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The technical efficiency of container ports: Comparing data envelopment analysis and stochastic frontier analysis

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  • Cullinane, Kevin
  • Wang, Teng-Fei
  • Song, Dong-Wook
  • Ji, Ping
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    Abstract

    The efficiency of the container port industry has been variously studied utilising either Data Envelopment Analysis (DEA) or Stochastic Frontier Analysis (SFA). Given the strengths and weaknesses associated with these two approaches, the efficiency estimates and scale properties derived from these analyses are not always convincing. This paper applies both approaches to the same set of container port data for the world's largest container ports and compares the results obtained. A high degree of correlation is found between the efficiency estimates derived from all the models applied, suggesting that results are relatively robust to the DEA models applied or the distributional assumptions under SFA. High levels of technical efficiency are associated with scale, greater private-sector participation and with transhipment as opposed to gateway ports. In analysing the implications of the results for management and policy makers, a number of shortcomings of applying a cross-sectional approach to an industry characterised by significant, lumpy and risky investments are identified and the potential benefits of a dynamic analysis, based on panel data, are enumerated.

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    Bibliographic Info

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

    Volume (Year): 40 (2006)
    Issue (Month): 4 (May)
    Pages: 354-374

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    Handle: RePEc:eee:transa:v:40:y:2006:i:4:p:354-374

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    References

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    Cited by:
    1. Di­az-Hernández, Juan José & Marti­nez-Budri­a, Eduardo & Jara-Di­az, Sergio, 2008. "The effects of ignoring inefficiency in the analysis of production: The case of cargo handling in Spanish ports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 321-329, February.
    2. Yip, Tsz Leung & Sun, Xin Yu & Liu, John J., 2011. "Group and individual heterogeneity in a stochastic frontier model: Container terminal operators," European Journal of Operational Research, Elsevier, vol. 213(3), pages 517-525, September.
    3. Trujillo, Lourdes & González, María Manuela & Jiménez, Juan Luis, 2013. "An overview on the reform process of African ports," Utilities Policy, Elsevier, vol. 25(C), pages 12-22.
    4. Chiou, Yu-Chiun & Lan, Lawrence W. & Yen, Barbara T.H., 2010. "A joint measurement of efficiency and effectiveness for non-storable commodities: Integrated data envelopment analysis approaches," European Journal of Operational Research, Elsevier, vol. 201(2), pages 477-489, March.
    5. Wanke, Peter F., 2013. "Physical infrastructure and shipment consolidation efficiency drivers in Brazilian ports: A two-stage network-DEA approach," Transport Policy, Elsevier, vol. 29(C), pages 145-153.
    6. Slack, Brian, 2010. "Battening down the hatches: How should the maritime industries weather the financial tsunami?," Research in Transportation Economics, Elsevier, vol. 27(1), pages 4-9.
    7. Juan Martín & Concepción Román & Augusto Voltes-Dorta, 2009. "A stochastic frontier analysis to estimate the relative efficiency of Spanish airports," Journal of Productivity Analysis, Springer, vol. 31(3), pages 163-176, June.
    8. New, Robert, 2012. "Management changes and vessel-level technical efficiency in the Eastern Tuna and Billfish Fishery: a stochastic frontier analysis," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124349, Australian Agricultural and Resource Economics Society.
    9. Ahmed Salem Al-Eraqi & Carlos Pestana Barros & Adli Mustaffa & Ahamad Tajudin Khader, 2007. "Evaluating the Location Efficiency of Arabian and African Seaports Using Data Envelopment Analysis (DEA)," Working Papers Department of Economics 2007/19, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
    10. Ahmed Salem Al-Eraqi & Adli Mustafa & Ahamad Tajudin Khader, 2010. "An extended DEA windows analysis: Middle East and East African seaports," Journal of Economic Studies, Emerald Group Publishing, vol. 37(2), pages 208-218, May.
    11. Herrala, Maila Elina & Huotari, Heikki & Haapasalo, Harri Jouni Olavi, 2012. "Governance of Finnish waterworks – A DEA comparison of selected models," Utilities Policy, Elsevier, vol. 20(1), pages 64-70.
    12. Christian von Hirschhausen & Astrid Cullmann, 2008. "Next Stop: Restructuring? : A Nonparametric Efficiency Analysis of German Public Transport Companies," Discussion Papers of DIW Berlin 831, DIW Berlin, German Institute for Economic Research.
    13. Juan Díaz-Hernández & Eduardo Martínez-Budría & Sergio Jara-Diaz, 2008. "Parametric estimation of inefficiency in cargo handling in Spanish ports," Journal of Productivity Analysis, Springer, vol. 30(3), pages 223-232, December.
    14. Halkos, George & Tzeremes, Nickolaos, 2012. "Measuring seaports’ productivity: A Malmquist productivity index decomposition approach," MPRA Paper 40174, University Library of Munich, Germany.
    15. Carlos Pestana Barros & Shunsuke Managi, 2008. "Productivity Drivers in Japanese Seaports," Working Papers Department of Economics 2008/15, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
    16. Juan Díaz-Hernández & Eduardo Martínez-Budría & Sergio Jara-Díaz, 2008. "Productivity in Cargo Handling in Spanish Ports During a Period of Regulatory Reforms," Networks and Spatial Economics, Springer, vol. 8(2), pages 287-295, September.
    17. Odeck, James, 2008. "The effect of mergers on efficiency and productivity of public transport services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(4), pages 696-708, May.
    18. Madeira, Armando Gonçalves & Cardoso, Moacyr Machado & Belderrain, Mischel Carmen Neyra & Correia, Anderson Ribeiro & Schwanz, Silvia Helena, 2012. "Multicriteria and multivariate analysis for port performance evaluation," International Journal of Production Economics, Elsevier, vol. 140(1), pages 450-456.
    19. Woo, Su-Han & Pettit, Stephen J. & Kwak, Dong-Wook & Beresford, Anthony K.C., 2011. "Seaport research: A structured literature review on methodological issues since the 1980s," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(7), pages 667-685, August.
    20. Yuen, Andrew Chi-lok & Zhang, Anming & Cheung, Waiman, 2013. "Foreign participation and competition: A way to improve the container port efficiency in China?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 220-231.
    21. Yan, Jia & Sun, Xinyu & Liu, John J., 2009. "Assessing container operator efficiency with heterogeneous and time-varying production frontiers," Transportation Research Part B: Methodological, Elsevier, vol. 43(1), pages 172-185, January.
    22. Trujillo, L. & Tovar, B., 2007. "The European port industry: an analysis of its economic efficiency," Working Papers 07/05, Department of Economics, City University London.
    23. Gonzalez, M. & Trujillo, L., 2007. "Efficiency measurement in the port industry: a survey of the empirical evidence," Working Papers 07/08, Department of Economics, City University London.
    24. Odeck, James & Bråthen, Svein, 2012. "A meta-analysis of DEA and SFA studies of the technical efficiency of seaports: A comparison of fixed and random-effects regression models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1574-1585.
    25. Greer, Mark R., 2008. "Nothing focuses the mind on productivity quite like the fear of liquidation: Changes in airline productivity in the United States, 2000-2004," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 414-426, February.

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