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Transforming India’s Ports

BCG helps India’s 12 major ports make sustained improvements in efficiency, costs, and competitiveness.

India’s 12 major public-sector ports are the country’s gateways to domestic and international trade; they account for nearly 55% of sea trade in the country. Among them, the ports handle all major commodities, including dry bulk (coal, iron ore), containers, break bulk, and liquid bulk. The ports are also characterized by substantial differences in topography, ranging from deep-sea ports to tidal ports and even river ports.

While capacity-enhancement programs ensured that the ports kept up with demand over the years, most of the 12 ports tracked lower on operational efficiency metrics, such as turnaround times and berth productivity, than their national and international peers. Lower operational efficiency affected the ports' ability to efficiently utilize existing infrastructure and caused them to lose significant market share to more efficient ports. As a result, the 12 ports’ profitability eroded from 42% to 28% over eight years.

In addition, the low productivity increased the overall logistic cost for the economy, directly impacting the country's aspiration of becoming a manufacturing hub. Therefore, it was critical that these ports improve their operational efficiencies and lower costs in order to maintain competitiveness and meet future growth. They turned to BCG to help transform their operations.

The BCG Approach

The BCG team worked closely with the port teams across more than 200 berths. In addition to diversities in cargo mix and topography, these berths were also characterized by substantial differences in ownership (port-owned, privately owned, PPP, or BOT) and modes of operation (mechanized versus conventional).

The BCG team first sought to identify key levers for improving the ports’ productivity, profitability, and operational efficiencies while ensuring that the ports would meet future growth demands. Detailed financial and operational benchmarking and interviews with stakeholders were carried out to formulate transformation strategies for each port. Root-cause analysis was carried out at all of the ports in close association with individual port teams. BCG used this data to formulate a structured action plan:

  • Provided benchmarks that allowed the 12 ports to compare their performance with that of their Indian peers and other international ports and identify solutions for performance gaps.
  • Performed detailed analysis of underlying drivers for operational productivity improvement across different stages of supply chain (from berth to yard to evacuation), and identified customized levers for productivity improvement at each port.
  • Worked closely with government and private stakeholders in identifying support infrastructure required to improve operational productivity and unlock savings for ports as well as trade.
  • Engaged with government, ports, and users to draft and roll out new policies across ports (performance norms policy, stevedoring policy) aimed at improving operational and financial efficiency across ports and reducing logistics costs for trade.
  • Developed a roadmap for operational improvement at each port to address identified performance gaps, which led to more than 100 initiatives.
  • Performed a detailed maturity assessment of operational capabilities using a structured framework, and compared the results to leading global practices to identify key enablers required for successful implementation of initiatives.

The observations and analyses from the benchmarking and deep-dive interviews were integrated into a practical set of initiatives for the ports. In all, 104 key initiatives—with a total value potential of more than $320 million for ports and $200 million for the trade—were identified. BCG also helped design an app that tracks critical operational metrics at the ports in real time, making performance measurement and reporting more transparent.

Impact of the Transformation Program

:

  • Productivity at the ports improved by about 20% in six months; at some ports, productivity improved by 70%.
  • Improvements in productivity unlocked 50 million tons of annual capacity, which translated to more than $320 million in value potential for ports through capex avoidance and increased cargo throughput. More importantly, an additional 30% to 40% capacity was unlocked in previously capacity-constrained ports.
  • Between $175 million to $200 million of value has been created for India’s trade ecosystem through improvements in operational efficiency at ports.
  • Operating surplus increased by about 19% across all 12 ports, from $530 million to $630 million.
  • For the first time, the public ports were able to gain market share from private ports. Additionally, several private ports were forced to reduce pricing in response to the major ports’ improved efficiency, directly benefiting the overall trade ecosystem and the Indian economy.

Public Sector
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