Thursday 20 November 08 - 10:50
 

Insight & Opinion

Port reform and the art of privatisation

At a recent maritime and logistics conference in Israel, (Port2Port) the Israeli ports of Haifa and Ashdod were heavily represented, as was the Port of Aqaba, Jordan, and the subject of port reform and privatisation was high on the agenda.

Port Strategy: Israeli ports such as Ashdod desparately want to privatise
Israeli ports such as Ashdod desparately want to privatise

The Israeli port reform program is mandated by legislation. The objective is to generate competition and improve the efficiency and level of customer service at Israel's ports. There are major investment plans in Haifa and Ashdod ports and the privatisation part of the reform is to sell 15% of the port companies in 2010 with further sales taking place up to 2018.

The three port managing directors were united in their complaints about their inability to develop as they would like, facing constant day-to-day interference by their government overseers, lack of agreement with the unions, and no real control over their assets.  In terms of actual privatisation, there was hardly a sniff of it. As for competition, they all use a common tariff which was a sore point.

In contrast, the representative from the Port of Aqaba highlighted the problems that his port had faced in the past: low productivity, over-manning, lack of investment, poor equipment and low throughput. Here, the Government stepped in to allow for a new landlord/terminal operation to be developed and with a major investment by APM Terminals, Aqaba today has a vibrant, modern container terminal that is operating relatively efficiently with much improved throughput and very large containerships calling at the terminal. A true success story.

The connection? A port reform act in Israel that did not go far enough and that has resulted in virtually all container lines ceasing direct services, using Egypt's Port Said as the transhipment port. The ports remain starved of investment, have significant labour problems and as for privatisation, the plan in place is not really workable. One senior speaker asked: Why is it that Egypt and Jordan can manage to privatise their port operations and Israel cannot? The contrast between Israel and its neighbour is like day and night.

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Israeli ports such as Ashdod desparately want to privatise

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