Optimizing private and public mode of operation in major ports of India for better customer service

Abstract

PurposeThe Government of India announced its liberalization policy in the year 1991. Since then, the major ports in India introduced privatization in various forms into their operations. However, the share of total traffic (cargo) handled by major ports fell from 90 per cent in 1991 to around 70 per cent in 2015, losing share to minor ports. These major ports, except for the port of Kamarajar, are governed by the Major Port Trust Act, 1961. None of the Indian ports feature amongst the top 20 ports of the world. Interestingly, several ports in Asia, namely, seven ports from China, Singapore, Hong Kong and Malaysia are on that list. Several studies and reports have shown that privatization in India did not yield the desired results. Ports in India have adopted a hybrid mode of governance, aligned between a landlord port model and a service port model. This paper aims to address the question – What is the optimal way to mix privatisation and government control in the operations of major ports of India.Design/methodology/approachIn this paper, the authors attempt to develop an optimization model for port planners to decide on the optimum mix of privatized and self-managed operations so as to maintain efficiency and maximize revenue.FindingsThe model tested on a major port in the country shows that the present privatization policy followed by the port needs revision. A similar plan to revise their policies can be carried out for other major ports in the country.Originality/valueThe model is generic and can be used by any port in the world operating under conditions similar to those in India.