Air and maritime ports play a pivotal role in trade for South Asia. There are three types of maritime ports: (1) transshipment hubs, (2) regional hub ports, and (3) regional seaports (Subramanian and Arnold, 2001). Transshipment hubs are located on or close to major shipping routes and attract frequent calls by large shipping lines. The port of Colombo in Sri Lanka is presently the only transshipment hub and is the most developed and successful port in the region. Colombo’s ranking in the top 100 container ports in the world is declining, however, primarily due to intense competition from Chinese ports.<sup>13</sup> Nhava Sheva port, India’s largest port, is considered as a regional hub port. Regional seaports handle feeder services from the major transshipment hubs. Examples are the port of Calcutta, port of Haldia in India, and port of Chittagong in Bangladesh.

South Asia’s low port efficiency ranking today, as noted in Figure 4, is reflected in a number of problems. There is congestion in regional hub ports and regional seaports and the associated delays prevent exporters from guaranteeing “just in time” deliveries. For example, on August 6, 2004, _Business Standard_ reported continued problems of congestion at the Nhava Sheva port in India. At this regional hub port, exporters are “estimated to lose around Rs800 core a month because of delayed shipments.” They usually pay 4 percent of the product value for shipment. Due to congestion, however, an exporter had to send his consignment by air, which cost “40 per cent of the value of the product” ( _Business Standard_ , August 6, 2004). Delays at regional seaports are longer. In contrast to transshipment hubs and regional hub ports, regional seaports do not operate on a fixed day-of-the-week schedule. This can cause delays and uncertainty in turn-around time at the ports. Subramanian and Arnold (2001) also highlight the problem of excessive delays in moving cargo through the ports of Calcutta and Chittagong in Bangladesh and the associated impact on trade.

There are clear indications of progress being made in addressing the obstacles noted above. Global container terminal operators are moving to invest in upgrading facilities in South Asia. India has instituted a policy to encourage private sector investment in ports, including inland waterways. As part of these developments, India has awarded $460 million in contracts to upgrade the Rajiv Gandhi Container Terminal in Cochin and build a new terminal at Vallarpadam. Maersk, a liner shipping company, has been awarded the concession for the second private container terminal at JNPT in Mumbai. In Pakistan, international operators, Hutchinson and P&O, are operating container terminals in the Ports of Karachi and Qasim.

# (2) Land Transportation

The lack of cross border transit points and road connections across the region are significant hindrances to intra-regional trade.<sup>14</sup> For example, barriers to trade and commerce in Afghanistan are centered, in part, on both problems in infrastructure, as well as cargo transshipment.<sup>15</sup> There is an inland water transport route between India and Bangladesh. Goods moving between India and Pakistan often must be transshipped

> 13 Kruk (2004). 14 See for example; World Bank (2002b) and World Bank (2004b). 15 World Bank (2004b).

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