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Introduction of Berth Operator System, Integreted Terminal Operation, Automation
The Chittagong Port Authority
Bangladesh

The Problem

The Chittagong Port being the premier port of Bangladesh, handles 92% of sea borne trade of the country. Before the initiative, the port was highly congested with high turn around time and dwell time of container which resulted in congestion surcharges on freight rates leading to increase in transportation cost. In the end, for increased transportation cost, price of common commodities went up. As a result people of the country suffered and poverty level increased. The chronic problem was Dock Workers Management Board (DWMB), which was a loop around the neck of Chittagong port. There were malpractices in Dock labour booking as a mafia syndicate controlled the booking and billing for which Chittagong port used to pay huge amount of money for nothing. A huge number of fake labours in disguised used the license of Dock workers took their toll from the port, the system was known as “Badly Sramik (proxy labor)” which was the root of corruption. This corruption costs huge to the port as well as national economy. Moreover, the presence of large numbers (approx.32) of trade unions used to make a chaotic situation which disrupted the normal course of operation/activities of the port. In addition, unnecessary interference of trade union leaders in the management of port created unpleasant situation, sometimes the union leaders forced the management to take illegal decisions which otherwise often disrupted port operation. Further, most of the documentations in port were done in manual form which was also vulnerable to corruption.

Solution and Key Benefits

 What is the initiative about? (the solution)
Berth Operator (BO) system has been introduced in the port since 16 May, 2007 on trial basis to replace the cumbersome and age old stevedoring system comprising 3 different agencies viz. Merchant labor, Dock labor, Stevedoring staff. In Berth operator system the Berth operators are responsible for accomplishing the total operation of cargo/container starting right from receiving cargo/containers from ships to storage/delivery. As regards labor management, these three groups of workers are integrated into one single group and they work under the control of Berth Operators. The actual number and category of workers are determined by the respective Berth operators. In the present system Berth Operators engage workers as per their own choice and they are responsible for the wages, welfare, safety, uniform etc. of the workers engaged by them. As a result the port operation is running without any interruption leading the faster port services. Since the Berth operators can engage workers as per their actual requirements, unnecessary engagement of extra labor has been stopped resulting in reduction of handling cost. Port users are now substantially benefited. To this effect an amendment of the Regulation for working of Chittagong port (Cargo & Container), 2001 came into force with effect from 28 November, 2007 by a Gazette Notification.

As a part of privatization initiatives, in March 2007 a Private Terminal Operator was appointed as a single point operator for integrated operation at Chittagong Container Terminal (CCT). They are responsible for overall operation of the Terminal including loading and unloading of containers to and from ships, yard management and also storage and delivery of containers. As soon as the Terminal Operator assumed the responsibility of CCT, average Turn Around time of ships has been reduced considerably. Moreover productivity of vessels operation has also been increased. As a result over all port productivity has been increased 30% and port business cost has been reduced by 40%.

Initiative has been taken to abolish Dock Workers Management Board (DWMB) in Chittagong port. The number of Dock Workers in gang has been reduced by 70%. ‘Badly (proxy) Sramik’ System has been abolished. In the Bangladesh labor Law, 2006, date of retirement of Dock Workers Management Board has been fixed to 57 years. Consequently under this law more than 1200 workers of the Board had already retired. Since new workers are not being given any registration. The number of Dock Workers will be reducing further. In order to abolish DWMB, an amendment of Bangladesh Labour Law, 2006 has been made and a gazette notification promulgated on May 4, 2008.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The solution was proposed by the Chittagong port Authority, Ministry of Shipping and other stakeholders such as port users’ forum, Chittagong Chamber of Commerce and industries, Bangladesh Garments Manufacturers and Exporters Association (BGMEA).

After 1/11 of 2007 the caretaker government imposed emergency and formed a taskforce for the Chittagong port Authority. Actually the taskforce was constituted with the members of Army, Navy, Police and other govt. agencies, which was known as joint forces. In direction of chief Advisors office and supervision of ministry of shipping, the Chittagong port Authority and Joint forces have implemented all the reforms mentioned before.

The economy of Bangladesh as a whole and the trade community in particular were the stakeholders of all these reforms.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
As Chittagong Port was a tool port strongly dominated by labours unions, the introduction of private operator in Chittagong port Container Terminal (CCT) was a challenge for the Chittagong Port Authority. The main strategy used by Chittagong Port Authority was to arrange consultation with labour union leaders and arranged several study programme for them to visit world renowned Ports in Singapore, Malaysia, India, Pakistan, UAE etc. In study tour the labor union leaders gathered knowledge about terminal operation system and observed how private operators are performing their job and contributing to the national economy. The labour leaders were motivated and didn’t resist the privatization initiative. Moreover, CPA didn’t have any Gantry Crane in CCT in the past. After installation of Gantry Cranes and operated by CPA’s operator, the productivity of Gantry Cranes were much bellow compare to international standard. In such situation, initially CPA has engaged private operator to operate Gantry Cranes and their performance was found satisfactory.

The 1435 member of stevedores’ staff union were part of the key trouble makers in the port. They usually joined hands with political parties in seizing port operation. Now the stevedores are allowed to hire there staff based on requirements and fitness not necessarily a member of the staff union. The joint forces implemented this initiative. Moreover, CPA followed old system of gangs of 24 people even in container berth including Chittagong Container Terminal; where maximum 4-5 people are required. In addition, most of the Dock workers rented out their ID on monthly basis to proxy labours. The join initiative of CPA and join forces resizes the gang and abolishes the DWMB. In this direction a gazette notification was promulgated on May 4, 2008 .To implement this initiative the join forces in association with CPA at the earlier moment of reforms apprehended all top terrorist CBA leaders and placed behind bars.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The key development of all the implemented initiatives is transformed CPA from a tool Port to landlord Port and freed CPA from chaotic labours unionism. Nonetheless, workers in Chittagong port used to work in two shifts of 12 hours each, mainly to take advantage of 4 hours forced overtime by each shift. In reality most of the employees never worked for even 7-8 hours. Three shifts of 8 hours each (0800-1600, 1600-2400, 0001-8000) were enforced by task force and CPA. Moreover, undue and over charges by different organizations such as Main Line Operators (MLO), Truck terminal, Trucks owners and off docks have been rationalized. For example MLO/shipping Agency used to collect US $ 200 for 20 feet and US $ 400 for 40 feet containers as surcharge which was discontinued since mid February’07. MLO’s also changed for documentation, manifestation, status Charge, cleaning etc. between Tk 2500/ (US $ 36.5)- to Tk 4500/- (US $ 66). All charges have been discontinued except clearing charge for Chemical and Clinkers at a rate of Tk 300/- (US $ 4.4) for 20 feet and Tk 500/- (US $ 7.3) for 40 feet containers besides, they also realized Terminal handling charge (THC) at US $ 43 per 20 feet and US $ 65 per 40 feet export/import containers in addition to the THC included as part of the freight. Now MLO’s agreed to discontinue charging THC separately. Earlier MLO’s demanded about $2500 - $3500 as bank guarantee in allowing in importers to take Containers to their premises. They are now allowed with a C & F Association written guarantee only. They also charged between Tk 1000 (US $ 14.62) – Tk 1500/-(US $ 21.93) for assessing the containers condition, which has now been fixed at Tk 300/- (US $ 4.39) for 20 feet & Tk 500/- (US $ 7.31) for 40 feet containers.

After 1/11 of 2007 CPA has implemented reform initiatives. The implementations step includes a) review of the Chittagong port operations and activities, (b) review of the documentation, (c) desk review of relevant reports in the port sector, (d) discussions with port users, policy makers and operational staff at the Chittagong port, (e) identify the loop holes, vulnerability and key areas for development.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
The main obstacles were the labour resistance and amendments of necessary laws. As the country was under emergency, labour resistance was not so strong that was handled firmly. Moreover, In Bangladesh Labours Law, 2006, date of retirement of Dock Worker has been fixed to 57 years. Consequently under this law more than 1200 workers of the DWMB had already retired. Since new workers are not being given any registration, the number of Dock workers reduced further.

The amendment of necessary law was not an easy task. Bureaucratic bottlenecks impede amendments of law and also the process of amendments is so complicated that usually takes long time. In this case task force, CPA, Ministry of shipping (MOS) and Chief Adviser’s office took special monitoring to amend the necessary law.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
To implement the initiatives financial, technical and human resources were used. To introduce ‘Berth Operator system’ instead of ‘Stevedore System’ required a series of meetings and negotiation with business community and other port users as well as amendment of CPA Act. All these activities involved human and financial resources. Abolishing “Stevedore Staff Union” which had 1435 members incurred Tk. 40 million. (US $ 0.585 million)

On the other hand, Dock Workers Management Board (DWMB) consists of 4157 labours was managed by 216 officials and staff. In new retirement programme a good number of labours aged between 57 to 79 were retired which incurred Tk. 461.00 million (US $ 6.74 million). The rest of the labours were also retrenched with full benefit which involved additional Tk 400 million. Therefore, abolishing DWMB incurred total Tk 861.00 million (US $ 12.54 million).

The introduction of ‘Direct Trader Input (DTI)’, an importer or his appropriate representative may process all import/export related documents online from his own office without involvement of C & F Agents and with speed, accuracy and minimum harassment. This involves technical resources such as computerization and online support. Moreover, ‘Electronic money transfer’ which also required technical support has been introduced in the 6(six) banks operating in the port area through which it has been possible to avoid cash transaction.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
The initiative is sustainable because for abolishing DWMB Bangladesh labour law, 2006 was amended and subsequently Bangladesh Gazzet was published on May 4, 2008. Also to abolish “Stevedore system” and introduce “Berth Operator System” necessary amendments of CPA regulation had done. So far as sustainability is concerned, the initiative will move towards efficiency of a port.

The vision of the Government of Bangladesh is transforming Bangladesh into digital Bangladesh by 2021. In line with this policy the introduction of integrated operation in CCT, IT based ‘Direct Traders Input (DTI)’ and ‘Electronic Money Transfer’ will remain sustainable.

The concept of ‘Berth Operator system’ instead of ‘Stevedore system’ and the concept of abolishing DWMB are transferable in the sense that most of the ports of the developing countries are facing same problems like Chittagong Port. To increase efficiency of port and to provide high quality service to the customers the concept introduced by CPA will be helpful for the developing countries ports.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
The overall impact of initiatives is on work efficiency of the port which has increased by 30% and cost of doing business has been reduced by 40% since January 2007. Work efficiency of the port is measured by analyzing ship handling, cargo handling and other inputs. The turn around time of ships calling at the Chittagong port was reduced to 2.28 days compared to 11.65 days in January 2007. The rate of handling of vessels at the port has also accelerated (182 in Nov/2008 as against 70 in January/07). The Chittagong port has achieved a land mark record in cargo handling. The cargo handling in the F.Y 2007-2008 was 28.95 million M/tons which was a record and surpassed the all previous records. Further, the berth operator system has greatly improved operations, in addition, the newly established berth window system has meant that the ships can now enter and exit the port at specific times. Improvements at CPA have also meant that ships now do not have to wait outside the berths, whereas earlier, it was common to have ships wait for 7-10 days at berth.

The number of shifts has been increased from 2 to 3, which has meant that work on loading and unloading the containers can now also be done at night, this reducing congestion at port. For online banking system, cash-fewer transactions are now increasingly being carried out, this directly addressing the problem of “speed money”.

During and after implementation of all the above reforms initiatives, CPA has learned that political stability and strong will of the government are the prime movers of all reforms. Usually all the trade unions and labour unions are patronized by the political parties and for the shake of their political gains sometimes political parties used their trade unions. CPA had tried before to implement the reforms initiative but couldn’t due to intervention by the labour unions. However, in a state of emergency CPA had successfully implemented the reforms initiatives and the whole economy are enjoying its benefits.

Contact Information

Institution Name:   The Chittagong Port Authority
Institution Type:   Government Agency  
Contact Person:   Hadi Hussain
Title:   Member (A&P)  
Telephone/ Fax:   880312526004
Institution's / Project's Website:   880312526004
E-mail:   map@cpa.gov.bd  
Address:   Room 330, Bandar Bhaban, Chittagong Port Authority
Postal Code:   4100
City:   Chittagong
State/Province:   Chittagong
Country:   Bangladesh

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