Processing Time Ambiguity and Port Competitiveness

Container seaports play an important role in cross-border logistics as firms increasingly expand their global footprint in sourcing, manufacturing and distribution. Besides convenience of access to hinterland regions, a key metric for a port's attractiveness is its processing time, that is, its ability to clear goods within a consistent, predictable time frame. Due to differences in infrastructure, government regulations, and operating procedures, ports may exhibit different degrees of predictability in processing times: some are more predictable while others are more ambiguous. We study how ambiguity in processing times affects a port's attractiveness under various circumstances. We find that even if a port maintains a consistent expected processing time, increased ambiguity can still affect its attractiveness to firms, although not always negatively. The effect of ambiguity depends on its nature, whether the shipments are time-sensitive, attitudes toward ambiguity, and trade terms surrounding shipments.