Philipp Asen University of Applied Sciences fh Joanneum Graz, Austria philipp.asen@fh-joanneum.at Vito Bobek University of Applied Sciences fh Joanneum Graz, Austria vito.bobek@fh-joanneum.at Tatjana Horvat University of Primorska, Faculty of Management, Slovenia tatjana.horvat@fm-kp.si The Efficiency of Ports and Airports in Emerging Markets Measured by Key Performance Indicators: The Case of Hong Kong and Durban Ports and airports impact emerging countries’ development. A case study where the ports and airports of Durban, South Africa, and Hong Kong are compared should provide information about this issue. The research was based on a quantitative and descriptive approach, as the outcome was simply expressed in an overall summary.The results were that Hong Kong outperforms Durban in most key performance indicators such as revenue, cargo handled, or container dwell time. In addition, Durban’s port is more expensive and cannot attract the most prominent busi- nesses. However, even though Durban is nowhere near the size of Hong Kong, the port and airport are essential for their economy, and they keep improving. In conclusion, it can be said that some obvious factors influ- ence the economy, like the size of the port or airport. Other than that, some indicators are not influenced by the size, like average turnaround time, which can be optimized. Keywords: infrastructure development, importance of ports and airports, comparison of emerging countries, key performance indicators Učinkovitost pristanišč in letališč na hitrorastočih trgih, merjena s ključnimi kazalniki uspešnosti: primer Hongkonga in Durbana Pristanišča in letališča vplivajo na razvoj hitrorastočih gospodarstev. Štu- dija primera, v kateri primerjamo pristanišča in letališča Durbana (Južna Afrika) in Hongkonga, bi morala zagotoviti informacije o tem vprašanju. Raziskava je temeljila na kvantitativnem in deskriptivnem pristopu, saj je bil rezultat preprosto izražen v splošnem povzetku. Rezultati so po- kazali, da je Hong Kong boljši od Durbana pri večini ključnih kazalnikov uspešnosti, kot so prihodki, pretovorjen tovor ali čas zadrževanja zaboj- nikov. Poleg tega je pristanišče Durban dražje in ne more pritegniti naj- vidnejših podjetij. Čeprav Durban po velikosti ni primerljiv s Hongkon- gom, sta pristanišče in letališče ključnega pomena za njihovo gospodar- stvo in se nenehno izboljšujeta. Ugotovimo lahko, da nekateri očitni de- javniki, kot sta velikost pristanišča ali letališča, vplivajo na gospodarstvo. Velikost pa ne vpliva na nekatere druge dejavnike, kot je na primer pov- prečni čas obdelave, ki ga je mogoče optimizirati. Ključne besede: razvoj infrastrukture, pomen pristanišč in letališč, pri- merjava držav v vzponu, ključni kazalniki uspešnosti https://doi.org/10.26493/1854-4231.16.75-81 Introduction Goods and services get imported from abroad for different reasons: they may be cheaper, have better quality, or no local alternative is available or exists. Trade benefits may be inequitable, but some trade is better than no trade at all (‘Interna- management 16 (2021) številka 2 75 Philipp Asen, Vito Bobek, and Tatjana Horvat |The Efficiency of Ports and Airports tional Trade: Need, Benefits, and Disadvantages’ n.d.). Especially in the emerging economy, trans- portation costs can represent a significant bar- rier to trade, as the necessary infrastructure is non-existent, which means that the expansion of infrastructure could facilitate trade by increas- ing regional and international trade through re- ducing costs. In emerging countries, a significant reason for the low quality of infrastructure is poormaintenance because of limited financial re- sources (Soobramanien and Zhuawu 2014). How- ever, efforts are made to improve transport in- frastructure and its quality, as it is essential to a country’s development and has a significant im- pact on the economy. During the 19th century and first half of the 20th century, ports tended to be instruments of state powers, and port access was regarded as a means to control markets. Competition be- tween ports was minimal. However, times have changed, and most ports today are competing with each other on a global scale and, with the tremendous gains in productivity in ocean trans- port achieved over the past several decades, ports are now perceived to be the remaining control- lable component in improving the efficiency of ocean transport logistics (Rodrigue 2020). So the three main determinants for competitive ports, identified here, are extensive maritime forelands (on the sea/water), effective port operations, and strong hinterland connections (road/rail) (Zhang and Roe 2019). The same can be said about air- ports. They have traditionally been considered as public utility providers, with little potential to develop significant market opportunities. Liber- alization of the air transport market around the globe has introduced new dynamics into the air- port industry.The emergence of competition and the transition in ownership (towards privatiza- tion or commercialization) demands a different perspective (Jimenez, Claro, and Pinho de Sousa 2014) The maritime and air transport industry is cost-driven, e.g. if a vessel spendsmore timewait- ing outside the port for the next available berth or due to congestion, the cost of transportation of the cargo increases (unctad 2014). Container ports and airports are compelled to regularly re- view their capacity and other Key Performance Indicators (kpis) to ensure that they can provide satisfactory service to users and maintain their competitive edge. This paper is about the efficiency of ports and airports and their role in emerging markets. In- frastructure has always been an essential tool for a country’s wealth and growth, enabling Euro- peans to import goods fromAsia faster or explore other parts of the world like the American conti- nent (Beckmann 2019). In the past, many countries defined them- selves by their ports, in particular those with a vast port quickly becoming the linchpin for busi- ness worldwide. Connectivity attracts business investments and human capital, which means that ports and airports are significant drivers of a country’s economic and social development. These ports give access to foreign markets, fa- cilitate the movement of products and goods and make people mobile (Bjorndal 2017). How- ever, the ports of Hamburg or Rotterdam are big- ger and more successful than those of emerging countries.The same canbe said about the airports in Atlanta or Frankfurt, which are well known, and every major airline heads for those airports (Roddey 2020; White 2018). Therefore, the paper highlights what the main drivers are for success- ful ports and airports and how they influence the development of a country. Economically developing countries usually do not have a well-developed infrastructure as re- gards ports and airports. However, they are often located on essential trade corridors or are rich in natural resources. The establishment of these structures could enormously support such coun- tries in their development and make them part of the global market (Kakissis 2018). At the end of this paper, we present a case study about two cities on these critical trade corridors, HongKong and Durban in South Africa. The authors have provided good practice, i.e. comparing ports and airports of two emerging countries. There is not much literature about ei- ther in emerging countries, and especially no comparisons.There ismuchmore in the literature about that issue in developed countries, so this paper’s importance is that it collects data from emerging countries’ ports and airports and com- pares them.Therefore, the professional relevance of the paper is that it determines the reasons for the different development in these countries and recent numbers in the industry. The two goals and the assumptions that will help to provide good practice are the following: • What is the importance of ports and airports in the development of emerging countries? Here the authors assumed that trade is es- sential for development, and infrastructure 76 management 16 (2021) številka 2 Philipp Asen, Vito Bobek, and Tatjana Horvat |The Efficiency of Ports and Airports Hong Kong 2010 3300 Hong Kong 2018 2920 Durban 2010 265 Durban 2018 410 Figure 1 Revenue in Million € Hong Kong 2010 21 Hong Kong 2018 18 Durban 2010 3 Durban 2018 6 Figure 2 Number teus Handled in Millions is necessary to trade. In addition, there are several factors of importance. • What are the reasons why Hong Kong out- performsDurban?Here the authors assumed that Hong Kong is more efficient in impor- tant kpis. This paper followed a quantitative approach, as the most critical indicators were expressed in numbers. It followed descriptive research as the outcome was expressed in an overall summary. Finally, the data were entered in Microsoft Excel and shown in various graphs. Case Study: Durban vs. Hong Kong In this case study, Durban’s ports and airports in South Africa and Hong Kong will be compared with some critical kpis. Durban was chosen be- cause it has the most extensive and busiest ship- ping terminal in sub-Saharan Africa and influ- ences the region and country. Furthermore, a new airport was opened in 2010 and the changes there will be interesting to analyse. Hong Kong was chosen because they have had one of the busi- est ports globally since the late 1980s due to the trade in manufactured products. Their airport is also gathering increasing importance as for many tourists it is the entry to China. However, Hong Kong is still often considered an emerging mar- ket. Ports Starting with one of the most important finan- cial indicators of every company, Figure 1 shows the revenue in € ofHongKong andDurban.There are several charges that ports levy to raise rev- enue, including vessel servicing and facility fees, cargo service fees, and leasing land for commer- cial and industrial activities. Setting appropriate fees for different types of vessels and cargo ship- ments is a complicated process. Ports need to be competitive with other nearby ports but also suf- ficiently profitable to cover costs. In Hong Kong, revenue has slightly decreased from 2010 to 2018. This ismostly due to the increased competition in South-East and East Asia. Ports like Shanghai or Singapore take much business from Hong Kong (Beard 2018).This can also be seen, as there is less cargo handled at the port compared to 2010. The other port, Durban, increased its revenue in that timeframe.They increased the number of twenty- foot equivalent units and tons of goods handled and became more efficient over time. However, there is still a considerable gap between the two ports concerning revenue collected (figure 1). The next important kpi is teu, which means ‘twenty-foot equivalent unit’ and is an inexact unit of cargo capacity often used to describe con- tainer ships and container terminals’ capacity. However, it is seen in Figure 2 that the handling of teus per year decreased in Hong Kong from 2010 to 2018. This is caused by to the competi- tion in the Asian market, especially from Shang- hai and Singapore. Adding to that, Hong Kong’s terminal yards are, on average, 25 to 30 percent below the benchmark for modern facilities. This has been a pressing issue formany years, yet land- use planning around the port remains inefficient. Thismeans that the port must focus on removing operational inefficiencies to stay on top. Never- theless, they handled 18 million teus in 2018, with 258 million tons of cargo handled (Ducruet, Itoh, and Merk 2014). Durban doubled their handling of teus per year in that timeframe. They handled 6 million teus in 2018, with 81.2million tons of cargo han- dled. Upgrading and re-equipping of port infras- tructure are well advanced in Durban, including the widening and deepening of the port entrance and channels to enable much larger ships to use the port facilities. However, the port in Durban management 16 (2021) številka 2 77 Philipp Asen, Vito Bobek, and Tatjana Horvat |The Efficiency of Ports and Airports Table 1 Comparisons of Ports Item Durban Hong Kong teu  million  million Container dwell time – days – days Average turnaround time  hours  hours Total cargo handled (int) . million  million Revenue (in )  million . billion Port-related jobs , , Opombe kpi from 2018. Based on International Transport Forum (2014) and China Merchants Ports Holding Com- pany (2019). is one of the most expensive ones compared to others. The total port pricing is around 280 usd per teu compared to Hong Kong, with approxi- mately 230 usd per teu. The terminal handling charges and cargo dues are themost relevant ones (International Transport Forum 2014) (figure 2). Another important kpi is container dwell ti- me, as it describes how long a shipping container stays at a port terminal. In the Hong Kong port, the short dwell time of 1–3 days also helps their efficiency, as the storage yards are already lim- ited (Ducruet, Itoh, and Merk 2014). Durban im- proved dwell time because systems were in place to allow for prompt clearance and release. The 3– 4 days dwell time in Durban are the fewest in any African port, as the average dwell time in African ports is around 10–14 days (International Trans- port Forum 2014). The next kpi is the average turnaround time (att). In 2018, ships spent a median time of 23.5 hours in a port. A shorter time in port is a posi- tive indicator that could signal port efficiency and trade competitiveness (unctad 2020). Within this kpi, there is a massive difference between Durban and Hong Kong. Whereas Hong Kong has a short turnaround time of approximately 10 hours, Durban’s average turnaround time ismuch higher than 50 hours (Ducruet, Itoh, and Merk 2014; International Transport Forum 2014). Both ports contribute massively to the econ- omy of the country, as the Hong Kong port con- tributes 1.1 of the gross domestic product in Hong Kong, and the port in Durban contributes between 1.5 and 2 of national gross domes- tic product (The Official Website of the eThek- wini Municipality n.d.; Transport and Housing Bureau 2021). Adding to that, they also employ many people and help to reduce unemployment. Port-related jobs in Durban add up to 100,000 people employed in this sector, while in Hong Kong, there are only 83,000 people employed (In- ternational Transport Forum 2014). These jobs include workers from the port, but also employ- ees of agents who work there. This means Hong Kong is much more efficient, with fewer peo- ple employed in port-related jobs. They achieve much more revenue, handle more cargo, and are more efficient in container dwell time and av- erage turnaround time. The port employees in Hong Kong handled three times more teus and more than three times as many tons as Durban did. Furthermore, they are five times faster in turnaround time and 1–2 days faster in container dwell time.This efficiency could be due to various causes like higher automation andmerely the size of the port. Nevertheless, the port in Durban will play a vital role in the future economic success of South Africa. Airports Durban’s new airport, King Shaka Airport, was opened in 2010 due to the football world cup in South Africa. It has a capacity of 7.5 million pas- sengers annually and has a longer runway, mean- ing that now, the giant planes such as the Airbus 380 or Boing 747 can land and take off in Durban, which was not possible at the old one.Thismeans that Durban is also considered a medium airport, classified with 5–10 million passengers per year. The airport in Hong Kong was opened in 1998 as the old airport got too small. It is now considered a mega airport that handles more than 30 mil- lion people annually. However, the airport even exceeds this by far, with around 71.5 million pas- sengers per year. Airports can generate revenue in three signif- icant areas: aeronautical revenue, non-aeronauti- cal revenue, and non-operating revenue (‘HowDo Airports Make Money?’ n.d.). The revenuedevelopmentofDurban andHong Kong is visible in figure 3 and figure 4, respec- tively. It is no surprise that Durban tripled their revenue due to the new airport and the capacity to handle the most prominent aircraft for inter- national flights. Hong Kong almost doubled their revenue, because it is one of the busiest airports globally, handles many freight aircraft and the numbers of passengers are steadily increasing. In this area, Hong Kong outperforms Durban mas- sively with € 1.8 billion generated in revenue com- pared to Durban’s € 35.4 million (Airport Author- ity Hong Kong 2020; Airports Company South Africa 2020). Therefore, it is essential to read the 78 management 16 (2021) številka 2 Philipp Asen, Vito Bobek, and Tatjana Horvat |The Efficiency of Ports and Airports 2010 10 2018 35.4 Figure 3 Revenue at Durban airport in € (based on Airport Authority Hong Kong 2020 and Airport Company South Africa 2020) 2010 959 2018 1800 Figure 4 Revenue at Hong Kong Airport in € (based on Airport Authority Hong Kong 2020) 2010 6.4 2018 20.5 Figure 5 Total Cargo Handled at Durban Airport inThousand Tonnes (based on Airport Company South Africa 2020) 2010 3600 2018 4800 Figure 6 Total Cargo Handled at Hong Kong Airport inThousand Tonnes (based on Airport Authority Hong Kong 2020) graphs correctly as Durban’s revenue would not be visible on Hong Kong’s chart. The airport in Durban has two different termi- nals, one for passengers and the other for cargo. Therefore, similar to the revenue, the total cargo handled increased significantly over time. The freight terminal is a significant benefit for the air- port as large freight aircraft can operate there and can load goods needed in the country or to sell to other countries. The capacity of cargo handled in Durban right now is 100,000 tons per year, but they want to increase this capacity to 2 million tons by 2060 (Dube TradePort n.d.). However, they could only handle 20,500 tons of cargo in 2018, meaning that they still have a significant amount of free capacity, which is inefficient but must be improved in the future (figure 5). HongKong international airport has been one of the world’s busiest airports and handled 4.8 million tons of cargo in 2018, which accounted for 42 ofHongKong’s external trade total value. They have sufficient cargo handling capacity, with a total of 7.6 million tons which could be handled. Furthermore, their geographic location and con- nectivity are significant in cargo handling (Hong Kong International Airport n.d.a) (figure 6). The flow of passengers is critical to the success of an airport. It is vital to optimize operational efficiency and the check-in process, develop hold baggage systems, and realize full capacity (aiq Consulting 2018). Table 2 Comparison of Airports Item Durban Hong Kong Air traffic movements , , Passengers  million . million On-time performance . . Total cargo handled (int) , . million Handling capacity (int) , (. full utilization) . million ( full utilization) Revenue (in ) . million . billion Opombe Numbers from 2018. Based on Airport Author- ity Hong Kong (2020) and Airports Company South Africa (2020). Durban was more or less fully occupied, so it was vital for them to open a new airport. They increased the number of annual passengers to 6 million, and it would be possible to handle 1.5mil- lion more (Airports Company South Africa n.d.). The airport in Hong Kong is gathering increas- ing importance for many tourists as the entry to China.They increased their number of passengers between 2010 and 2018 to 71.5million, which is an overwhelming 195,000 per day (HongKong Inter- national Airport n.d.b) (figure 7). Hong Kong connects these passengers with 220 destinations worldwide via 120 different air- lines.They have approximately 420,000 air traffic management 16 (2021) številka 2 79 Philipp Asen, Vito Bobek, and Tatjana Horvat |The Efficiency of Ports and Airports Hong Kong 2010 50 Hong Kong 2018 71.5 Durban 2010 4.8 Durban 2018 6 Figure 7 Number of Annual Passengers in Millions (based on Airport Authority Hong Kong 2020 and Airports Company South Africa 2020) Hong Kong 2010 300 Hong Kong 2018 420 Durban 2010 54 Durban 2018 51.1 Figure 8 Number Annual Air Traffic Movements inThousands (based on Hong Kong International Airport n.d.b and Airports Company South Africa 2020) movements per year and two runways in opera- tion (Hong Kong International Airport n.d.a). In Durban, air traffic movements slightly declined, which is an interesting fact. This means fewer re- gional flights but more international flights with larger aircraft withmore seats for passengers (fig- ure 8). As a medium airport, Durban has an on-time performance of 84.3 compared to the mega air- port in Hong Kong with 76.4 (oag Aviation Worldwide 2020). Considering the size of both, these times are quite good, as it is expected that smaller airports are more punctual than bigger ones. Conclusion In conclusion, it can be said that infrastructure is very important for a country’s economy, and ports and airports contribute to the gross do- mestic product and reduce unemployment. Of course, the size is essential, but there is more to mention. Key performance indicators like con- tainer dwell time, average turnaround time, or total cargo handled are essential. Inmost of these indicators, HongKong outperformsDurbanmas- sively, as they work more efficiently with fewer people employed. Furthermore, the port in Dur- ban has much higher fees for the same amount of cargo than Hong Kong and therefore is not very attractive for many shipments. However, even though Durban is nowhere near the size of Hong Kong, the port and airport are essential for their economy, and they keep improving. Both cities have ambitious plans for the future, lead- ing them in the right direction of becoming more developed. Itwas challenging tofindgoodpapers anddata for both cities’ ports and airports, especially Dur- ban. Therefore, we had to abandon our plans to do a correlation analysis. It was impossible to find year-to-year numbers, and it was already hard to find numbers from ten years ago and some re- cent numbers to compare them and see the de- velopment. Furthermore, it was difficult to differ- entiate the data as they had different definitions. Port-related jobs are an example. Here, it was not easy to differentiate as most of the time the data stated that all jobs which are in any way related to the port or airport are taken into account. The 21st Century Maritime Silk Road is de- signed to go fromChina’s coast to Europe through the South China Sea and the Indian Ocean with smooth, secure and efficient transport routes connecting major seaports along the Belt and Road where Hong Kong and Durban are very im- portant hubs.TheMaritime Silk Road is the mar- itime component of China’s Belt and Road Ini- tiative (bri). It complements the various non- maritime activities stimulated by the Chinese government that relate to transport, energy and communication infrastructure in developing coun- tries, and between China and Europe. It will cre- ate better and new opportunities for economic development of both seaports and airports. References aiq Consulting. 2018. ‘Passenger Experience – Why is it Important for Airports?’ 6 June. https://www .aiqconsulting.com/aiq-news/passenger -experience-why-is-it-important-for-airports/. Airport Authority Hong Kong. 2020. Building for the Future: Annual Report 2019/20. 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