Why ports matter for the global economy

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Photo: Stuart Price/KEPROBA

Since the start of maritime trade, ports have played a central role in the economic and social development of countries. More than 80 percent of global merchandise trade (by volume) is transported via sea routes. A considerable and increasing proportion of this volume, accounting for about 35 percent of total volumes and over 60 percent of commercial value, is carried in containers. Container ports are essential nodes in global supply chains and are crucial to the growth strategies of many emerging economies.

The development of high-quality port infrastructure, operated efficiently, has often been a prerequisite for successful growth strategies, particularly those driven by exports. When done correctly, it fosters the necessary confidence to attract investment in production and distribution systems, supporting the growth of manufacturing and logistics, creating employment, and increasing income levels.

By contrast, a poorly functioning or inefficient port can hinder trade growth, with a profound impact on the Landlocked Developing Countries (LLDCs) and Small Island Developing States (SIDS). The port, along with the access infrastructure (such as inland waterways, railways, or roads) to the hinterland, is a vital link to the global marketplace and needs to operate efficiently. Efficient performance encompasses several factors, such as the port's efficiency itself, the availability of sufficient draught, quay, and dock facilities, the quality of road and rail connections, the competitiveness of these services, and the effectiveness of the procedures utilized by public agencies for container clearance. Any inefficiencies or non-tariff barriers will result in higher costs, reduced competitiveness, and lower trade volumes.

Efficient port infrastructure has also been identified as a key contributor to overall port competitiveness and international trade costs. Unfortunately, ports and terminals, particularly for containers, are too often main sources of shipment delays, supply chain disruptions, additional costs, and reduced competitiveness. The result far too often is that instead of facilitating trade, the port increases the cost of imports and exports, reduces competitiveness, and inhibits economic growth and poverty reduction. The effect on a country or the countries served by the port can be severe. Inefficient ports can slow the circular system of container shipping, thereby reducing capacity, and reducing costs. Ships have to wait unnecessarily incurring additional fuel costs, additional emissions, and additional costs.

Improving container port performance lowers the cost of trade, contributes to food security, improves resilience, and reduces unnecessary emissions from vessels. The role of ports as the linchpin in the global economy is a major reason why the World Bank and S&P Global Markets are tracking port performance for nearly 350 global ports in the Container Ports Performance Index (CPPI).

The third edition of this ranking is now available, and the data from 2022 show that globally, ports are continuing to recover from pandemic-era disruptions as falling demand allowed ports to clear backlogs.

But despite ongoing recovery, the ranking indicates much scope for efficiency improvements at global ports through development of better infrastructure, technical innovations and digitization, as ports seek to improve asset productivity and customer service and contribute to industry emissions reduction targets.

The CPPI and the underlying data are intended to identify gaps and opportunities for improvement for the benefit of key stakeholders in global trade, including governments, shipping lines, port and terminal operators, shippers, logistics companies and consumers. By identifying top performers - and those with scope for improvement - we can determine what port advancements and strategies should be replicated elsewhere. These insights help inform our work with developing countries as they continue to develop their port systems and seeks ways to contribute to sustainable and resilient supply chains.

Download the latest edition: Container Port Performance Index 2022.