Ports and international trade

International trade, which is completely different from the domestic one, refers to movement of goods, services and capital across the borders of different countries. A port is the gateway for international trade which has another name cross-border trade. As Wikipedia says, port refers to the city or the place where goods brought to and from a country or territory are loaded and unloaded from the carrying transports under the supervision of the customs that is empowered by the state to oversee international trade. In a nutshell, the whole country having a port moves with its operation. International trade is becoming very competitive day by day and survival of international market players is dependent on quality port infrastructure and efficient port management. Low quality port infrastructure and inefficient port management make international trade costly.
Existence of port depends on many issues like navigability, coastline amenities, quality of sea water, etc. Since 95 per cent of the international trade is transacted through maritime routes, sea ports assume greater importance. Efficient port management facilitates timely shipment, cost competitiveness in international trade, building investors' confidence, technology transfer, inflow of foreign direct investment, rise in forward and backward linkage industry, development of  logistics, shipping business and vibrant supply chain and entre-pot trade.
Fragility in port infrastructure creates delay in shipment of cargoes that saps buyers' confidence which is crucial for survival in international trade. Due to late shipment, exporters-suppliers have to count huge losses from buyers who have pre-agreed market demand for goods received late. Payment under documentary credit becomes jeopardised by the issuing bank which undertakes to effect payment upon timely shipment of goods as fixed in the documentary credit.
The cost of international trade largely depends on efficient port management, which handles  cargoes with minimum time consumption. Singapore, the second largest seaport in terms of total cargo tonnage handled and the largest transshipment port in the world is hugely earning foreign currencies through international trade though the country is lacking in land and natural resources. China exports goods worth $2.37 trillion a year using its well-equipped port infrastructure situated in important locations which are full of industrial parks contributing to earnings through international trade.
International investors, before making any investment decision, first of all, enquire about  infrastructure quality of a port for trading internationally for purchasing raw materials from global markets and selling those internationally after manufacturing. Efficient port management also helps technology transfer from high-tech territories to under-developed ones and helps build a vibrant supply chain which is very important for  smooth international trade operation. If goods are imported from one country with the purpose of re-exporting to another, it is called entrepot trade. Import duty is not levied on these goods. The important centres for entrepot trade are London, Hong Kong, Amsterdam and Singapore.
Ports help develop international trade among countries. Chittagong port, as for example, is situated in such a geographically important area that spreads cross-border trade among countries in the area spanning from east and western India up to south-western China. After the revolution of the containerisation in 1968, the shipping world witnessed a dramatic change in the marine transportation system and transshipment which is very common in international containerised shipment became very easier and the ports such as Singapore, Shanghai, Jabel Ali and Flexistoe have come out with state-of-the-art transshipment facilities that connect the distantly-situated parts of the globe.
Ports are vital for a vibrant supply chain management which is crucial for development of international trade. The international commercial terms (INCOTERMs) which disseminate risk and responsibility among the parties involved in the movement of goods in international trade are designed recognising the port existence in mind. The Uniform Customs and Practice for Documentary Credit (UCPDC), vide ICC publication no 600, a win-win method of international trade payment settlement, discusses ports' indispensability in international transportation system. Port of loading and the port of unloading are very vital for marine insurer for covering oceanic risks.
Port and international trade are very synonymous and the twins move hand in hand because these embrace each other. Modern ports in the world are situated in countries which are very vibrant in international trade. China, which is the world's largest economy in terms of international trade and size of GDP, belongs to the seven among the top ten sea ports in the world. The existence of a port influences rise of international trade in the surroundings of that territory.
The writer is Head of
Offshore Banking,
Bank Asia Limited
[email protected]