Latest / The Productivity Podcast with Fexingo: Output, Efficiency, and Long-Term Economic Growth / How a Mid-Size Port Cut Turnaround Time by 65 Percent
Transcript
- Lucas: So, you have a mid-size container port. It handles about three million TEUs a year—that's twenty-foot equivalent units. Not tiny, not Singapore. And it decides it wants to cut the time a ship spends at berth by half. Luna: That sounds like a capital project. New cranes, deeper dredging, maybe a whole new terminal. Lucas: That's the instinct, right? Throw infrastructure at the problem. But the Port of Salalah in Oman didn't do that. They spent about twelve million dollars on software, training, and process re-engineering. And over three years, they reduced average vessel turnaround time by 65 percent. Luna: Sixty-five percent? From what baseline? Lucas: They went from an average of about 42 hours per vessel to around 14 and a half. That's faster than some terminals with twice the crane density. The key wasn't more equipment—it was knowing where every container was, in real time, and coordinating every move. Luna: So this is a data story. Lucas: Very much so. Before the overhaul, Salalah operated like a lot of ports: the terminal operator had one system, the shipping lines had another, customs had a third, the trucking companies had a fourth. None of them talked to each other. So a container might be sitting on the dock for six hours because nobody knew it had cleared customs. The crane operator might be idle because the next row wasn't staged. Luna: Classic information silos. And the fix was a port community system? Lucas: Exactly. They implemented a single digital platform that connected the terminal operating system, the customs declaration database, the shipping line's stowage plans, and even the truck appointment system. Every stakeholder saw the same data at the same time. That alone cut a lot of the waiting. Luna: But a platform doesn't move steel. How did they actually speed up the crane work? Lucas: That's where the second layer came in. They used a real-time optimization algorithm for crane scheduling. Traditionally, the crane supervisor prioritizes based on experience—which is fine, but it can't juggle thirty variables at once. The algorithm looked at vessel stowage, container weight, truck arrival times, and yard congestion, and it assigned crane moves in a sequence that minimized idle time. They measured a 30 percent increase in crane moves per hour. Luna: So they got 30 percent more productivity from the same cranes. Lucas: Right. That's the difference between latent capacity and installed capacity. They had the cranes. The bottleneck was decision-making. And that's a pattern you see in a lot of productivity gains—it's not that you need more stuff, it's that you need to use the stuff you have more intelligently. Luna: And this is interesting because so many infrastructure projects default to 'build more.' A new berth costs hundreds of millions. A new software system costs low single-digit millions. Lucas: Yeah. And the interesting thing about Salalah is that they didn't even buy the most expensive system. They used an open-source core and customized it. That's part of why the total cost was only twelve million. The port authority also invested heavily in training—every crane operator, every clerk, every dispatcher went through a two-week simulation course. They didn't just drop software on people. Luna: That part matters a lot. You can have the best algorithm, but if the crane operator doesn't trust it, they'll override it. Lucas: Exactly. And the results are real. The port's throughput went from about 2.8 million TEUs in 2020 to 4.1 million in 2024, without adding a single new crane or berth. That's a 46 percent increase in throughput from the same physical footprint. Luna: I love that this is a productivity story without a huge capital spend. It's about information flow and coordination. Lucas: And it's replicable. There are dozens of mid-size ports around the world that have similar inefficiencies. The World Bank did a study—they estimate that if every port in the bottom 50 percent of efficiency could get to the median, global trade costs would drop by about 2 percent. That's tens of billions of dollars. Luna: Which is the kind of macro impact that's hard to see from a single port, but it adds up. And we're able to dive into these cases because the show is ad-free—no sponsor dictating what we cover. If you find value in that, you can support the show at buy me a coffee dot com slash fexingo. It's a simple way to keep these deep dives coming. Lucas: Yeah, and we really appreciate that. So Salalah is a good example, but it's not without caveats. The port operates in a relatively stable political environment, and its labor force is unionized but cooperative. That's not the case everywhere. Luna: Right. If you're trying this in a port with adversarial labor relations or where the customs authority is resistant to sharing data, the same software won't work. Lucas: Exactly. And Salalah had a motivated leadership team. The CEO at the time, a guy named Ahmed Al-Farsi, was a data-driven engineer who pushed the project through. That kind of top-level buy-in is critical. Luna: So the productivity gain is real, but it's not just a plug and play solution. It requires alignment. Lucas: Right. And that's actually a useful lens for thinking about broader economic productivity. A lot of the gains we've seen in the last decade—from just-in-time manufacturing, from cloud computing—they come from better coordination, not just more machines. The Salalah case is a microcosm of that. Luna: And it's also a reminder that the easy productivity gains might be in the middle of the distribution, not at the frontier. The most efficient ports already have these systems. The least efficient might not have the institutional capacity. But the middle—that's where the leverage is. Lucas: Yeah. The World Bank's Container Port Performance Index ranks about 400 ports. Salalah moved from the 120th percentile up to the 40th. So it went from below average to well above average. That's a huge jump. Luna: And they did it in three years. That's fast. Lucas: It is. And it's not just a one-off. They've sustained those gains. In 2025, they averaged 14.2 hours per vessel. So the improvement held. That's a sign that the organizational changes are baked in, not just a Hawthorne effect. Luna: What's the one thing you'd take away from this for a listener who doesn't work in shipping? Lucas: I think it's this: before you decide you need more capacity, ask whether you're using the capacity you already have. The answer is almost always no. And the fix is usually about information and coordination. That goes for a factory floor, a hospital ward, or a port. Luna: Good rule. And maybe also: don't underestimate training. The software is cheap, but getting people to use it well is the hard part. Lucas: Absolutely. So that's the Port of Salalah. One of those quiet productivity wins that doesn't make headlines but moves the needle on global trade. Luna: It's a good story. And we'll be back next time with another one.