Productivity improvements have unlocked 50 million tons of annual capacity at India’s 12 major ports without incurring capital expenditures.
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 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:
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.
The transformation program developed by BCG led to significant and lasting improvements for India’s 12 major ports: