The Chittagong Port Authority (CPA) and the Red Sea Gateway Terminal International (RSGT) Deal: Towards Better Port Management

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The recent agreement between the Chittagong Port Authority (CPA) and Red Sea Gateway Terminal International (RSGTI) marks a significant stride towards enhancing port management and facilitating seamless trade connectivity. This landmark deal, witnessed by Prime Minister Sheikh Hasina and Saudi Investment Minister Khalid A Al-Falih, is poised to reshape the dynamics of the Patenga Container Terminal (PCT) and, consequently, the broader economic landscape of Bangladesh. This article explores the outcomes of the agreement, shedding light on its implications for port efficiency, economic growth, and regional connectivity.

The Deal

This milestone deal, marks a noteworthy collaboration on a public-private partnership (PPP) and government-to-government (G2G) basis, spanning the next 22 years. The agreement underscores the commitment of both parties to usher in a new era of port management and operational excellence. RSGT, an international terminal operator with strategic partnerships, including one with the Malaysian Mining Company (MMC), is set to play a pivotal role in the operation of PCT. The terminal, strategically located some 242 km southeast of Dhaka, spans over 32 acres and boasts three jetties with a combined length of 600 meters. It has the capacity to handle an additional five lakh TEUs (twenty-foot equivalent units) of containers annually, showcasing a significant boost in Bangladesh’s maritime capabilities.

Under the terms of the agreement, three vessels with an 11-meter draft will have the capability to berth simultaneously at the terminal, leveraging its close proximity to the estuary of the Karnaphuli River. This strategic location, complemented by the recent construction of the Bangabandhu Sheikh Mujibur Rahman Tunnel, South Asia’s first underwater tunnel, by China, adds a unique infrastructure dimension to the terminal’s operational efficiency.

The collaboration between CPA and RSGT signals not only a bilateral agreement but also a broader partnership between nations, reflecting the shared commitment to economic development and maritime progress. The 22-year term of the agreement indicates a long-term vision for sustained collaboration, emphasizing stability and continuity in the management and operation of PCT.

Pivotal Impact of The Deal

Investment Influx

RSGTI’s commitment to invest approximately $170 million in upgrading the Patenga Container Terminal signifies a substantial financial injection into Bangladesh’s port infrastructure. This influx of capital is poised to catalyze economic development, create job opportunities, and stimulate ancillary industries, contributing to the overall growth of the national economy.

Gateway to Global Trade

As the PCT acts as a gateway for 90 percent of Bangladesh’s import and export activities, the agreement holds the promise of transforming it into a more efficient and internationally competitive facility. The enhanced handling capacity and streamlined operations are expected to reduce import-export expenses, positioning Bangladesh as a more attractive player in the global trade arena.

Regional Economic Growth

The geographical advantage of the PCT at the estuary of the Karnaphuli River opens up opportunities for neighboring countries such as India, Bhutan, and Nepal to utilize the terminal. This regional accessibility not only strengthens economic ties but also positions Bangladesh as a crucial hub for trade and commerce in South Asia, fostering mutual economic growth.

Technological Advancements

RSGTI’s expertise, demonstrated through managing Saudi Arabia’s largest terminal facility at Jeddah Port, brings with it advanced technological know-how. The integration of modern equipment and efficient cargo handling systems at the PCT is expected to elevate the port’s operational standards, promoting a technologically advanced and competitive maritime ecosystem.

Healthy Competition and Efficiency

The introduction of a foreign operator with a focus on modern equipment and superior service at the PCT is likely to foster healthy competition among port operators. This competition, driven by a commitment to better services at lower costs and reduced handling times, is anticipated to drive efficiency improvements not only at the PCT but also at other terminals operated by the CPA.

Strategic Importance for Saudi Arabia

Saudi Arabia’s interest in the PCT extends beyond the immediate benefits of port management. The establishment of a special economic zone as a forward staging area for strategic commodities from Saudi Arabia enhances the geopolitical and economic ties between the two nations. This strategic collaboration positions Bangladesh as a key partner for Saudi Arabia’s investments in diverse sectors such as energy, infrastructure, agriculture, and technology.

Recognition of Bangladesh’s Economic Potential

The decision by the Saudi government to appoint RSGTI as the terminal operator for the PCT is a testament to the recognition of Bangladesh’s ongoing development and economic potential. This acknowledgment not only boosts the country’s image on the global stage but also signals a vote of confidence in its economic trajectory.

Importance of Seamless Port Connectivity and Handling Capacity

Seamless port connectivity is a linchpin for efficient trade operations, and the handling capacity of ports plays a pivotal role in facilitating the flow of goods. The upgraded PCT, with its proximity to the estuary and modern facilities, is poised to become a model for seamless port operations. This is crucial not only for meeting the demands of the burgeoning import and export activities in Bangladesh but also for positioning the country as a strategic player in the larger global trade network.

Towards Better Port Management

The recent partnership between Chittagong Port Authority (CPA) and Red Sea Gateway Terminal International (RSGTI) signifies a transformative era for Chittagong Port. The collaboration aims to revolutionize key performance indicators (KPIs), ushering in enhanced efficiency, reduced dwell times, and overall improved productivity. Before the collaboration, Chittagong Port handled 11.93 crore tonnes of goods in 2022, experiencing a year-on-year growth of 2.28%, with 4,344 ships arriving – a 3.20% increase from 2021. Post-collaboration, the expectation is a significant boost in voyage productivity, streamlining processes at Patenga Container Terminal for faster loading and unloading, meeting the preferences of shipping companies.

Secondly, pre-collaboration, the port managed 31, 33,020 TEUs of containers in 2022. With the partnership, a notable reduction in container dwell time is anticipated, optimizing terminal space and adhering to global best practices. This improvement aligns with the collaborative approach’s goal to impact productivity positively.

The port handled 31, 33,020 TEUs of containers in 2022, and the collaboration is anticipated to bring about improvements in container traffic management. Monitoring container traffic, measured in TEUs or number of moves, becomes crucial for analyzing the port’s performance over different timeframes, aiding in strategic decision-making.

Moreover, truck visit time as a crucial KPI affecting trucking companies’ bottom line. Post-collaboration expectations include a reduction in truck visit times, positively impacting operational costs for trucking companies. This enhancement fosters favorable relationships and positions the port as a preferred choice in the competitive market.

Lastly, pre-collaboration, the number of gate moves was highlighted as a valuable metric for understanding volume and controlling overall operations. The collaboration is expected to increase the number of gate moves per day, contributing to decreased congestion and enhanced overall port productivity. This aligns with the collaboration’s overarching goal of streamlining operations for improved efficiency.

In conclusion, the collaborative effort between the Chittagong Port Authority (CPA) and Red Sea Gateway Terminal International (RSGTI) represents a landmark development in Bangladesh’s port management landscape. The infusion of investments, technological advancements, and the commitment to increased efficiency are poised to propel Chittagong Port into a new era of productivity and connectivity.

The analysis of key performance indicators underscores the strategic shift towards optimizing operations, reducing dwell times, and enhancing overall efficiency. This collaborative venture not only addresses the immediate challenges faced by the port but also positions Chittagong as a significant player in the global maritime trade network.

As the deal unfolds, the upgraded Patenga Container Terminal emerges as a symbol of progress, reflecting Bangladesh’s commitment to navigating the complexities of global trade. The collaborative effort is not just reshaping the operational landscape of Chittagong Port; it holds the potential to catalyze broader economic growth and solidify the nation’s role as a regional trade hub.

The transformative impact of this collaboration extends beyond the port’s immediate functions. It stands as a testament to Bangladesh’s readiness to embrace advancements in port management, seamlessly connect with global trade networks, and foster economic prosperity. With a focus on increased efficiency, reduced dwell times, and overall enhanced productivity, Chittagong Port is well-positioned to navigate the evolving dynamics of international commerce, contributing to the nation’s recognition on the global stage. This collaborative venture is a pivotal step towards ensuring Bangladesh’s continued success in the competitive landscape of maritime trade.

– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

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