EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
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Economies of Scale<br />
Port operations such as cargo handling services have been shown to have increasing returns<br />
to scale 80 . Figure A.34 which plots data for a selection of (anonymous) Latin American ports<br />
demonstrates that economies of scale do exist.<br />
<strong>The</strong> chart shows the number of TEUs processed per hour increases in direct proportion to the<br />
total number of TEUs processed per year. More specifically: larger vessels have lower costs per<br />
container than smaller vessels. Large vessels also require bigger ports and equipment. Larger<br />
ports also employ bigger cranes and other equipment which have greater throughput. <strong>The</strong>y are<br />
able to make more intensive use of the port assets and can also achieve economies of scale in<br />
the management of port operations.<br />
<strong>The</strong> main commercial ports in the <strong>Pacific</strong> are significantly smaller than most of the<br />
comparators and have had limited access to funding for upgrades equipment and<br />
maintenance. Most port infrastructure in the region has been funded by donor grants 81 . <strong>The</strong><br />
low volume of traffic at some of the smaller <strong>Pacific</strong> ports means that any investment in port<br />
infrastructure produces a relatively low rate of return. <strong>The</strong> low rate of return is a deterrent to<br />
investment. Kiribati provides one example of this where economic analysis of a development<br />
plan to construct a new wharf allowing alongside berthing of 90% of the ships calling, was<br />
shown to provide a low rate of return because of the small cargo volumes compared with the<br />
large capital investment required to bring the facilities up to an international standard 82 .<br />
Figure A.34: Central American Ports, Throughput and Movements 1999<br />
Source: Hoffman (2001) Grafico 4 in Caribbean <strong>Infrastructure</strong> Review, Castalia 2004<br />
80 “Caribbean <strong>Infrastructure</strong> Review”, Ports and Maritime Services Section, Castalia, June 2004<br />
81 <strong>Pacific</strong> Regional Transport Study, AusAid, 2004<br />
82 “Review of Maritime Transport 2000”, Chapter V Port Development, United Nations, 2000<br />
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