sea transport can only be achieved by improvements in seaports. The turnaround times of vessel or container stock at yards are the two main performance indicator of a seaport. Shipping business is highly expensive which will see the profit by maximum utilization. In addition, Branch (1998) reviewed the development of a country‘s infrastructure and particularly its port are accord a high priority in terms of investment and high technology. Port is a place where international shipping either originates, terminates or transits and thereby of necessity making it highly dynamic subject to keep pace with increasing commercial and economic activities( CPA,2010b). In spite of constraints in men and material and financial limitations the Port Authority has concentrated all its attention to the development of the Port and better management so as make it the nerve centre of the economic progress.



-----------------------------------------------------------------------------------------------Port (Clark et al, 2001) efficiency which is an important determinant of handling cost varies widely from country to country and, specially, from region to region. It is well know that some Asian countries (Singapore, Hong Kong) have the most efficient ports in the world, while some of the most inefficient are located in Africa (Ethiopia, Nigeria, Malawi) or South America (Colombia, Venezuela, Ecuador). Countries with inefficient seaports have higher handling costs and good infrastructure have lower seaport costs. It is reasonable to think that the determinants of port efficiency will not only consist of infrastructure variables, but also of management and/or policy variables. Overall level of infrastructure that assumed to be positively correlated with a country's level of seaport infrastructure because the better the infrastructure the higher the probability of an efficient port; that is, a positive coefficient for this variable. Therefore, any strategy aimed at integrating a country into the trading system has to take transport costs seriously. Seaport efficiency, though, is not just a matter of physical infrastructure. Moreover, Clark et al. (2001) research results

suggested that some

level of regulation increases port efficiency, but excessive regulation can be damaging. In addition, Couper ( 1986) reflected that the range of port developments in continuum of world port characteristics extending from break bulk

manual operations to automated

container handling which are rising through numerous stages of technological change where port organisational structures are involved as ports move along this path of development. Goss (2002) expected to see very good initiative for reforming the pricing of port which will be an attractive factor for ship-owner, shipper, consignee overall for port users. He argued that, in particular, there is a great need to reform the traditional methods of charging for port services, so as to avoid the extensive cross-subsidisation that these involve. In terms of the logistics cost (Cullinane, 2002) which they account for within any given supply chain, the level of port‘s performance and/or relative efficiency will, to a large extent, determine the competitiveness of a nation and can ultimately have an influence upon industrial location decisions and the benefits derived from the economic policies of national governments.



-----------------------------------------------------------------------------------------------The organisational effectiveness is a rather new concept in port business which focuses the on the goals of the organisation and its environment and striving for systems that approaches in significant role of seaports affected by changes and developments of world trade, supply chain and logistics trend, maritime transport and technological developments ( Cetin and Cerit, 2010). They denoted seaports as social and technical organisations and effectiveness of port organisations have unique characteristics for providing best services to the port users always .However, efficiency and performance measurements alone cannot provide a competitive position to the port organisation because port need to generate value adding service to the port users and meet the rapidly changing expectations in the market. INPUT. 

Port Infrastructure



Port Area ( Nautical and Operational



Productivity



Equipments



Efficiency



Technology



Service Quality



Port Labour



Adaptability



ICT



Innovation



Capital



Value Generation



International laws and Regulation Ship Operations



Information Management



Cargo Operations



Communication Management



Logistics and Industrial Services



Profitability



Safety and Security



Organisational Worth



Information Technology



Survival



Marketing



Human Resource Quality



Political and Legal



Professionalism

PROCESS

EFFECTIVE MEASURES (OUTPUT)

Figure20 Human (Diagram). Delphy survey on port effectiveness ( Cetin Cerit, 2010)  and Leadership Resources 

Social and Environmental



Customer Satisfaction



Engineering



External Support

The Economics of Port Transport: Improving Seaport Facilities Autonomy in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 57  Compliance/Conformity 

Resource Acquisition


-----------------------------------------------------------------------------------------------Port economics literature emphasized the supply chain management approach as new paradigm in port competitiveness for analysing the port activities and port can develop different competencies and offer a high quality services. In

the recent debate on port

competitiveness, a growing number of papers has focused on the issue of integration of port activities regarding supply chains for framing the unitarily of the port in the process of creating value for the end customer( Bichou and Gray ,2004 )

.The difficulties

are

encountered in the use of a systematic approach in the port–aimed for determining the contribution of the whole port community in the supply chains—is mainly linked to the lack of a ‗competitive community spirit‘ among the actors, both public and private( Martino and Morvilo,2008). The concept of integration in the port context has essentially concerned intermodality and organizational integration undertaken by global carriers aimed at responding to the changing requirements of industrial and commercial enterprises and, at the same time, improving their own internal efficiency. The field of analysis to the role and integration modes of ports within global transport systems, on the other hand they underline the passive role traditionally played by ports in relation to the strategic choices of other port community operators, with obvious effects on their bargaining power and, in general, on their development strategies. In this respect, it ( Slack ,1993) has already been shown that ports are mere ‗pawns in the game‘ within global transport systems and that the power of liner shipping affects port development . In a study Robinson (2002) identified the role of the port in the supply chain through the contribution of the ‗multi-port operator‘, i.e. large terminal operators, in the process of creating value. Finally, Bichou and Gray (2004) try to conceptualize the port system from a logistics and supply chain management perspective, aiming to define a new framework to measure port performance. They start from the hypothesis that ‗by using a logistics and supply chain approach, ports may achieve a better use of port capacity‘. An important issue is addressed by Tongzon (1995) in the study of port performance and efficiency and that is

quantified the contribution of terminal efficiency to the overall

determination of port performance. He found that port provides empirical support for the notion that terminal efficiency is a vital component of any waterfront reform aimed at improving port performance and efficiency. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 58


-----------------------------------------------------------------------------------------------The port landscape has, after all, also altered in many respects because new technology and strategic developments have led almost automatically to greater port competition, both at port authority level and at the level of companies operating within the various ports (Meersman & Voorde, 2002 ). In addition, all port players, from authorities to terminal operator agents, are looking for ways to maximize profits, to maintain or increase market share or simply to survive. They also added that a strong and efficiently run seaport could be an important asset for a country or region in trying to improve its economic position.

DETERMINANTS OF THROUGHPUT

DETERMINANTS OF EFFICIENCY

Location

Container Mix

Frequency of Ship call

Crane efficiency

Port Charges

Work Practice

Economic Activity

Vessel size and cargo exchange

Figure 21 ( Diagram) Port performance components (Tongzon,1995) The role (Reid & Sanders, 2002) of operations strategy (which is a part of Business Strategy along with Marketing & Finance strategy) is to provide a plan for the operations functions for making the situation to use its resources perfectly and effectively. For developing the operations strategy in maritime business, it is very important to follow the all stages of operations because it is not only the business but also serving the nation and act as a catalyst of all trades of the country.



-----------------------------------------------------------------------------------------------Cost Quality

Flexibility

Speed or Time

PERFORMANCE OBJECTIVES Dependability

Figure 22 (Diagram). Performance objectives in operations (Slack and Lewis, 2008: Reid & Sanders, 2002) a) COST. Cost is the main elements of business. Less cost or minimize the access expenditure will help to increase the profit margin as well as decrease the misuses of the company resources. Logistical ( Bowersox et al 1997) systems should be designed to utilize transportation that minimizes the total transport cost . b) QUALITY. Quality as a competitive priority (Reid & Sanders, 2002) mainly focused on product and service quality. There will be no sacrifice in quality of the service. c) TIME. Time is the best priority for speed and on time replacement of the vessel. The port performance is measured by the speed of handling of cargo and vessels. d) FLEXIBILTY. Due to the pattern and style change of trade, environment change rapidly, including customer needs and expectation, the ability of the organisation to accommodate these changes can be a winning strategy. e) DEPENDABILITY. Organisation (Slack and Lewis, 2008) needs to achieve higher confidence in the operations for reaching to the final destination or result timely. When looking at the determinants of port efficiency, Clark et al (2001) found that, the level of infrastructure and organized crime exert a significant positive and negative influence respectively. In addition, policy variables reflecting regulations at seaports affect port efficiency in a non- linear way. This result suggests that having some level of regulation increases port efficiency, but an excess of regulation could start to reverse these gains. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 60


-----------------------------------------------------------------------------------------------Stopford ( 2009) believed that port improvement plays a major part in reducing the sea transport cost which affected the value of the commodity. Globalization, trans-nationalism of production, or placing the raw materials or finished product in right time by moving through sea ,land or air need a perfect place for coinciding the supply and demand. Larger ship, containerisation or latest technology or combination of sea and air or any processes for reliable transport modes, Palmer (1999) identified one point at which a cargo moves from sea to land or land to sea and that is port which attracted geographers, economic historians and sociologist . Recent technical changes in container and bulk handling, port development is essential for staying with the trade clock and reducing the turn round time of the vessel is the main target of authority because shipping is the low return business where investment is very high.

5.6 SEAPORT DEVELOPMENT IN BANGLADESH

The development of Bangladeshi port or developing countries are highly depends on the finance of international donor or loan from international Bank. This literature review will help how Bangladesh can invest locally or international for their port development and infrastructure projects for making easy access to the sea port for using cheap maritime facilities in import and export business. Port is the subsystems of total transport network and meeting place of other modes gateway for the entrance from land to water for crossing the border for representing the country in front of the world trader (Ghosh and De, 2001). In Bangladesh, port is the golden gate of the country because of its importance of serving the nation silently. The people of Bangladesh believed that country moves with the port especially for running the import export trade.

The maritime dependency factor of Bangladesh is about 30 % where 89% of international trade is handled by the prime port Chittagong as the principal gateway of international trade and commerce ( Khanam and Misir,2008). Unfortunately, this port is unable to provide prompt and efficient port operations comparing with private sector port operation in other countries of the world.



-----------------------------------------------------------------------------------------------Roy and Banerjee (2008) identified two great impediments to the development of Bangladesh for trade facilitation and these are poor transport facilities and infrastructure. Inadequate development of multimodal systems, Congestion and inefficiency at major port Chittagong, limited role of private participation in transport etc are the main reasons to develop a good transportation system. Razzaque (1997) added that poor port and related facilities are major factors hindering the development of a logistics system in the country.

Figure 23 ( Chart) Maritime Profile of Bangladesh ( Hoffmann,2004) The above profile indicates the worst situation of Bangladesh maritime industry. The number of population and natural sea access causing the demand of maritime business. Moreover, regional and international demand along with national derived demand forecasted the huge maritime business. Due to natural advantages of seaport facilities in Bangladesh, she can take competitive advantages and develop the transport chain for connecting with the world by trade or providing logistics facilities to neighbours.



-----------------------------------------------------------------------------------------------Prospectus of Bangladeshi seaport is highly described by the noble prize winner Professor Mohammad Yunus (2006) as ―Mega-port at Chittagong is the key to making Bangladesh the cross-road of the region. With the economy of the region growing at a sustained high speed, demand for the access to a well equipped well managed port will keep on rowing. A region, which includes two giant economies, will be desperately looking for direct shipping facilities to reach out to the world. Chittagong will offer the region the most attractive option. Evan today despite the problems of present Chittagong port, Kunming is requesting permission to utilize this facility. With global competition becoming more fierce shorter and shorter lead time for delivery will become magic formula to attract business. An efficient mega port at Chittagong will be in high demand. This port can be built and owned by national or international company with government participation in equity. It can contract out the management of the port to a professional port management company‖. WTO (2006) reported that ―Despite rapid growth of overall trade volume in recent years, and cargo preferences available to Bangladesh flag vessels, a shortage of vessels in the national fleet has prevented them from meeting their allocated share in sea-borne trade‖ Along with the national vessel shortage Bhattacharya and Hossain (2006) found the following challenge for the country‘s competitiveness in international trade as follows:1) Lack of adequate infrastructure of ports (Both Land and Sea) which imposed heavy business costs and long lead times of processing. However, the current infrastructure of the country is so far from conducive to an effective business environment. 2) Rules and regulations are not appropriate for doing international trade. Timely notification of relevant and required amendments to existing laws has hardly been done to facilitate trade. In addition, a little scope of private sector participation in the policy formulations by way of providing suggestions through mutual discussions. 3) Customs valuations and traffic classification ambiguities in the private sector.



-----------------------------------------------------------------------------------------------4) Commonness of corruption among the customs personnel which raised the costs of doing business. 5) Inefficiency of the government bureaucracy has always been a major bottleneck for the country‘s international trade. However, they praised the initiative of government for facilitating the trade like customs administration modernization, development of the prime seaports, establishments of new infrastructures and simplification of documentation etc. In 2001, the major two seaports handled about 4.7 million tonnes of seaborne cargo and it is likely to triple by 2015. Connectively, they argued ― There is no denying that such a growth of international trade demands more efficient port services, cargo-handling services and custom clearance for a cost effective business environment‖ (p-10). A key effect of economic globalization is the continuing increase in maritime trade and traffic( Chodhury,2008). Private participation in port sector is just starting and Bangladesh needs to provide credible assurances to investors that their efforts will not be thwarted by bureaucratic process, lack of adequate resolve in implementing declared policies or regulatory stranglehold. Quick, effective implementation of port reforms could help to mitigate a major constraint for the export-led growth which Bangladesh wants to pursue. Denoting Chittagong port as first generation port of the world, Begum (2006 ;p-5) believed that ― There is no doubt that Chittagong port acts as the life line to sustenance & development of trade, commerce, transport and industry of Bangladesh‖. She added that sustainable development of the country could be achieved by improving the transport sector including seaport facilities where seaport will be performed as per economic strategy of the nation and will act as trade facilitator.



-----------------------------------------------------------------------------------------------However, from the national point of view, the cost of output at Chittagong port is higher than the actual cost incurred for operations (Azad, 2008). This is happening due to the illegal uses of bribe to speed up the activities. So that is a great problems for reducing the cost of clearing the cargo from the port and export trade or for both domestics consumption and export purpose depends on the efficiency and performance of the service supply in the Chittagong port. Regarding private sector participation in Bangladeshi port, Khanam and Misir (2006) showed the way to follow the models used by other Asian countries like BOO, BOT, SOT etc for getting the new physical port or terminal structure. Finally, Azad (2008 :p-102) advised that ― The reorganisation of the supply of port services in Bangladesh should be such that the Government should not be the sole supplier of this service. Next, the Chittagong port should be allowed to cater the needs of not only the users from Bangladesh but also users from the entire region in the neighbourhood of Bangladesh‖

5.7 CONCLUSION Overall, port leads the economic development of a country. Port operates as institutions for promoting industrialization, expansion of trade and commerce, sustaining stability in price levels, settlement of payments for imports and exports. Adam Smith, often regarded as the father of modern economics, saw shipping as one of the steeping stones to economic growth. A country can‘t run without links to the outside world, can never, Adam Smith argued, achieving high levels of efficiency by shipping that means the special role of a port. The physical or quality performance of a port helps to contribute on the national development. The basic aim of economic planning is to bring about rapid economic development through the development of Agriculture, power, transport, communication, cottage industry and all other sectors of the country context Bangladesh. Through rapid growth that means economic growth, the country aims at increasing GDP. Directly or indirectly, port has been fuelling to the all sector of economy for developing in national economy where transport of a country serves as the lifeline.



-----------------------------------------------------------------------------------------------However, from the above literature review regarding port in connection to the intermodal systems, hinterland, and infrastructure of transport systems along with port own infrastructure of terminals, equipments and quays Bangladesh will find the ways to set up a strategies for developing the port services to play an important role in GDP directly and social services indirectly. On the other hand, discussion about economics and others will help to understand the financial outcomes from the port transport by improving the port facilities. Last but not least, overall, development of the Bangladesh maritime industry as an important sector of national economy. Generally, seaports compete with each other for cargo and turnover but cooperation between them has potential social and economic benefits and can possibly contribute to the national policy goals ruled by the national government for public interest (Wortelboer and Kolkman, 2010). This kind of cooperation offers possibilities for counteracting the undesirable side effects of competition also increase the opportunities for the parties involved to improve efficiency. Finally, this literature review will help to compare and contrast the general peoples thinking about port economics and its application for improving seaport facilities in Bangladesh as derived demand of the nation to catalyst the national trade and offering transport service to the neighbours for earning foreign exchange.



------------------------------------------------------------------------------------------------

CHAPTER 6. RESEARCH METHODOLOGY 6.1 Research Orientation

Research is an intensive and purposeful search for knowledge in a scientific way as an academic activity for related information on a specific topic(Kumar, 2008). Ghouri and Gronhaug (2005) believed that research papers at Masters Level might bring the ability of the student for handling and analysing a problem systematically. They also stated that it is a professional training process by which we can learn to think and work systematically that contributes to accuracy and a more orderly approach and these are more reliable in handling research as well as business or other problems. Saunders et al (2009) featured two kinds of business and management research, which are as follows:i)

Basic Research for expanding knowledge of processes of business and management which brought the results in universal principles relating to the process and its relationship to outcomes. Finally, research findings of significance and value to society in general for contributing the social needs. This type of research is undertaken by students in university where the topic and objectives are chosen by the researcher with the prior approval from supervisor or academic authority in a flexible time scales.

ii)

Applied Research for improving the basic understanding of particular business or management problem which results in solution to problem. Finally, the findings of practical relevance and value to the managers of the organisation. This type of research are undertaken by people based in a variety of settings including organisations and universities in a tight time scales.



-----------------------------------------------------------------------------------------------Bell (2009) found that many researchers in areas such as education, business, social science and health are directly connected with the practical outcomes of the research for knowing the facts and understand in order to act and improve comparatively. This dissertation is related to the maritime research that is a part of business research. Maritime research is an infant stage and literature, resources and other references are not plentiful for exploring in detailed or for getting fruitful outcomes but the author tried to find some recommendations from the available sources. Before going to the research methodology, we need to know about the business research and maritime research because of business research activities in maritime affairs especially dealing with the core elements of maritime management like maritime transportation and seaport development. i)

Business Research.

Business Research is a process of planning, acquiring, analysing and disseminating relevant data, information and insights to decision makers in ways that mobilize the organisation to take appropriate actions that, in turn, maximize performance (Cooper &Schindler, 2008). In general, business research (Wisegeek ,2010) refers to any type of researching done when starting

or

running

any

kind

of business

for

starting

any

type

of business requires research into the target customer and the competition to create a business plan. Small business research begins with researching an idea and a name and continues with research based on customer demand and other businesses offering similar products or services. All business research is done to learn information that could make the company more successful. ii)

Maritime Research

Research in maritime policy and management is, to a large extent, concerned with solving problems in the maritime industry and, at the same time, advancing knowledge that is industry specific. In order for it to have a greater contribution and, at the same time, achieve greater recognition outside industry boundaries, there is definitely potential for research outcomes to inform theory outside the maritime realm.



-----------------------------------------------------------------------------------------------It is important that, in borrowing concepts from other disciplines in order to explain phenomena in the maritime industry, we also have a view towards using the findings from our research towards informing the established paradigms in other disciplines. After all, a good theory is one that is ‗refutable‘ and consistent with a body of existing theories, parameters that enable the potential for contribution from research in the maritime industry. To do so it is imperative that the highest standards of scientific methodology are applied. The prime (Dinwoodie, 2000:p-28) concern is to establish and test an appropriate research methodology, which demands an attempt to understand the processes operating which determine how student perceptions of employment roles in the transport roles evolve. Overall, maritime research especially in seaport development is the development of business research where port is the centre of business. Recent trend of moving cargo from one part to another commercially and using the available resources, created the opportunity for developing this trade and feel to do more research in maritime development for the interest of world trade. According to Stake (1995) cited in Bryman and Bell (2003: p.53) ―Case study research is concerned with the complexity and particular nature of the case in questions‖. Therefore, case study research is related to the qualitative research for associating the tendency to be upon an intensive examination of the setting. Bryman and Bell (2003: p.54) added that ―it is certainly true that exponents of the case study design often favour qualitative methods, such as participants observation and unstructured interviewing, because these methods are viewed as particularly helpful in the generation of an intensive detailed examination of a case. Generally, the basic or any other types of research are conducted by collecting the data from two broad sources primary and secondary. Managing Primary data from the source, secondary data also collected by applying two methods Qualitative and Quantitative. Bryman and Bell (2003) stated that principal orientation to the role of theory in relation to qualitative research is in deductive; testing of theory, epistemologically positivism and ontologically objectivism, on the contrary, the qualitative research is inductive ; generation of theory, interpretivism and constructionism.



-----------------------------------------------------------------------------------------------Patton (2002) stated that qualitative methods facilitate the real study and raised the issues, which are focused in depth and detailed. Comparing the qualitative and quantitative research methodology, Patton (2002 : p.5) argued that ― Generally, useful and credible qualitative research findings through observation , interviewing and content analysis requires discipline, knowledge, training, practice, creativity and hard work‖ . He added that approaching (Patton,2002: p.5) field work without being constrained by predetermined categories of analysis contributes to the depth, openness and detail of qualitative inquiry. Secondary sources ( Roberts, 2004) are written by authors who interpret others works including abstracts, indexes, encyclopaedia , reviews and textbook which are useful because these are combined knowledge from many primary sources also provided a quick way to obtain an overview of a specific topic.

6.2 Methodology The research methodology defines what the activity of research is, how to proceed, how to measure progress, and what constitutes success (Perez, 2008). In this project, research is conducted as following diagrams:-

Research Methodology for case study

Primary Research

Secondary Research

Literature Review Questionnaires and Interviews

Primary Published Sources

Secondary Sources

Figure 24 ( Diagram). Diagram showing the Research Methodology used.



-----------------------------------------------------------------------------------------------This research is followed both the primary and secondary research methodology and combined by the qualitative method‘s of primary research and literature review method‘s of secondary research where data extracted from the primary and secondary both sources. Primary data was collected through the questionnaire and also through the literature review, which also identified relevant secondary sources. In terms of research methods, qualitative research analysis of focus group sessions and unstructured group interviews were employed (Dinwoodie, 2000:p-60) . Due to the depth connection of this case study with maritime economics and port development activities of maritime nations, preliminary information are collected from secondary sources like text books, journal articles , academic sound website and e-books by using university library and internet connectively. After that primary sources literature reviewed for exploring the current data and information. In this connection, Government/United Nation (Like UNCTAD, WTO etc) /INGO (Like IMO, OECD, EU, SAARC etc) publications, reports, journals used for statistical data , facts and figures. Due to the easy access and availability of internet in research place and fastest communication method, online is highly used for exploring such kinds of data through Google search engine and university web portal library database The primary research methodology which applied in this research is basically for qualitative data analysis. In a positivist study, it is likely that the purpose of collecting qualitative data is to ensure that all key variables have been identified (Collis & Hussey, 2009). According to Roberts (2004:p.111), ―the qualitative research is really an umbrella term that refers to several research genres that share certain characteristics‖. Moreover , he added that the qualitative approach is based on the philosophical orientation which focuses the people‘s experience from their perspective on related subject arena. Here, qualitative data were collected for getting the real time thought of peoples who are involved in Bangladesh port transport industry. A wide range of scholar and operations oriented persons are participated in this research. Primary research was conducted by interviewing ―expert‖ in the subject matter over telephone. For this purpose, targeted the shipping expert, importer, exporter, port authority and government employee (Trade and shipping related) of Bangladesh and other countries like India, Nepal for telephonic interview. Physical interview is conducted with maritime professionals at London, UK. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 71


-----------------------------------------------------------------------------------------------6.3 Data Collection Data (Bell, 2009) collected by means of questionnaires , interviews or any other method mean very little until they are analysed and evaluated through compiling and connecting with the main topic of the research. Gathering large amount of information but not meaningful for this research should avoided because of the interest of making or getting good output from the data. Good data (Saunders et al,2009) has a number of characteristics which are as follows:a) Data is collected systematically. b) Data is interpreted systematically. c) Data is compiled accurately.. d) There is a clear purpose: to find things out. This dissertation set on a case of port development and preliminary gathered the data from literature review based on research aims, objectives and statement of the problems. After that, the qualitative data were collected by questionnaire to the participants.t.

6.4 Data Compilation There are two kinds of data collected for this case study. Firstly, as described earlier, we examined the published primary sources, as also relevant secondary sources and compiled the valuable information on port development finally . What are the views of great researchers regarding port development and its role in national economy ? What mechanism Bangladesh should take for the port development ? How it is interconnected with the economics? Overall, related literature is reviewed for compiling the data of port for getting the important measures to take initiative for sustainable development of Bangladesh port transport. Secondly, qualitative data by research questionnaire was collected from the participants and compiled to identify factors for increasing the efficiency of Bangladeshi ports. .



-----------------------------------------------------------------------------------------------6.5 Research Questions This research is conducted by the participation of interested people who are related with the Bangladesh port transport directly and indirectly. There are five research questions which are selected finally .The results of the literature review influenced the choice of the questions asked. Port users are playing a key role for choosing the mode of transport also port in their convenient ways like time and cost. Identifying the factors, which help to make a port successful, this research set the first question:01. What are the main factors which make a port successful from the point of view of port users? Having the natural advantages of seacoast, available cargo for shipment also regional and international demand, why not Bangladesh is able to establish one international seaport ? Investigating the barriers or reasons prompted the second question:02. What are the barriers to the development of an international seaport in Bangladesh? Again, the natural advantage and location of Bangladesh is so attractive to serve her neighbours states by providing the maritime logistics facilities. The recent growing demand of these states created the opportunity to do business where domestics service is facing the high cost due to the poor infrastructure and other facilities or national policy. Responding to these demand how Bangladesh will arrange the facilities, was the subject of the third question:03. How will Bangladesh meet the growing demand for maritime access (national, regional, international)? Privatization is the current process for reducing the costs and funding the port transport infrastructure. Depending on foreign investors for infrastructure may not be in the national interest . National policy and strategic long term plan favours privatization but fearing for the creation of monopoly it is also a risk. What is the thinking of peoples regarding port privatization and its risk in Bangladesh set the fourth question.



-----------------------------------------------------------------------------------------------04. Are there any risks to the national interests of Bangladesh from port privatization? An idea can change the style and bring the solution. For more relevant information and others set the last question:05. Is there anything else you would like to add on port development in Bangladesh?

6.5 Ethical Issues

Ethics and integrity of working are very important to complete the research without any interruption and overcome any obstacle faced by the researcher. Now-a-days, the ethical issues are big concern because of its importance for doing real works without any piracy or stolen others activity. Regarding ethical issue and its present situation, Jankowicz (2005 : p.62) stated that ―The development of formally stated ethical guidelines for the conduct of project work is relatively neglected and, until 1998 or thereabouts, ethical guideline for dissertation work was somewhat overlooked‖. Most (Kumar, 2005) professions have established an overall code of ethics for conducting research in respective fields.

Blaxter et al (2001) summarised the research ethics, which are as follows:―Research ethics is about being clear about the nature of the agreement you have entered into with your research subjects or contacts. This is why contracts can be a useful device. Ethical research involves getting the informed consent of those you are going to interview, question, observe or take material from. It involves reaching agreements about the uses of this data, and how its analysis will be reported and disseminated. And it is about keeping to such agreements when they have been reached‖ (P-158).



-----------------------------------------------------------------------------------------------The research followed

the university standard guidelines on ethical issues. Before

undertaking taking the interview, in every case positive consent to participate was obtained from interviewees. They were assured that they and their country would not be identified by name in the dissertation which used X, Y, Z instead of the original name and country.

6.8 Limitation

This project had faced exclusive limitation of data collection. The stakeholder of ports in Bangladesh did not disclose their views regarding national plan and transportation policy. Shipping publication and trade journals cover a wide range of subjects but they too document very little research work (Hawkins and Gray, 2000: p.49). They also added that further evidence of this lack of research literature on shipping strategy could be found the curricula of graduate degree courses in shipping.



------------------------------------------------------------------------------------------------

CHAPTER 7 RESULTS OF PRIMARY RESEARCH The qualitative method of Primary research had used for this research to find out the thoughts of port users, stakeholders and others about port development in Bangladesh. Questionnaires were sent to 60 persons in the Bangladesh, UK, Singapore, USA, Japan and Australia where targeted the GOB employee, associations leaders, consultants and others who are engaged with the Bangladesh or foreign maritime sector. Getting the advantages of internet e-mailing system, questionnaires were sent through University of Greenwich student mail account. Finally, 50 persons are selected for this research because of their deep connection with the Bangladesh port development and expertise in shipping. Physical Interview, telephonic interview also conducted for getting the quick respond from the participants. Of 22 replies received, 12 through e-mail, 8 by conducting telephonic interview and 2 interview conducted at London in UK physically.

7.1 PORT SUCCESS.

1. Development of transhipment areas in an appropriate geographical area. 2. Development of infrastructure and ensure competitive prices and easy access and well developed embarkation facility. Capacity of handling both inbound and outbound cargo to cope with current and projected increase in volume in handling cargo and containers. 3. Create business friendly environment with enough flexibility and accessibility. 4. Organised and planned handling of all incoming ships moored at Chittagong port outer anchorage. Planned scheduling, control and implementation of Vessel Arrival and Departure.



-----------------------------------------------------------------------------------------------5. Co –ordination and sufficient functional equipment with space with proper management and maintenance team. Strong port management authority who will exercises own faults with a good management system. Adequate number of workers, no industrial unrest and disciplined dockworkers‘ management with good & harmonised relation among the management, workers and unions to be maintained. Wages structures of the dockworkers are to be adjusted to increase of cost of living. Right time, right thing at right place that is all the users‘ aspect from the Port operation people/management. 6. Reduction of corruption in system. Port administration should out of corruption fro smooth transaction of the port activity especially in shipment. If the port authority take more time for shipment it decrease the uses of this port for this reason it should be tried to reduce time for shipment. Minimisation of bureaucratic tangles for port operation and customs systems. 7. Use of appropriate IT based documents and orientation of exporters and importers on use of IT. Technology & skill enabled quality service in terms of speed & time, safety & security overall good Security System. 8. Modern Inspection, monitoring and control of the cargo in respect of quality and quantity & Pre-shipment Inspection system. 9. Disposal of unclaimed and un-cleared cargo after minimum waiting period. 10. Political stability at port. 11. Quick service and clearance of cargo from the vessel and yard. Special care for vessel turnaround time and dwell time.



-----------------------------------------------------------------------------------------------7.2. BARRIERS TO PORT DEVELOPMENT.

1) Any default strategic plan and anti-conducive management. 2) An inefficient focal point in the maritime industry. 3) Not to identify effective future growth of cargo. 4) Insufficient draft and narrow channels are using for incoming and outgoing activities at Port. 5) Shortage of infrastructural facility and cargo handling equipment. Absence of modern automated container handling facility and for break bulk ships. 6) Labour unrest and cognizance of labour unrest and elimination of root cause by payment of wages in commensuration with skills of handling modern equipments. 7) Continued depressed economy. 8) Lack of farsightedness of our political leaders is the main barriers for an international seaport. Government policy, restrictions & limitations of Port Authority in terms autonomy, Political unrest & different political view, politically biased unethical trade unionism. 9) Red tape activities within various Government offices/autonomous bodies and related stake holders, non attachments of professionals and skilled workforce in port operation, automation of port operational activities, negative approach and undue advantage seeking mentality of port users. 10) Sea pirates activities at outer anchorage. 11) Multi stage service delivery process from the port. 12) Trade union problem in Bangladesh.CBA activities of multiple services provider & user forum.



-----------------------------------------------------------------------------------------------13) Poor port management and corruption in customs department. 14) Service delay and response delay. 15) Lack of proper risk management. 16) Port security issues. 17) Embarkation cost and lack of facilities 18) Limited embarkation points, berth and container yards. 19) Long waiting for loading and unloading. 20) Shortage of fund for developing infrastructure at port. 21) Lack of openness of the steps taken by any government to the people. 22) Lack of knowledgeable person to show the bargaining power in favour of Bangladesh. 23) Awareness of the benefit of port privatization.

7.3. DERIVED DEMAND OF PORT TRANSPOR.

1) Decision of appropriate plan for strategic location of deep seaport. By establishing deep sea port facility which will start to serve this region to meet the growing demand. Development of a free-business zone. 2) Initiative for world-class port services and comparative price. 3) Establishment of world class infrastructure in port areas. 4) Planning of established neighbourhood development for building trust in this region. 5) Introduction of Automated Container handling system to increase cargo handling speed. 6) Feasibility study of extension, modernisation of port with human resources and equipments.



-----------------------------------------------------------------------------------------------7) Legislative control of workers involving in anti -establishment activities declaring the ports and its channel as KPI ( Key Point Installation ). 8) Introduce bay Crossing container vessels of smaller drafts with lesser number of containers up to the river port in Dhaka. 9) Increase of inland river ports and land ports. 10) To meet the growing global demand our Port facility and Off –dock( Private inland Container Depots) have taken plan to increase the security level up to the international standard . 11) A long term policy and strategy on port operation & facility. 12) Establishing inland container handling riverine port, developing present facilities of riverine ports of various districts, new set up of inland container depot in various region. 13) Multimodal facilities improvement. 14) Skilled & professional manpower engagement in the port operation activities regardless of any political enforcement. 15) Extension of Chittagong port and utilization her vacant space. 16) Need to solve the political problem and trade union problem in port. 17) Setting long-term port management strategy plan. 18) Ensure acceptable service delivery. 19) Facilitate port to meet port user requirements. Acceptable costing plan. 20) Ensure high level of security in port and outer channel. 21) Maintain the channel depth in schedule. 22) Enforce and utilize the maritime law. 23) BOT model for private sector involvement . 24) Equal, non-discriminatory and competitive attitude to all users.



-----------------------------------------------------------------------------------------------7.4 PORT PRIVATIZATION

Very interesting question for the participants and expressed their opinion as follows:-

There is a little chances of risk to the national interests from a port privatization rather would increase productivity and competiveness attitude. The privatization will create many scopes to utilize much more resources as of competitive market with competitive labour costs. However, there will be risk involved if the privatization system will not be free from any complicity like government bureaucrats.

Privatization is better, some time it becomes bureaucratic also .especially this country.

No, but privatisation process has to be rigidly controlled and industry Must not be handled by any politically involved vested interest. Till then it should be a government sector industry as KPI.

As far, I know the private companies are participating in the Berth Operation, so i don‘t think there are any risks to the national interest for doing so. But before that Govt. Must insure and keep in consideration regarding the national security and other threats. I think there are no risks in privatization.

Yes, but I am not interested to write the answer



-----------------------------------------------------------------------------------------------All over the world, many countries operating their port activities privately under certain & strict Government guidelines, statutory rules and procedure which are securing the national interest in terms of National security, smuggling, terrorism etc. In that way, Bangladesh can privatise their port operation activities like pilotage, container & cargo handling, warehousing, berthing & jetty operations, infrastructure development through BOT system etc but ownership and security should be keep in hand under Port authority. Bangladesh owned their main Naval base within Chittagong port area, so this is also a great concern to accept foreign investment in port privatisation.

I guess privatisation will be a good option in perspective of Bangladesh as politicians play an important role in port management committee. As a result, normal port activities hampered and interrupted on the political decision and complexity. On the other hand, privatization can move the sector into monopoly business however it can ensure better services. It could go against the national interest if the government propose to privatize the main sea port in Bangladesh. Alternatively, government can approach for new sea port in interest of private public partnership (PPP).

No, because we have the experience that all of the private institution doing well in our country.

From the above comments, it is clear that port privatization is a great problem in Bangladesh. Mention that Chittagong port is the most profitable public organisation in Bangladesh where privatization of some port services is going on.



-----------------------------------------------------------------------------------------------7.5 MISCELLANEOUS

Regarding port development in Bangladesh, some participants added that only political commitments could ensure effective and efficient trade union and port employee also proper monitoring by anticorruption team. One participant expected that infrastructure development is going on in full swing and very soon the automation of Chittagong Port will be completed which we believe will help all the users to export and import goods and materials in a safe, fast and easy manner. Moreover, the private off docks are handling almost 99% export of our country and they are also ready to take the challenge to serve the international community to get the full advantage of our current sea Port of Chittagong. However they argued for ―Now we are using our one port (Chittagong) extensively. For meeting the growing demand we may use another port located in Mongla and also we might use Chalna port. This two is used hardly though it possible to use and have the potential. Relevancy with the subject is very important in qualitative research. Moreover, this research is highly seeking the minimum maritime knowledge for replying the structured questions. Easterby-Smith et al (2009) reflected on qualitative research and argued that it is a creative process which aims to understand the sense that respondents make of their world. This chapter was aimed to find out the real time thoughts of the participants regarding Bangladesh port transport and its connection for the development of shipping industry. In addition, participants reflection will help to compare or contrast with the literature review so that research can find out some recommendations for improving the seaport facilities in Bangladesh and indicate the economic benefits from port transport. The economics (Rinman & Linden, 1978:p.130) of port investment ought to be based on a short enough lifetime of the installations to allow ongoing adaptation of facilities to meet the constant changes to which the modern transport industry is subject. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 83


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CHAPTER 8 ANALYSIS This chapter is trying to analyse the five questions answer by academic experts view about port development. Thirty two years ago Rinman & Linden (1978) identified two lines of development communication and transportation. To supply industry with raw materials and to distribute manufactured goods all over the world. Efficient (Rinman & Linden, 1978:p.130) port operation is a national concern. During (Branch,1991: p.91) the past century Customs cargo clearance has become a very complicated procedure. To provide a record of export and imports, and so enable the government to assess and thereby control the balance of trade. A port‘s (Alderton ,1984: p 168) hinterland is as large and available as the road, rail, barge and air interchanges facilities allow. Indeed, global (Selkou and Roe,2004:p-25)economic changes are heavily interrelated and shipping is one of the main driving forces which lie behind this complex arrangement and interaction that inevitably Occurs. The development ( Notteboom and Rodrigue ,2005) of global supply chains increased the pressure on three major places : Maritime Haul, Port Operations and Inland Freight Distribution. Inland accessibility is playing a significant role in port competiveness because cargo handling efficiency is depends on the availability of inland transport in both export and import. Resources( Boyce,2002: p.1) and Infrastructures represent two elements that interact in complex ways to support and shape economic activity.. Alderton (1984: p 188) resumed that ―The ship operator wants a quick and efficient turn around for his ship and a good turnout for the cargo‖ Port labour is the most likely cause for his possible frustration. Cost ( Haralambides & Veenstra,2002: p.799) recovery and the pricing of port services are complex and controversial issues, both technically and conceptually because they deal with the development and provision of infrastructure; economic development; public investment; fiscal policy and the role of the state in economic activity. Barriers (Vickerman, R., .2007 )to transport and trade are of three main types; physical or infrastructure, regulatory and market induces or competitive barriers.



-----------------------------------------------------------------------------------------------Port authorities can play an important role through an active engagement in the development of inland freight distribution, information systems and inter-modality. Direct and indirect forms of networking with nodes and market players constitute probably the most important role for port authorities in the regionalization phase, as gaining competitive advantage will more and more become a matter of going beyond the port boundaries both in terms of physical investments and managerial capabilities.

Figure 25 (Diagram). The evolution of a port ( Notteboom and Rodrigue,2005) Notteboom and Rodrigue ( 2005) identified three major steps in port development process as per above figure : setting, expansion and specialization. They argued for regionalization of port for serving other countries in a region for better productivity of port services. Context Bangladesh: having huge potentiality for developing its port as per the model of Bird (1980) as well as regionalization added by Notteboom and Rodrigue ( 2005). Containerisation (Reveley & Tull,2002:142) in particular required coordination between port and city planning over transport links and a shift of focus from ports alone to the total transport chain linking producers and consumers. The Container ( Notteboom,2005: p.173) and inter-modality concept in a metamorphosis, characterised by technological innovations and changes in the organisation and structure of the distribution system.



-----------------------------------------------------------------------------------------------D E M A N D

Changes in trade patterns

Inland Transportation

Competition

Water depth (Ship size-dredging)

PORT DEVELOPMENT

Environmental Pressures

Cargo Handling Technology

Different Ownership/Goals

Port Management

(Region, Country, City and others)

Labour /Trade Unions

Figure 26(Diagram). Factors constraining port development ( Alderton,2005)

Seaport (Olson,1988: p.307) accountability may appear straightforward enough at first glance: if seaports are public agencies created by government, they should be required to render an accounting for their actions and their performance according to well-established standards

regularly

applied

to

Rimmer,2004)system development

government

departments.

Port

(

Comtois

and

depends on the three major cities : Port ranges. The

hinterland and the intermodal split. For developing a hub port, Samanta and Mohanty (2005) identified three kinds of facilitators in nature as follows: 1) Physical Facilitators like suitable geographic location, deeper draft channel and berths, adequate aggregation of cargo, well developed cargo feeder network, sophisticated cargo handling equipments and sound labour practice. 2) Financial Facilitators for maintaining the port tariff rationale and economically 3) Procedural Facilitators for framing the appropriate but simplified customs procedures and other laws.



-----------------------------------------------------------------------------------------------A public ( Hershman & Bittner,1988: p 52)port is charged with operating in the public interest.

It must be attentive to new ideas and opportunities, and to change in the

community‘s values. furthermore, a public port ‗s organisational structure and operating procedures should encourage flexibility, for the organisation must have the power, financial resources and administrative mechanism to act on new opportunities.

Song and Lee ( 2005:p145) defined that a hub port is an area serving such functions as a transhipment centre and a gateway for the larger hinterland by connecting mainline services with various feeder networks. Song and Lee ( 2005;p148) recognized six dimensions for determining port selection factors which are as follows:1) Port Infrastructure and Port Equipment 2) Port Charges 3) Port Service Quality and Scope 4) Port Location 5) The Carriers service in port and 6) Inland Transportation. In the privatization(Reveley & Tull,2002:145) and deregulation wave that ensued, two main arguments were used to justify moves away from the central planning of ports. First, competition encourages ports to provide better and cheaper services. Second, port users have the maximum freedom to pick a port that matches their needs, which in theory leads to the efficient movements of ships, cargoes and passengers. Regarding port privatization, Dowd ( 1988) positioned that privatization is not such a good idea. He argued that ― A public body can make decisions that are much more long term than a private organisation. A private organisation is worried about next quarter‘s results but a public agency would more willing (and able) to accept lean years to accomplish something in the long run‖(p-225)



-----------------------------------------------------------------------------------------------Justifying the privatization of port Tull and Reveley (2008) argued that a mixture of economic, budgetary and ideological reasons has driven the privatization . Private port is deregulated by the new management. The impact ( Everett, 2005:p-99) of deregulation has been so significant that stevedoring companies and rail and truck operators as traditional modal operators have significantly restructured their operations in order to become market focused third party service providers of a range of integrated functions. A review ( Baird,2005) of survey is undertaken by IAPH during 1998-99 focusing on the world‘s top 100 container ports and Baird highlighted the advantages and disadvantages of port privatization on the light of that survey. IAPH ( 1999) survey found (50% argued) that the basic aim of port privatization is to reduce the cost and improve the productivity and efficiency, thereby enhancing overall economic performance.

Figure 27 (Chart) Advantages of Port Privatization (Baird,2005: p137)



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Figure 28 ( Chart) Disadvantages of Port Privatization (Baird,2005: p137) . On the contrary, port privatization created political or commercial ambiguity where government lost control power. But significantly, Port (Branch ,1998:p.172) Privatization offers an injection of private capital into the business, a greater focus on automation and productivity and, above all, a market-led strategy. Branch (1998:p.172) argued that port privatization encourages all employees to develop a marketing focus to raise the profile of the port and attract more business through being more competitive and providing quality of service. Landside(Haarmeyer &Yorke, 1993) port property and fixtures of the country's major ports are generally owned by state and local governments with government port authorities acting as the governing entity. Bringing the key success factors of Singapore Port, Tongzon (2005) found the followings:1) Strategic Location 2) High level of operational efficiency 3) High port connectivity 4) Adequate infrastructure 5) Adequate information technology. Information interchange with custom and between the intermodal organisations , overall, a wide range of port services



-----------------------------------------------------------------------------------------------Tongzon (2005:p 175) refereed that the success of the port of Singapore developed not only its unique geographical location but also the result of proactive government intervention and the effective implementation of appropriate seaport policies also strategies which created an environment that nurtures openness, efficiency and accountability in its port operations and services. This example indicated that Bangladesh might turn into same position. Government-owned (Haarmeyer &Yorke, 1993) and operated ports face many problems. Lacking exposure to full commercial competitive pressures, publicly owned and operated ports may have reduced incentive to operate efficiently and are often subject to political interference. These public ports can absorb scarce funds from local governments and drag down local economies. On the other hand, efficiently operated public ports, such as the ports of Los Angeles and Long Beach, are often targeted by cities that want to siphon off surplus funds. The natural ( Farthing and Brownrigg,1997:p82`)tendency of all nations, including the traditional maritime countries, is to look at shipping from their own national perspective and to see where they can gain an advantage. Connectively, Shipping ( Boyce,2008: p.165) has always been a ―networked‖ industry, and its history therefore has much to offer in terms of insights into the structure, processes and dynamics of the organisational form. Branch (1988) argued that ship operations is highly depends on the maximum efficiency of port especially in ship turnaround time. He also stated that good road, rail and canal communication should be available for increasing the port productivity.



-----------------------------------------------------------------------------------------------

CHAPTER 10. CONCLUSION The purpose (Jansson and Shreerson,1982) of a port is to make possible a smooth transfer of freight between sea and land transportation. The (Chia et al 2003) forces of globalization, rapid advances in transport technology and recent developments in the shipping industry have affected port operations and their bargaining position relative to that of the shipping lines. The journey of this project was started with a motto of finding some ways to show the economics of port transport by improving seaport facilities in Bangladesh. The Principal (Jansson and Shreerson,1982) factors of production of a ports are quays, port cranes, stevedoring labour and administrative staff, transit storage space and time of ships and land transport vehicles. In addition, there are port inputs that are to a large extent fixed and independent of throughput such as the approach channel, the harbour basin and access roads. Firstly, it is the derived demand for Bangladesh because of her continuous development of trade ( Import –export). Moreover, regional demand of India, Nepal and Bhutan for using Chittagong and Mongla ,river ports of Bangladesh for their growing demand of port transport which are not feasible by their own country or land-locked situation. In addition, China and Myanmar both are seeking seaport facilities from Bangladesh as they are locating in a suitable location in Bay of Bengal or geographical advantages for minimizing cost and tome of their trading commodity especially for import. Transit, Transhipment or corridor any facilities are highly required in this region for development. Significantly, this is matter of trust and that will develop regional connectivity especially for SAARC. The author of this project is believed that Bangladesh can take this available opportunity as trade for proving the port transport facilities, which will add the economic benefits or increase GDP. The GDP ( Khanam and Misir 2008) growth rate is around 6 to 7 % but container growth rate is about 14 %. McConville (1999) argued that Industrial economic development is the central factor in the volume of international seaborne trade, but the volume can also be influenced by technological development as well as political factors. Above the circumstances



-----------------------------------------------------------------------------------------------From this research the followings are essential for creating the scope of maritime Trade. 1. Infrastructure development of port, road and highways, rail connection, traffic systems and others. 2. Formulate and implement port policy and feasible pricing of port transport by complying WTO guidelines and must be a minimum for domestic cargo. 3. Avoid the political affairs and put the port and its channel out of political activities. 4. Research on port transport for future trade forecasting of country, region and others also pricing strategy and the position of other rival ports. 5. Exclusive training of port officials and related peoples for better functioning of existing and planned port facilities .

Maximum output of the research came from the literature review and result of primary research where reader will find how port is functioning and playing a role in transport system affect on the economy of a country. In addition , the research also find how peoples are thinking on the development of Bangladesh port transport system as she haven‘t any good position in world port industry even in Asia.. The main work done by analysing the literature review and the answers of research questions by the participants on the survey. This case study got more speed when the author visited two major ports of Bangladesh ,Chittagong and Mongla and discussed project details with the employee, workers , port users and other stakeholders. It is important to note too that having geographical advantages with linking facilities with neighbouring countries, the country is lagging behind in facilitating port services due to shortage of planning, good policy, and qualified personnel in this sector. However, finally, this project counselled some recommendations to overcome for situation and further development for structuring international standard port transport system. Overall, this project will help the reader to take reference for any research on port development especially for Bangladesh context South Asia including southern part of China and Myanmer, The author believes that Bangladesh will develop her port transport system to cope with the demand of globalization to stay with world trade. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 92


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CHAPTER 10. RECOMMENDATIONS Based on the research conducted for showing the economics of port transport by improving seaport facilities in Bangladesh, the following recommendations are suggested. Mention that all recommendations are the result of this study, will not be affected to any person, any organisation, or any government for implementing their own strategies:01. National Port Policy. Strategies ( Hawkins and Gray, 2000) can be grouped into three levels : Corporate (Top- within the organisation Master Strategies), business and functional. ( Lower level). For Master level strategies need to formulate National Port Policy for domestic purpose and Foreign Port Policy for using Bangladeshi port by others or transit policy for neighbours. 02. IT Development. It (Drewry,1998) is impossible to operate the port efficiency without information Technology. Need to establish minimum three main technology applications which are as follows:a) Portintranet- Internal management of port that will be used by port officials only. b) Portextranet- External management with all users including shipping agents, freight forwarders, off docks, C&F and others. c) PortGOVnet- Strategic and financial management with Government and Customs. 03. Port Privatization. Putting the main management of port on the hand of concerned ministry or government need to privatize various services to national people. Coping the present condition of Mongla port , need to fully privatize to provide port services to the neighbouring countries. 04. Port Pricing. The right ( Haralambides & Veenstra,2002: p.782) prices can lead a port to prosperity and growth : the wrong ones can guide it to extinction or to the proliferation of subsidies and inefficiency. Depends on the commodity handling quantity and forecast , need to revise the pricing of port service but must different for other countries and must higher than the domestic cargo. The Economics of Port Transport: Improving Seaport Facilities in Bangladesh - A Case Study. Saha razon chandra. ID#000575867 Page 93


----------------------------------------------------------------------------------------------05. Political Stability. The political (Branch ,1998:p.183) and economic focus of port should be considered. Political stability and sound economic growth are desirable features. The opinion of political leaders may be different but must not interfere on the port and her supply chain activities for keeping the national interest. 06. Environmental Management. Need to sustain on environmental damage caused by air and water pollution. Environmental (Wooldridge & Stojanovic,2004: p.191 )management of ports and port areas concerns the functional organisation of activities and operations specifically to attain high standards of environmental protection and the goal of sustainable development. 07. Performance Monitoring. The epitomizes Branch (1998:p.183) the efficiency which is so essential to the efficient turnaround of vessels and continuous access to the port. The continuous ( Cullinane,2002 : p.826) monitoring of comparative measures of performance in all relevant forms will become pivotal to the successful management of port and terminal operations. 08. Container Off dock in major cities. Like Chittagong, NBR can provide license for off-dock or ICD in major cities for inspiring the businessperson to establish industry. 09. Transit . Muhith (2010) told that Bangladesh is a transit country. Alderton (1984: p 180) Ports may be serving a regional trade and traffic may be dislocated by decisions of neighbouring countries. It is the great time to give transit facilities by imposing reasonable standard international pricing. 10. Riverine container port. Need to improve the existing river ports and develop as spoke ports by connecting Chittagong and Mongla for container transportation by barge . Some riverine container port may be used by India and Myanmer.



----------------------------------------------------------------------------------------------11. Commercial zone. Alderton ( 2005) stated that port is the major economic multiplier for the nation‘s prosperity because it is not only a gateway for trade but also a attracting place for commercial infrastructure in the form of banks, agents, storage, depots , distribution canters etc as well as industrial activities. Bangladesh can establish commercial zone by cantering her ports. Industrial Park. Free Trade zone & EPZ may establish by connecting port or near port. 12. Human Resources. In an informal discussion, one respondent suggested that professional background of port managers many of whom are former naval officer is not suited to the demands and needs of running a port. Therefore, need to recruit professional people, well-trained staff who are highly qualified in maritime management. 13. Utilization the capital of Chittagong Port. At present, CPA has huge liquidity that can utilize on port development (This information is collected from reliable source during physical visit of Chittagong port by author) . Relatively, it may use for the development of Mongla Port and road construction. 14. Infrastructure Development. This is highly recommended to the government by PPP methods especially urgent construction of four lanes road of Dhaka-Chittagong for easy connecting of capital city with the main port. 15. Cooperation &coordination. The development (Reveley & Tull,2002:142) and operation of ports requires cooperation and coordination between a myriad of public and private agencies, including port authorities, road and rail authorities, local councils, shipping companies, stevedoring companies and shipping agents. Port authority should organise regular meeting with them for identifying any problems and their possible solutions.



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Appendix 1 Survey Statistics Preliminary Selected as Participant and Communicated...60 Persons Finally selected as Participant and Invited........................50 Persons Participated on the survey finally...................................22 Persons

Note. Deleted the original name of the Participants. Table.09. Research Participant List.



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Appendix 2 time table Activities

From

To/On

Submission of Research Proposal to Business School of University of Greenwich.

22.02. 2010

Discussion with GMI about research topic and submitted the proposal to GMI on the prescribed form.

22.02.2010

27.03.2010

Final Selection of Topic and Supervisor as per GMI criteria of business research project for Maritime MBA.

19.04.2010

31.05.2010

Conduct the first meeting with supervisor for research planning and others. Mind mapping and explore the topic.

04.06.2010 05.06.2010

Second meeting with supervisor for setting the outline of the dissertation.

28.06.2010 29.06.2010

E-mail and set the time & date with stakeholder of Bangladesh for telephonic interview.

30.06.2010

06.07.2010

E-mail and set the time & date with stakeholder of India, China, Nepal, Myanmar and Bhutan for telephonic interview. Third meeting with supervisor on July 12 2010.

07.07.2010

12.07.2010

E-mail and set the time & date with some shipping personality at London in UK. Fourth meeting with supervisor on July 24 2010

13.07.2010

24.07.2010

Gather information by telephonic and physical interview and data analysis. Fifth meeting with supervisor on August 11 2010.

25.08.2010

11.08.2010

Working on Literature Review and Methodology. Sixth meeting with supervisor on August 18 2010.

12.08.2010

18.08.2010

Working on Country Profile and Transport systems of Bangladesh. Last meeting with supervisor for research guidelines for Bangladesh Port Industry on August 26 2010..

19.08.2010

29.08.2010

Travel to Bangladesh from UK for research activities.

30.08.2010

31.08.2010

Report drafting and further development.

01.09.2010

30.09.2010

Conducting practical survey by visiting two major ports of Bangladesh ( Chittagong and Mongla)

01.10.2010

20.11.2010

Report drafting, develop and finalize. Final feedback from supervisor through email and further editing.

20.11.2010

08.12.2010

Final Report Submission

09.12.2010

Table.10. Research Schedule.



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