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Port privatization, efficiency and competitiveness: Some empirical evidence from container ports (terminals)

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  • Tongzon, Jose
  • Heng, Wu
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    Abstract

    Few studies have investigated the quantitative relationship between port ownership structure and port efficiency with mixed results. This study applies a stochastic frontier model proposed by Battese and Coelli [Battese, G.E., Coelli, T.J., 1995. A model for technique inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics 20, 325-332], which incorporates the inefficiency effect, to show whether port privatization is a necessary strategy for ports to gain a competitive advantage. While this stochastic frontier model has been used to a wide number of industries where the technical inefficiency effect is required, this method has rarely been employed to port industry. This study also investigates the determinants of port competitiveness. Both the principal component analysis (PCA) and the linear regression model are used to examine the effects of identified key factors on port competitiveness. Based on a sample of selected container terminals around the world, the results of this study have shown that private sector participation in the port industry to some extent can improve port operation efficiency, which will in turn increase port competitiveness. Another important determinant of port competitiveness is the adaptability to the customers' demand. All these results provide some policy implications and guidance for port authorities and port operators in formulating effective strategies to improve their competitiveness vis-a-vis rivals.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

    Volume (Year): 39 (2005)
    Issue (Month): 5 (June)
    Pages: 405-424

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    Handle: RePEc:eee:transa:v:39:y:2005:i:5:p:405-424

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    1. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    4. Hans J F Peters, 2001. "Developments in Global Seatrade and Container Shipping Markets: Their Effects on the Port Industry and Private Sector Involvement," Maritime Economics and Logistics, Palgrave Macmillan, vol. 3(1), pages 3-26, March.
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    7. Douglas K. Fleming & Alfred J. Baird, 1999. "Comment Some reflections on port competition in the United States and western Europe," Maritime Policy & Management, Taylor & Francis Journals, vol. 26(4), pages 383-394, October.
    8. Alfred J Baird, 2000. "Port Privatisation: Objectives, Extent, Process, and the UK Experience," Maritime Economics and Logistics, Palgrave Macmillan, vol. 2(3), pages 177-194, September.
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    14. Theo Notteboom & Chris Coeck & Julien Van Den Broeck, 2000. "Measuring and Explaining the Relative Efficiency of Container Terminals by Means of Bayesian Stochastic Frontier Models," Maritime Economics and Logistics, Palgrave Macmillan, vol. 2(2), pages 83-106, June.
    15. Kevin Cullinane & Dong-Wook Song, 2001. "The Administrative and Ownership Structure of Asian Container Ports," Maritime Economics and Logistics, Palgrave Macmillan, vol. 3(2), pages 175-197, June.
    16. Jose L. Tongzon, 1989. "The Impact Of Wharfage Costs On Victoria'S Export-Oriented Industries," Economic Papers, The Economic Society of Australia, vol. 8(4), pages 58-64, December.
    17. Trujillo, Lourdes & Nombela, Gustavo, 1999. "Privatization and regulation of the seaport industry," Policy Research Working Paper Series 2181, The World Bank.
    18. Tongzon, Jose, 2001. "Efficiency measurement of selected Australian and other international ports using data envelopment analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(2), pages 107-122, February.
    19. Cullinane, Kevin & Song, Dong-Wook & Gray, Richard, 2002. "A stochastic frontier model of the efficiency of major container terminals in Asia: assessing the influence of administrative and ownership structures," Transportation Research Part A: Policy and Practice, Elsevier, vol. 36(8), pages 743-762, October.
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