Optimizing Private and Public Mode of Operation in Major Ports of India for Better Customer Service

Prior to 1991, in India, due to government dominance, port-customers did not get what they needed as they had to satisfy themselves with the port-offerings. This was so as for long time ports were inflexible to the changes in the need of port-customers. After, the liberalization process started, since 1991 in India, many of the major ports, administered by the Union Government of India have been shifting to privatization of its operation. Meanwhile globalization of world’s economy, monumental development in transportation and logistics sector and magnum changes in information technology have led to the explosion of availability of port-customers’ service-options and service-providers. In India, the number of ports increased manifold. There were around 10 ports prior to 1970s. At present there are 13 major ports administered by the Government of India while around 200 ports under the state governments. The bulk of the government expenditure is directed to the major ports of the country. But the returns are much less. The share of the major ports reduced from 90% (prior to 1991) to 70% in the year 2015. The span of choice for port-customers is increased which eventually led to the changes in the role of port. The major ports looked for private partnership to cope up with their dwindling share. At this stage, the major ports in the country has a hybrid state of governance aligned between a landlord port model (i.e., fully privatized management and operations) and a service port model (i.e., fully self-managed with no private participations). However, studies show that inspite of introduction of private participation these ports are yet to figure in the elite list globally. In this paper an attempt has been made to understand the cost-revenue dynamics of the hybrid state of governance of the major ports of the country and propose a computational framework to determine the optimum size of privatization by the major ports and opt for other measures to maximize the port efficiency, inter-alia customer satisfaction and revenue.