85.

The distinction between objective and subjective risks is important because the
former can only be insured, while the latter can be reduced or eliminated by correctly
defining the incentives schemes each participating agent faces:
Allocating the objective risks means finding the best devices for risk sharing among the
participating agents while possibly insuring part of the risks through external parties.
Allocating the subjective risks means defining the best set of contracts to give the right
incentives to each partner, taking into account each partners skills and know-how, his
risk aversion and his reputation for sticking to its commitments.
D.3

Benefits Distribution

86.
If the rationale for institutional reform in the port sector is not strongly questioned,
how to make sure the expected benefits go where they were intended to is another issue
altogether. Typically, expectations can be summarized as follows for the main
stakeholders:
Governments: at the macroeconomic level, to improve external trade competitiveness
by reducing transport costs, and in particular the cost of port services, and improving
port efficiency at the sea/land interface; at the microeconomic level, to alleviate
financial burden on national budgets by transferring part of port investments and
operating costs on the private sector, and incidentally, raise revenues from assets
divestitures;
Transport and Terminals Operators: more cost-effective port operations and
services, allowing for more efficient use of transport assets and better competitive
positions on transport markets, and more business opportunities in growing sectors (f.i.
container operations);
Shippers, Exporters/Importers: reduced port costs, and as a consequence of more
efficient port operations, lower maritime freight rates, allowing lower cost of imported
inputs and better competitiveness of exports on external markets; and
Consumers: lower prices on consumer goods, and better access to a wider range of
products through increased competition between suppliers.
87.
In countries where port sector reform has already been largely implemented,
Governments have usually achieved most of their expected benefits in terms of productivity
and cost-effectiveness of port services, and reduction of the financial drain on national
budgets: Malaysia, Argentina, Columbia, and now Brazil are telling examples, with
productivity of container handling operations improved between two and fourfold, and
handling costs reduced between 40 to 70%. Port reforms in Argentina have sought to
deregulate, decentralize, and privatize. And they have sought to introduce competition not
only among ports but also for the portsby inviting operators to bid