The future governance structure of Libya's container ports: A survey of stakeholder attitudes

Research in Transportation Business & Management 8 (2013) 7–16

Contents lists available at ScienceDirect

Research in Transportation Business & Management

The future governance structure of Libya's container ports: A survey of stakeholder attitudes Hesham M. Ghashat 1, Kevin P.B. Cullinane ⁎ Transport Research Institute (TRI), Edinburgh Napier University, EH10 5DT, United Kingdom

a r t i c l e

i n f o

Article history: Received 27 July 2012 Received in revised form 19 February 2013 Accepted 10 March 2013 Available online 6 April 2013 Keywords: Libya Ports Governance Stakeholders

a b s t r a c t The landlord and regulatory functions at Libya's container ports are currently administered and controlled by a national port authority, while the Socialist Ports Company is responsible for operational functions. This paper comprehensively describes the new direction of government policy and strategy, as well as the dynamic changes in the sector's operational environment. The main aim of the paper is to determine the perspectives of key stakeholders on the possible future governance structure for Libya's container ports. This is achieved through the implementation of an attitudinal survey. A statistical analysis of responses reveals a consensus that the technical performance of Libya's ports needs improvement if the sector is to remain competitive within the Eastern Mediterranean. By ranking stakeholder priorities and preferences, more than one scenario for future port governance emerges. The results also suggest that a change to the governance structure of the sector, almost irrespective of its form, is perceived as a top priority for enhancing operational and business performance and that this is widely expected to have a positive impact on stakeholder interests. The paper concludes that the analysis provides new and clear empirical evidence in support of the perceived positive impact of a port devolution policy in Libya. © 2013 Elsevier Ltd. All rights reserved.

1. Introduction Over the past three decades, the implementation of port devolution policies has dramatically transformed port management across the globe, with changes in the governance structure of ports involving immense variations in the degree of private versus public sector involvement. This allocation and distribution of the responsibility and accountability for port functions to different entities varies depending upon unique local and national criteria. Considerable effort on the part of researchers has been devoted to producing an ‘ideal’ port governance model that could be adhered to by governments and/or port authorities or which can explain all changes in port governance (e.g. Baird, 1995, 1997, 2002; World Bank, 2003). It is apparent that devolution does not necessarily mean the sole participation of the private sector in the port industry. Public ports still exist, as do partnerships between public and private entities. Baltazar and Brooks (2007) considered the full spectrum of governance and proposed five models ranging, at one extreme, from fully governmental at a highly centralised level to complete private sector control (as in the UK) at the other. In the UK, privatisation focused on the raising of revenue for the government through outright sale. As Goss (1998) stated, this did not serve to increase the value of ⁎ Corresponding author. Tel.: +44 1314552951; fax: +44 1314552953. E-mail addresses: [email protected] (H.M. Ghashat), [email protected] (K.P.B. Cullinane). 1 Tel.: +44 131 455 2951; fax: +44 131 455 2953. 2210-5395/$ – see front matter © 2013 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.rtbm.2013.03.005

investment, competition or productivity. Although revenue was generated for the government in this way, this occurred at the expense of other stakeholders. The later improvement of productive efficiency at UK ports resulted, more directly, from labour reforms rather than from the privatisation process per se. In contrast, the port of Singapore remains a public port. While its operational function is conducted by a corporatized entity (PSA), the remaining functions rest with the Maritime and Port Authority (MPA). Singapore still remains competitive in terms of container handling and shipping volumes (Cullinane, Yap, & Lam, 2007), despite the challenges it faces from other ports within the region, especially from those which have a more liberal approach to the participation of private shipping lines in terminal operation via concession arrangements. Those ports combining public and private entities can be managed and operated by different governmental tiers, or commercialised via the introduction of the private sector through concession arrangements (where some port functions are devolved to the private sector for an agreed period of time). The private sector can also be introduced by alternative means, e.g. selling stocks or joint ventures as is the case with Malaysia's ports, where container operations at Port Klang were moved to a port operating company called Klang Container Terminal (KCT) (Bichou, 2007; Peters, 1995). The government of Malaysia then sold 40% of KCT to the public in order to secure benefits for the public and protect it from privatisation (Peters, 1995). The 2000s saw a great deal of participation from the private sector in the country's ports and an increase in container throughput in Malaysia's ports, mainly thanks to the involvement of major carriers in the Port of

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Tanjung Pelepas (PTP). However, in general, the dilemma with all potential approaches to port devolution is that there is no definitive guide as to precisely which function(s) need to be devolved and to whom. Libya's port governance structure currently conforms to the third type of port governance model proposed by Baltazar and Brooks (2007); it is government-owned, but managed and controlled by a corporatized entity, with the landlord and regulatory functions administered and controlled by a national port authority and with the operational function the responsibility of the Socialist Ports Company (SPC), a government owned company. Since the quality of services offered by Libya's container ports needs to improve in order to enhance their effectiveness and competitiveness within the Eastern Mediterranean region, Ghashat (2009) and Ghashat, Cullinane, and Wilmsmeier (2011) argue that this governance model is no longer effective for Libya. Based upon the application of the matching framework concept, these works suggest that effectiveness-oriented strategies require organic structures to support them and that these are characterised by the flexibility and decentralisation of decision making; both of which are best achieved, within this geo-political context, via the implementation of a policy of port devolution. Brooks and Pallis (2008) argued that the experience of others should be instructive. However, each country has its own characteristics (geographical location, financial capabilities, political interests etc.), which can determine the objectives behind the policy. Stakeholder satisfaction is broadly accepted as an important measure of the success of a change in port governance (Notteboom & Winkelmans, 2002; Wang & Slack, 2002; Winkelmans, 2008). Therefore, this paper investigates local stakeholder attitudes in respect of any potential future governance structure and its anticipated impact on their interests. The research reported herein concerns the future governance structure of the Libyan port sector, with a focus on identifying the best method for managing and operating the ports in order to survive in an aggressive and competitive environment. It is important to recognize that the ongoing crisis in Libya since February 2011 does not undermine or negate the findings of this research. The port industry will not be disregarded once the country's governance system or political regime stabilizes. Regardless of the nature of the country's future governance structure, state officials will need to have access to the most relevant information in order to properly manage and administer the country's port sector. In addition, the governance structure of Libya's ports has not been altered since this research was conducted. Therefore, despite the ongoing crisis in Libya, it remains the case that the findings of this research provide a valid model for how Libya can best approach the devolution of its ports, to help recover from the ongoing crisis and to assure the future prosperity of the country's economy and the nation in general. This paper details the current characteristics and status of Libya's container port sector in Section 2. Section 3 describes recent changes in Libya's port policy and governance structure. It also outlines possible future avenues for further change and improvement and provides a justification for concentrating on stakeholder attitudes and opinions to gauge the success of any new port policy (particularly devolution). Section 4 explains the methodology underpinning the stakeholder survey. The analysis of the survey is in Sections 5, and Section 6 concludes the paper with a discussion of the results and their implications for selecting a preferred port devolution policy for Libya's container port sector. 2. Libya's container port system 2.1. Port locations and their classification Libya is situated in the middle of the northern coast of Africa, with an area of 1,759,540 sq km and a coastline of about 1970 km on the Mediterranean. It is bordered to the East by Egypt, to the South by

Chad and Niger, and to the North-West by Tunisia (Otman & Karlberg, 2007). The importance of the location of Libya lies in the fact that it stands as a crucial link between Europe, Africa and Asia and is close to a major shipping route (UNCTAD, 2008). As shown in Fig. 1, there are 18 ports along the shoreline of Libya. Libya is located in the central, most competitive part of the Mediterranean basin within a triangle of hub ports located in Egypt, Malta, Italy and the Western Mediterranean basin (Ghashat et al., 2011). Libya's port sector is inefficient and highly bureaucratic (Ghashat, 2009). As such, Libya has lost some of its share of cargo throughput to ports in neighbouring countries; it simply cannot compete, especially for containerised transhipment traffic. Ports in Libya handling containerised and general cargo are classified by the National Planning Council (NPC) as commercial ports. Other classification categories for ports are ‘oil’ and ‘industrial’ ports (see Table 1). While few of the country's ports engage in handling all types of cargo, oil and industrial ports have been established to serve specific industries. For instance, the port of Abokamash was built to serve the Abokamash petrochemicals complex. The ports that handle containers and general cargo are sub-classified as principal and secondary ports. The principal ports include Benghazi, Misurata, Elkhoms and Tripoli, while the ports of Zowara, Sirte, Tobruk and Darnah are classified as secondary ports. There are, in addition, two other ports handling oil and its derivatives (as the main activities and the vast majority of cargo handled there) alongside containerised cargo. These ports are MarsalBurygah and Ras Lanuf which are classified as secondary ports by the NPC (Ghashat et al., 2011; National Planning Council, 2005). 2.2. Operational characteristics Currently, the country's ports accommodate different vessel types including general cargo, dry and liquid bulk and container and Ro-Ro, with sufficient number and length of quays. However, in terms of container vessels, the ports only serve feeder vessels due to the draft restrictions which constrain the ports' ability to accommodate mega-container ships. There are also no dedicated container handling facilities, meaning that the ports are unable to cope with the remarkable developments that have occurred in the shipping industry in terms of vessel size, cargo handling technology and operational strategy. However, this has generally been the case at Libyan ports and is one of the problems the sector faces (OBG, 2009; SPC, 2009). All of the country's container ports provide only basic services; Table 2 shows their main operational characteristics and a summary of the services provided and equipment available at each port. To summarise, the current operational characteristics of Libya's ports are not compatible with the technical requirements of modern ships (Ghashat, 2009; Ghashat et al., 2011). 2.3. Port throughput The Libyan port sector has seen a rise in the number of TEUs handled since 2004. Libya's ports handled 282,684 TEUs in 2008, representing a steady increase from 135,467 TEUs in 2004 (Table 3). The key driver of growth is import activities (OBG, 2009) and the healthy condition of the country's economy prior to its recent problems, combined with an increase in external trade. In 2008, the port of Tripoli had Libya's second largest container throughput of 84,246 TEUs, followed by the port of Benghazi with a container throughput of 72,364 TEUs. However, the port with the largest container throughput in the country was Misurata, which is managed and operated by the Misurata Free Trade Zone and which handled 99,096 TEUs in 2008. In 2004, the port of Tripoli handled only 462 TEUs, while Elkhoms ranked as the second port in terms of throughput with 40,053 TEUs handled. This was due to a General People's Committee resolution

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Source: National Planning Council (2005) Fig. 1. The Location of Libya's Ports.

that aimed to organise the movement of containers to and from Libyan ports. The resolution stopped the handling of containers at the port of Tripoli and diverted container traffic to Elkhoms. The justification for this resolution was to reduce the congestion on Tripoli's roads and the pressure on the port itself. Since it was passed, however, the resolution has not been enforced. As shown in Table 4, in 2008 the port of Misurata ranked number one in terms of handling dry bulk cargo, thanks to the nearby location

Table 1 Libyan port classification and activities. Source: Derived from the National National Planning Council (2005), accessed 2009. Serial Name

Type

1 2 3

Abukammash Melleta Zwara

4 5

Azzawia Tripoli

6

Elkhoms

7

Misurata

8

Iron-steel Misurata Sirte

Terminal Industrial Terminal Oil Port Container & GC Port Oil Port Container & GC Port Container & GC Port Container & GC Terminal Bulk

9 10

11 12

13 14 15 16 17 18

Port

Main activities

Major Secondary Location port port or city

●

Abukammash Melleta Zwara

●

Azzawia Tripoli

●

Elkhoms

●

Misurata

Container & GC Ras lanuf Port Oil/ container & GC As Sidra Port Oil MarsalBurygah Port Industrial/ container & GC l Azzuwaytinah Port Oil Benghazi Port Container ● & GC Ras almengar Terminal Oil Darnah Port Container & GC Tobruk Port Container & GC Alharega Port Oil

of a major iron ore complex. Besides dry bulk, the port handles the majority of the rest of the non-containerised cargo that is imported and exported, ahead of Tripoli and Benghazi. Misurata's port is still number one in terms of the vessels that visited the port in 2008 at 959 vessels, followed by Tripoli with 819 vessels and Benghazi with 512 vessels in the year. During 2006 and 2007, Misurata's port received 1040 and 1160 vessels respectively (MFTZ, 2008). The port of Elkhoms was ranked fourth in terms of general cargo handled in the same years. The country's secondary ports served a modest volume of cargo in 2008, again with their import activities playing a major role in the volume of cargo handled at each port. As these secondary ports were characterised by small hinterlands and limited facilities, they handled a small percentage of total cargo throughput and the total number of vessels. A percentage of Libyan trade was still served by the ports of neighbouring countries. Ghashat (2009) pointed out that some shipping lines and tramp Table 2 Operational characteristics of Libya's ‘General Cargo and Container’ ports. Sources: SPC (2009), MFTZ (2008), World port source at http://www.worldportsource. com/ports/LBY.php and http://www.libyaonline.com/business/pages.php?cid=310. Port

Max Total water quay depth length with max depth

Alburaygah Benghazi Darnah Elkhoms Misurata Ras lanuf Sirte Tobruk Tripoli Zowara

9.2 m 11 m 9m 12 m 11 m 14 m Under 9m 10 m 4m

Misurata ●

Sirte

●

Ras lanuf

●

As sidra Alburygah

Azzuwaytinah Benghazi

●

Benghazi Darnah

●

Tobruk Tobruk

Container Services handling Pilotage Towage IT, Bunkering equipment container tracking

200 m X 778 m X 333 m X 225 m X 1100 m √ 250 m X rehabilitation 125 m X 1251 m X 120 m X

√ √ √ √ √ √

√ √ √ √ √ √

X X X X X X

√ √ √ √ √ √

√ √ √

√ √ √

X X X

√ √ √

Note: This table refers solely to those ports in Libya that handle containers and are classified under the Libyan system of port classification as being ‘General Cargo and Container’ ports. All of the listed port characteristics, therefore, relate solely to the handling of general cargo and containers. Security, customs clearance and port state control is available at all of the ports, in addition to medical services. Some ports contain covered storage spaces, while all the ports have an open storage area. No added value services are provided at any port.

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Table 3 Number of containers handled at Libya's ‘General Cargo and Container’ Ports (TEUs). Source: SPC (09), National Information Agency (2007) and MFTZ (2008). Port

2004

2005

2006

2007

2008

Alburyagah Benghazi Darnah Elkhoms Misurata Ras lanuf Tobruk Tripoli Zowara Total

2787 38,591 0 40,053 48,404 655 4389 462 126 135,467

2869 37,197 0 37,766 64,751 314 5142 17,332 0 165,371

2377 52,049 0 31,060 64,637 374 688 41,355 0 192,540

– – – – 64,712 – – 46,482 – 221,186

2016 72,364 13 24,817 99,096 107 25 84,246 0 282,684

Note: This table refers solely to those ports in Libya that handle containers and are classified under the Libyan system of port classification as being ‘General Cargo and Container’ ports.

vessels tend to divert to other ports in order to reduce the costs that occur as a result of the low efficiency and bureaucratic procedures at Libyan ports. Thus, some Libyan importers prefer to receive their shipments through ports in neighbouring countries, rather than through Libyan ports and then move it by truck to Libya. This phenomenon has led to a decrease in Libyan port throughput. 3. Port governance structure and policy 3.1. Governance structure Over the past forty years, Libya's ports have been administered by different entities. During the 1970s the ports were generally controlled by the General foundation for Ports and Lighthouses (GFPL), which was established under law number 82/1970 and was a statutory administrative organisation under the transport ministry and responsible for all port functions. In 1985, the Socialist Port Company (SPC) was established under law No. 21/1985. The company is 100% a government entity (under the General People Committee for transport and communication) acting as a regulator and an operator (Harab, 2006). 1993 witnessed the establishment of the Libyan Maritime Transport and Ports Authority (LMTPA resolution No. 170/ 1993 of the General People Committee (Prime Ministry)). The new entity was authorised to carry out administrative duties and activities including planning, providing infrastructure and the collection of port dues. It functions as a department of the secretariat of transport and communications, though the resolution limited the role of the SPC in providing superstructure and operating and managing the ports. However, there was an overlap in the duties of the SPC and the LMTPA.

Table 4 Cargoes handled at Libya's ‘General Cargo and Container’ Ports (000s tonnes as of 2008). Source: SPC (2009) and MFTZ (2008). Port

No. of vessels

General cargo discharged

Bagged cargo discharged.

Dry bulk discharged

General cargo loaded

Alburyagah Benghazi Darnah Elkhoms Misurata Ras lanuf Tobruk Tripoli Zowara

99 512 140 129 959 70 71 819 35

113.300 1131.600 26.917 215.222 1682.006 25.456 67.946 1120.282 35.200

0 364.257 28.148 11.236 – 1.000 7.215 275.015 1.500

3.850 432.496 00 2.303 2000.0 0 46.808 1329.361 10.900

46.436 16.202 0.0143 11.218 832.463 72.150 0 7.850 8.880

Note: This table refers solely to those ports in Libya that handle containers and are classified under the Libyan system of port classification as being ‘General Cargo and Container’ ports, even though they may handle other forms of cargo as well.

In 2006, the port of Misurata was transferred to the MFTZ (Misurata Free Trade Zone) under resolution No. 33/2006 of the General People Committee (Prime Ministry) and the new entity became responsible for all of the port's functions; it represents the port authority and is entirely autonomous. MFTZ is owned by the Economic and Social Development Fund Company (ESDFC) (resolution 72/2009 of the General People's Committee) (Fig. 1). MFTZ is responsible for all of the port functions (Regulator, Landlord and Operator), while Port of Misurata assets are owned by the government via the Public Property Department (PPD). Both the PPD and the ESDFC report directly to the General People Committee (Fig. 2). 2008 witnessed a great deal in terms of organising Libya's port governance hierarchy and the allocation of responsibilities between the entities involved in the sector (resolution 81/2008). Ports remain in the public sector; the landlord and regulatory functions of Libya's container and general cargo ports are currently administered and controlled by a national port authority (LMTPA), while the operational function is the responsibility of the Socialist Ports Company (SPC), with both reporting to the Secretary of Transport (Fig. 2). However, not all operational functions are carried out by the SPC (Ghashat, 2009; Ghashat et al., 2011) as, theoretically, some of the operational functions are carried out by the LMTPA. These include waste disposal, landside and berth capital investment, in addition to facilities security, maintenance and repair. The involvement of national government still occurs in a port's affairs when the landside and berth investment need national government approval. This is in addition to non-commercial functions, which are provided by different entities, such as the customs services provided by the national customs agency under the secretary of finance, etc. However, Port State Control is still administered by the LMTPA at all Libyan ports.

3.2. Objectives and policies The lifting of the sanctions that had been imposed on Libya by the United Nations in the early 1990s, coupled with efforts devoted to reforming the regulatory and institutional framework in preparation for the move towards a market economy, has opened up lots of economic activities to the private sector and foreign direct investment (FDI) which, in turn, has led to growth in the country's economy (Ghashat, 2009; Otman & Karlberg, 2007). Such growth has placed pressure on the port sector in general as the volume of the country's external trade has increased (National Information Agency, 2007). As a result, the government is aiming to modernise the ports with the goal of increasing the country's overall port capacity to handle unitised cargo, in order to speed up the handling process and thus, subsequently, facilitate trade flow and support the economy (Annual Report of the General People Committee & its Secretariats, 2008). In general, and at the macro level, Libya needs to achieve the transfer of management skills and related techniques to ensure the understanding of the application of these techniques (Salama & Flanagan, 2005). Without this knowledge transfer, the simple purchase and installation of new technology would be inadequate. Retaining existing customers and trying to encourage others to use the country's ports, as well as reducing congestion and shortening the time ships spend at ports (including bureaucratic time) are top priorities of the LMTPA (Libyan Marine Transport and Port Authority). The key future strategy of the Libyan government is to convert the country's major ports to hubs in the Mediterranean basin, competing with other ports in the region to attract transhipment cargoes, as well as serving the local trade. However, not all ports will be converted to perform this role, since only Benghazi and Elkhoms have been selected. The port of Benghazi was selected specifically due to its potential to serve the landlocked African countries, particularly Niger and Chad. Such an ambition means that these ports will be opened up to competition with other ports in the region for transhipment trade.

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General People Committee (Prime Ministry)

Transportation Secretary

SPC

Public Property Department

LMTPA

ESDFC

MFTZ

Misurata Port

The rest of the ports

Operational relationship

Ownership

Port state control

Fig. 2. The hierarchical structure of Libya's ports.

This competition will lead to the operational environment of the selected ports becoming more dynamic and unstable. 3.3. Future development In spite of the changing climate of the country's business environment (institutional and operational), which impacts on the port sector directly and indirectly, it is true that the primary effort is devoted to organising the hierarchy of the sector. However, it should be noted that the port cannot be protected from the impact of the macro situation; rather, this should be interacted with in order to assure satisfactory performance. Therefore, further action is required. From this perspective, Ghashat (2009) argued that it is important to allow the participation of the private sector in Libyan ports in order to facilitate their improved physical condition, via the introduction of new management skills and the enhancement of the quality of the dock labour force. This argument was based on the operational characteristics of the ports. However, from the above discussion, it is not only the operational characteristics that represent challenges for the sector. The competitive environment and the new direction of government strategies and policies represent other challenges for the ports. In this respect, Ghashat et al. (2011), Notteboom and Winkelmans (2001), the World Bank (2003) and Notteboom (2007a) all argue that the governance structure of ports should be altered in a way that will help them to survive in such an environment. Ghashat et al. (2011) concluded that the governance structure of Libya's container ports should take an organic form (decentralised and flexible). However, from the literature on port governance and devolution, a number of possible decentralised structures exist. Thus, they further argued that investigating port stakeholders' perspectives is necessary for securing the effectiveness of the selected structure, an argument also proposed by Brooks and Cullinane (2007a). Through such an investigation, a balance between stakeholder interests may be achieved. 4. Stakeholder survey 4.1. Survey process This research has been designed to elicit and measure attitudes and opinions of Libya's port stakeholders in relation to the current situation and potential future governance structure. Stakeholders have been identified as those (a person, group, organisation or system) who influence

or can be affected by an organisation's actions, policy, plan or objectives (Freeman, 1984). Surveying stakeholders is vitally important as it leads to obtaining valid and reliable findings (Brandon, 1998; Cousins & Earl, 1992). In addition, on the basis of other work, Brooks (2007) has stated that the satisfaction of stakeholders is an important measure in program performance evaluation. For Libya's ports, this research has concentrated on those that are impacted or affected by the decisions or style of the sector's management. Thus, the stakeholders are the LMTPA, SPC, MFZT and Shipping Companies (SCs — i.e. the liner shipping companies that constitute a port's customers). In addition, some companies are working only as consultants (independent consultant IC). A pre-survey was conducted in order to understand the focus of stakeholder attitudes in respect of the Libyan port situation, i.e. their interests. It was found that there is a real desire to enhance the situation of Libya's container ports in the market and their technical performance in order to face contemporary challenges (the dynamism of the environment and the new direction of government strategies). However, as is summarised in Table 5, the pre-survey indicated that there are a variety of suggestions in place regarding how to achieve such a goal, and there are common and individual interests that need to be met and fulfilled. Following the suggestion of Brooks (2007), these interests will be used hereafter as a measure of the devolution programme's performance. 4.2. Population and sampling frame An identical questionnaire was distributed to the major stakeholders in Libya's ports. This survey is a census survey; the data was collected from the entire population, although the number of stakeholders in Libyan ports is limited due to the size and the structure of the Libyan market. In this respect, Saunders, Lewis, and Thornhill (2009) argued that for a population of less than 50, it is important to collect data from the entire group. Seven copies of the questionnaire were sent to each of the LMTPA and the SPC, three copies were sent to the MFTZ and five copies were sent to those potential respondents identified as independent consultants. The survey was sent directly to those at managerial level (middle management and above). 4.3. Survey items, structure and variable operationalisation The survey begins with seeking an indication of the satisfaction of the stakeholders with respect to the technical performance of the

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Table 5 Libyan port sector key stakeholders and their interests. Source: derived from the pre-survey (informal discussion with a representative sample of the stakeholders) conducted by one of the authors during October 2009. Stakeholder Interests LMTPA

SPC MFTZ SCs

Enhancing the technical performance, reducing the expenditure, increasing throughput, increase the national income, expanding the role of the ports, converting one or more of the country ports to a hub, allow the competition in and among the country ports in addition to reducing the fright rate and they also interested in protecting the dock labour Same as the objective of LMTPA, but not in favour of competition, objectives can be achieved by any means except changing the governance structure “monopolistic marketplace”. The justification is that the changing the governance structure will affect the labour negatively As same as the objective of LMTPA and SPC, but not in favour of the competition, objectives can be achieved by any means except changing the governance structure “monopolistic marketplace”, same justification of SPC Enhancing the technical performance is the top priority with regardless of the means for doing this, reducing the fright rate, port dues and cargo handling charges

ports. Stakeholders were asked to indicate on a Likert scale (from 1 = totally unsatisfied to 5 = totally satisfied) to what extent they are satisfied with the current performance of the Libyan port/ports that they have dealings with. They then identified the most crucial areas for performance. Items judged to play an important role in the performance of any given port were listed and included; a port's infra- and superstructure, competition, autonomy, the governance structure, dock labour quality and diversity of port services. The stakeholders were then asked to indicate on a Likert scale how important each of these items were for enhancing performance (from 1 = not important to 5 = critically important). All of these items were listed to test the spectrum of stakeholder interests. To achieve an understanding of a given governance model, it is necessary to know how specific activities or services of enterprises are provided (Brooks & Cullinane, 2007b). For the ports, the governance structure can be considered as an allocation of the responsibility for providing port functions between different entities. However, the pre-survey process (and associated informal discussion) revealed that not all of the port functions identified by Baird (1997) can be transferred, especially into the hands of the private sector; i.e. there are transferable and non-transferable functions (Table 6). The classification that emerged was justified by reasons such as: protecting the national sovereignty and national public interest, the financial capability of Libya and the potential for simply replacing a government monopoly with a private one. Therefore, to predict any future governance structure, the stakeholders were asked to indicate how the transferable functions should be provided/conducted in order to enhance the performance of the ports. Six possible entities were listed in the questionnaire, including the Central Port Authority (CPA), a public port authority at the port level (PA), a Corporatized Entity (CoE), a Concession arrangement (CoA) such as build–operate–transfer, a Joint Venture between private and public sector (JV) and, finally, the Private Sector alone. Finally, beyond tying the governance structure to the objectives explicitly, the survey examined the impact of what the stakeholders regarded as the best governance structure for Libyan ports according to the spectrum of different stakeholder interests (Table 5). In this

respect, the degree of satisfaction of stakeholder interests was deemed to represent the devolution programme performance measurement. The stakeholders were asked to evaluate the future situation of the elements listed in the questionnaire with 1 = will increase significantly to 5 = will decrease significantly. 5. Survey analysis and findings Out of 125 copies of the questionnaire which were distributed, 49 were completed, representing 39.2% of the total. With all of them usable, this was a very acceptable response rate upon which to form a conclusion from the results (Fellows & Liu, 1997). The respondents were mainly at managerial level and some of them were acting as consultants for the entities participating in this survey. In addition, the vast majority of the respondents (77.6%) use or carry out activities at all of the country's ports. The responses of all stakeholders attracted equal weight within the analysis. 5.1. Technical performance The stakeholders were not satisfied with the current performance of the ports, with a mean response rate of 4.23 (where 4 = not satisfied and 5 = totally not satisfied). This implies that the ports are suffering from problems which need to be identified and resolved in order to enhance their overall performance. 5.2. Performance enhancement The stakeholders indicated that all areas and functions of the port sector need to be improved in order to enhance technical performance; their prioritisation of the listed factors for enhancing performance is depicted in Fig. 3. Improving the administration and management system of Libya's container ports has the highest mean value of 4.92 and thus is ranked first in terms of the priority of action required. The provision of added-value services is ranked lowest at seventh (albeit this is still important in the minds of respondents) as it has the lowest mean value of 4.45 amongst all the other factors

Table 6 The transferability of port functions, built on the information collected via the pre-survey process. Function transferability

Regulatory functions

Port functions Landlord

Operator

Transferable

Vessel traffic safety Port monitoring

Waterside maintenance (e.g. dredging) Maintenance of port access Marketing of location, development strategies, planning

Non-transferable

Licensing, permitting Customs and immigration Emergency services Protection of public interest on behalf of the community Determining applicable port policy and environmental policies

Port security Land acquisition

Cargo and passenger handling Pilotage and towage Line handling Facilities security, maintenance, and repair Marketing of operations Waste disposal Land side and berth capital investment

Note: This table represents a variation of the port function matrix first presented in Baltazar and Brooks (2001) and later applied to Canada in Brooks (2004).

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Fig. 3. Stakeholder priorities for enhancing performance.

that have an impact on the overall performance of the country's container ports. 5.3. Future governance structure Table 7 indicates that some transferable functions of Libya's container ports should be devolved to another entity; put in an alternative way, the current situation is no longer preferred (i.e. corporatisation has not met the expectations of the stakeholders). However, the stakeholders did not select one entity for each function and for some functions the percentage of responses were close to each other, which means a different scenario may exist. The most preferred scenario for the future governance structure is as depicted in Table 8. The dilemma for this scenario relates to the setting of charges. Notteboom (2007b) argued that in many cases the operator has the freedom to set charges, whilst the port authority receives the concession fees. Logically, the proposed scenario might be changed slightly by transferring the responsibility for setting charges to the service provider. Thus, the scenario would be as presented in Table 9, though due consideration would need to be given to determine if any pricing regulation was required on the basis of the level of competition or contestability in the stevedoring market. Based on the stakeholder responses reported in Table 7, another scenario could exist and this is as shown in Table 10. Taking into account that the majority of stakeholders (67.2%) suggested that port infrastructure should be provided either by the national port authority or by the port authority at the port level, this scenario was the second most popular preference selected by stakeholders. From Table 10, it is suggested that only the cargo handling/stevedoring function is to be devolved to the private sector and, based on these responses, the port superstructure and control of charges should be provided jointly between the private and public sector. Joint provision of the former may be facilitated through a large variety of financing and

management schemes including, but not limited to, BOT (build– operate–transfer), BOOT (build–own–operate–transfer), and BOO (build–own–operate). The control of charges (both port dues and stevedoring charges) may be jointly provided for through appropriate terms and clauses within any concession agreement forged between public and private sector interests. Other port functions, under this scenario, remain in the hands of the central port authority. From these scenarios it can be concluded that the operations function of the port should be devolved to the private sector. On the other hand, one aspect of the landlord function should be provided by the private sector, namely the provision of port superstructure. This corresponds with the findings of Baird (2002) that port superstructure within the majority of major seaports worldwide are today the responsibility of private terminal operators. 5.4. Changes in governance structure outcomes (prospects) Table 11 shows that changing the governance structure would have a positive impact on the spectrum of stakeholder interests (excluding the current operator's interest in dominating the market, such interests will be impossible to meet under the current governance structure, as it is no longer the preferred scenario). Respondents' expectations revealed that the most significant improvement would be seen in technical performance (common interest); the three components of technical performance would be improved following changes to the governance structure of the ports, with a mean value of 1.57 for efficiency, 1.59 for effectiveness and 1.57 for productivity. In addition, the sector throughput would increase after the introduction of the private sector into the ports' operational tasks, with a mean value of 1.57. This is not surprising, and could be attributed to an expectation of either enhanced performance of the sector or a reduction in costs; these two elements will encourage shippers to export and import their goods via Libya's ports

Table 7 Stakeholders responses regarding who should provide the different port functions in percentage. Areas/functions

Response rate

CPA

PA(Port level)

CoE

CoA (e.g. BOT)

JV

PS

total

Port infrastructure

Count % Count % Count % Count % Count % Count % Count %

27 55.1 1 2.0 1 2.0 13 26.5 14 28.6 23 46.6 17 34.7

6 12.1 10 20.4 1 2.0 0 0.0 20 40.8 13 26.5 7 14.3

2 4.1 3 6.1 4 8.2 6 12.2 5 10.2 6 12.2 1 2.0

6 12.2 19 38.8 18 36.7 15 30.6 0 0.0 0 0.0 14 28.6

6 12.2 11 22.4 10 20.4 4 8.2 5 10.2 4 8.2 8 16.3

2 4.1 5 10.2 15 30.6 11 22.4 5 10.2 3 6.1 2 4.1

49 100 49 100 49 100 49 100 49 100 49 100 49 100

Port superstructure Stevedoring/cargo handling Services to vessels and traffic safety Regulation and safety Planning and monitoring performance Port dues & stevedoring charges

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Table 8 The most preferable scenario for Libya's future port governance.

Table 10 A third possible scenario for Libya's future port governance.

The responsibilities of Libya's maritime transport and port authority

The responsibilities of the port authority at the port level

Functions provided via concession arrangement

The responsibilities of Libya's maritime transport and port authority

Functions provided by private sector alone

Jointly between Libya's maritime transport, port authority and the private sector

Infrastructure Planning and monitoring Performance Controlling port dues and stevedoring charges

Enforcing and implementing safety standards and regulations

Superstructure Stevedoring and cargo handling Services to vessels

Infrastructure Planning and monitoring performance Enforcing and implementing the safety standards and regulations Services to vessels

Stevedoring and cargo handling

Controlling port dues and stevedoring charges superstructure

instead of through the ports of neighbouring countries. In addition, the government may oblige concessionaires to handle a certain number of containers which will definitely be more than the current level. International experience (e.g. Port Kelang, Port Tanjung Pelapas, Gioia Tauro and Tartous) shows that the container flow has increased following the introduction of the private sector into the ports. Ghashat (2009) highlighted the fact that shipping lines serving Libya charge freight rates higher than the market level to compensate them for delays which cost them money. Table 11 shows that the freight rate would decrease after changes to the governance structure. This is reasonable as the technical performance will be enhanced (waiting, bureaucratic and handling time would all be reduced). Stakeholders also anticipated that port dues and stevedoring charges would decrease. However, such findings are in line with those put forward by Kent and Hochstein (1998) and Hoffmann (2001), as well as by Halling (1996) who pointed out that, after reforms to the port of Tauranga, stevedoring charges were reduced by 50%. Dock labour numbers and wages were anticipated to increase as a result of changes to the governance structure of Libya's ports. International experience in this aspect varies. The UK experience was that there was a reduction in the number of dock labourers after its privatisation programme. In Argentina, labour numbers were also reduced (Estache & Carbajo, 1996) and also in Australia, their reform programme resulted in a smaller workforce because Australia had excess dock workers before their corporatisation process was implemented. In Mexico, however, the number of employees almost doubled as a result of the increased activities at its ports and development of the country's trade following the reform process (Estache, Gonzalez, & Trujillo, 2002). Stakeholder anticipation in the Libyan case can be justified by the fact that the government's future objectives include increasing sector throughput and converting two of the country's ports into a hub and a gateway; such new functions within the sector may be expected to lead to increased cargo handling at the ports, increased vessel frequency, improved hinterland distribution and an increased need for logistics and added-value services, all of which are likely to require a larger workforce. Stakeholders expected sector competitiveness to be enhanced by changes in the governance structure, with a mean value of around 1.9 (where 1 = will increase significantly and 2 = will increase) for the three types of competition (competition within a port, competition among the country's ports and international competition). This perception was in line with Turnbull and Wass (1995) and Tongzon

Table 9 A second possible scenario for Libya's future port governance. The responsibilities of Libya's maritime transport and port authority

Functions provided via concession arrangement

Infrastructure Planning and monitoring performance Enforcing and implementing the safety standards and regulations Controlling port dues

Superstructure Stevedoring and cargo handling Services to the vessels Stevedoring charges

and Heng (2005), who concluded that competitiveness can be enhanced by introducing the private sector into the port sector. The involvement of the private sector in Libya's ports would lead to a reduction in the financial burden on the government's shoulders, with a mean value for the stakeholders' responses at 3.69. This is attributed to the fact that the private sector would invest in port superstructure, paying wages to dock workers and bearing responsibility for the daily operational costs. International experience in Malaysia, Philippines, Thailand and Latin America, suggests that concession arrangements have led to increased investment in the port and increased government revenue (Agustin, 1998; Cass, 1999; Hoffmann, 2001). In the case of Libya, the stakeholders further anticipate that the contribution of the sector to national income would increase, with a mean response of 1.88 (where 1 = will increase significantly and 2 = will increase).

6. Discussion and conclusions The stakeholder survey revealed that there was consensus that the technical performance of Libya's ports needs to be improved, with different views regarding the best means of doing so. As such, this research suggests very clearly that changing the governance structure of Libyan ports should be a top priority for the country's government; a finding that confirms the general conclusions expressed in Cullinane, Song, and Gray (2002), Tongzon and Heng (2005), Cullinane, Ji, and Wang (2005a,b), Cullinane, Wang, Song, and Ji (2005b), Wang and Cullinane (2006). In respect of the most preferred governance structure, i.e. the most appropriate for helping the sector survive in the highly dynamic environment it now faces and to cope with the government's new strategic direction, responses to the stakeholder survey further demonstrates that a mixed governance structure (public and private) is the best choice; an outcome which is in line with that of Baird (2002), Cullinane et al. (2002) and Brooks and Cullinane (2007c). However, the results also suggested that not only does the allocation of responsibility for port functions not fall neatly into the categories proposed in the widely-accepted port privatisation matrix (Baird, 1995, 1997; World Bank, 2003), but that from the pre-survey findings there are certain functions that can be considered to be non-transferable functions (items — refer to Table 6). These items include those strongly related to national sovereignty and public interest. The transferable items are constructed from the operational functions and some items of the regulatory/landlord functions. By ranking stakeholder priorities and preferences, more than one scenario for future port governance has emerged as possible contenders. Based on these scenarios (refer to Tables 8, 9 and 10), it was considered preferable to leave some of the transferable items in the hands of the central government (the central port authority). This can be justified by the ability of the country to supply such items. But it is definitely the case that the current governance structure (a corporatised entity) is no longer preferred, as the existing operators are perceived to be failing to deliver stakeholder expectations.

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Table 11 Stakeholder perspectives regarding the possible impact of the new governance structure. Items

Efficiency Effectiveness Productivity Ports' dues Stevedoring charges Freight rate Labour numbers Labour wages Competition within a port Competition among the country's ports Ports' international competitiveness Throughput Government subsidy National income

Count % Count % Count % Count % Count % Count % Count % Count % Count % Count % Count % Count % Count % Count %

1

2

3

4

5

Will increase significantly

Will increase

No Impact

Will decrease

Will decrease significantly

25 51.0 23 46.9 26 53.1 3 6.1 1 2.1 1 2 4 8.2 6 12.2 7 14.3 6 12.2 13 26.5 26 53.1 1 2.0 15 30.6

22 44.9 25 51.0 21 42.9 8 16.3 5 10.2 4 8.2 26 53.1 38 77.6 39 79.6 42 85.7 32 65.3 20 40.8 7 14.3 29 59.2

1 2.0 0 0.0 0 0.0 8 16.3 12 24.5 5 10.2 10 20.4 4 8.2 3 6.1 0 0.0 3 6.1 1 2.0 9 18.4 2 4.1

0 0.0 0 0.0 1 2.0 28 57.1 29 59.2 31 63.3 9 18.4 1 2 0 0.0 0 0.0 0 0.0 2 4.1 21 42.9 2 4.1

1 2.0 0 0.0 1 2.0 2 4.1 2 4.1 8 16.3 0 0.0 0 0.0 0 0.0 1 2.0 1 2.0 0 0.0 11 22.4 1 2.0

Brooks and Cullinane (2007a) have concluded that commercialisation may be better than corporatization, with a majority shareholding in the hands of governments. They proposed that commercialisation should be via concession arrangement (i.e. the introduction of the private sector into the port function(s)). This conclusion has been validated in this research when, in the preferred governance structure scenario, the stakeholders perceived that it was better that some transferable functions were provided/conducted by private entities via a concession arrangement, while other functions (most importantly, the port infrastructure) should be provided and retained in the hands of the government (via a central port authority). To measure the impact and implications of the preferred governance structure for Libya's ports, the potential accommodation of stakeholder interests is examined as a measure of the achievement of devolution objectives. These interests can be regarded as a non-financial measurement of the devolution programme as they are distinct from, and are not concerned with, profit, return on investment etc. However, these measures can be reported to the three groups identified by Brooks and Cullinane (2007a), which include the port itself, government and stakeholders and customers. As such, not only can they provide valuable information for the formulation of port policy in any national or geographic context, but also for port management as it seeks to achieve objectives which are simultaneously acceptable to stakeholders, while ensuring its own sustainability. These measures also facilitate the monitoring of port performance over time for all interested parties, including the stakeholders themselves. In order to reap these advantages, it would obviously be necessary to reduce the complexity of the survey structure and content in order to ensure that continued and regular stakeholder responses are secured. As distinct from the interests of existing operators, the governance structure proposed herein would accommodate the interests of key stakeholders. The main benefits would include enhancing the overall technical performance of the sector. Unexpectedly, Libya's stakeholder expectation is that the performance of the ports can be enhanced without a reduction in dock worker numbers. The positive impact of the policy would be felt by the users of all the ports, as

Total

Mean value

49 100 49 100 49 100 49 100 49 100 49 100 49 100 49 100 49 100 49 100 49 100 49 100 49 100 49 100

1.57 1.59 1.57 3.37 3.53 3.84 2.49 2.0 1.92 1.94 1.86 1.57 3.69 1.88

their costs would decrease and the sector's competitiveness would be enhanced. In addition, labour numbers and their wages would be further increased, sector throughput would be significantly increased and government subsidy would be eliminated. Moreover, the ports would contribute to national income. To recap, this paper has supported the conclusion of Ghashat (2009) and Ghashat et al. (2011) regarding the importance of changing the governance structure of Libya's ports via implementation of a devolution policy. The findings, including that a mixed governance model would be the best choice, are in line with many previous studies, such as those by Baird (2002), Cullinane et al. (2002), Brooks and Pallis (2008) and Verhoeven (2011). Even more persuasively, on the basis of an analysis of the governance structure of 42 ports across a range of different countries, Brooks and Cullinane (2007c) find evidence of 34 different combinations of governance along the private– public continuum, with only four ports operating under a fully public model, and only one port being fully private. For the purposes of this research, however, port functions were further categorised into transferable and non-transferable items. In addition, for measuring the potential performance of the devolution programme, as distinct from the traditional measurement of devolution policy outcomes, this paper used stakeholder objectives as measures; these indicators seem to be valuable as they can be reported to all of the interested parties. This paper has investigated stakeholder attitudes regarding the future. As such, the results of this analysis can still be utilised by the country's future regime as guidance for realising any revision to port governance structure in the light of the country's future reform priorities. It is obviously the case, however, that the validity of some findings still need to be assessed following their potential implementation, and that further research should be conducted in order to investigate the maturity of Libya's institutional environment for supporting and accommodating such requirements (changes in the governance structure) and to determine the effectiveness of utilising stakeholder interests as measures for the success of a devolution policy. Furthermore; according to the findings of this analysis, stakeholders have voted in favour of private sector involvement, even

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