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Group and individual heterogeneity in a stochastic frontier model: Container terminal operators

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  • Yip, Tsz Leung
  • Sun, Xin Yu
  • Liu, John J.

Abstract

Container ports are a major component of international trade and the global supply chain. Hence, the improvement of port efficiency can have a significant impact on the wider maritime economy. This paper deconstructs a representation in the existing literature that neglects the heterogeneity of individual and group-specific terminal operators. In its place, we present a hierarchical model to make a connection between efficiency and terminal operator group characteristics. The paper develops a stochastic frontier model that controls not only individual heterogeneity but also group-specific variations. The model decomposes the total stochastic derivation from the frontier into inefficiency, individual heterogeneity, group-specific variations, and noise components, with the estimation being performed using Markov chain Monte Carlo simulations. The validity of the model is tested with a panel of container terminal operator data from 1997-2004. Our findings show that terminal operator groups are important in promoting terminal efficiency at the global level, and that the operators with stevedore backgrounds show a higher efficiency than carriers.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:ejores:v:213:y:2011:i:3:p:517-525
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    3. Efecan, Volkan & Temiz, İzzettin, 2023. "Assessing the technical efficiency of container ports based on a non-monotonic inefficiency effects model," Utilities Policy, Elsevier, vol. 81(C).
    4. Levent Kutlu & Robin C. Sickles & Mike G. Tsionas & Emmanuel Mamatzakis, 2022. "Heterogeneous decision-making and market power: an application to Eurozone banks," Empirical Economics, Springer, vol. 63(6), pages 3061-3092, December.
    5. Chen, Jihong & Wan, Zheng & Zhang, Fangwei & Park, Nam-kyu & Zheng, Aibing & Zhao, Jun, 2018. "Evaluation and comparison of the development performances of typical free trade port zones in China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 506-526.
    6. Pérez, Ivone & Trujillo, Lourdes & González, María Manuela, 2016. "Efficiency determinants of container terminals in Latin American and the Caribbean," Utilities Policy, Elsevier, vol. 41(C), pages 1-14.
    7. Mark Ching-Pong Poo & Tsz Leung Yip, 2019. "An optimization model for container inventory management," Annals of Operations Research, Springer, vol. 273(1), pages 433-453, February.
    8. Marta Mańkowska & Michał Pluciński & Izabela Kotowska & Ludmiła Filina-Dawidowicz, 2021. "Seaports during the COVID-19 Pandemic: The Terminal Operators’ Tactical Responses to Disruptions in Maritime Supply Chains," Energies, MDPI, vol. 14(14), pages 1-22, July.
    9. Pérez, Ivone & González, María Manuela & Trujillo, Lourdes, 2020. "Do specialisation and port size affect port efficiency? Evidence from cargo handling service in Spanish ports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 138(C), pages 234-249.
    10. ManWo Ng & Wayne K. Talley, 2017. "Chassis inventory management at U.S. container ports:modelling and case study," International Journal of Production Research, Taylor & Francis Journals, vol. 55(18), pages 5394-5404, September.
    11. Song, Bingliang & Cui, Yuanyuan, 2014. "Productivity changes in Chinese Container Terminals 2006–2011," Transport Policy, Elsevier, vol. 35(C), pages 377-384.

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