Estimating the inefficiency in the Norwegian bus industry from stochastic cost frontier models

A stochastic cost frontier function based on data from 170 of the 175 Norwegian subsidized bus companies is estimated under two alternative presumptions regarding the distribution of the inefficency among the bus operators. When the inefficiency is assumed to be half-normally distributed, the average inefficiency in the industry is estimated to be 13.7 per cent. This calculated value is nearly halved (7.2 per cent) when the exponential distribution is applied, while the ranking of the companies according to inefficiency is unchanged. By regressing the estimated inefficiency values for each company on some exogenous variables describing its ownership structure and the subsidy policy which it faces, it is seen that inefficiency of the companies which negotiate with the public authorities over the subsidy amounts is slightly higher than the inefficiency of the companies which face a subsidy policy based on cost norms. Our analysis gives, however, no significant differences in the efficiency between privately owned bus companies and publicly owned bus operators, and shows only minor economies of scale.     

Institutional structure of New Zealand licensed road freight carriers

Road freight transport in New Zealand has operated under government regulations since 1936, primarily to protect the freight revenue of the New Zealand Railways. In 1983 an Act was passed to deregulate the freight transport industry and to switch over to a qualitative licensing system. This is expected to have some impact on competition within the road freight industry as well as between road and rail. This paper analyses the institutional structure of the road freight industry at the pre‐deregulation phase. The trend over the last few years, shows that the number of single vehicle owners (mostly owner‐drivers) and their share in the industry is growing at a faster rate than others. The vehicle authority distribution varies widely from one region to another in the country. Economic factors like employment, population, urbanization etc. could not explain this variation. The segregation of demand by existing government regulations appears to be the main reason for such diversity in vehicle authority distribution. Apparently there is no monopoly trend in the aggregate nor in the regional distribution. However, many owner drivers work closely with large firms, which may change the concentration observed in the distribution of vehicle authorities.

Productivity is relatively high for one person operations, i.e., mainly owner drivers. It then goes down and then rises to a certain limit. This gives an indication of the possibility of economies of scale, the single vehicle firms being an exception.     

Regulatory policy and economies of scale in the U.S. intercity bus industry

After nearly a half century of federal and state regulation, the U.S. intercity bus industry is the subject of proposals which would drastically reduce the extent of governmental control over fare setting, service abandonment, and market entry. An essential requirement for understanding how these regulatory changes might affect the industry is knowing the extent to which economies of scale are present in the provision of intercity bus services. This paper reports on the analysis of economies of scale for both Class I firms and for Class II and III firms. The results show nearly constant returns to scale beyond very low output levels but very strong dependence on the mix of charter and regular-route service provided.     

A subadditivity test for the cost function of the principal European railways

The objective of this paper is the comparison of the efficiency levels for a set of European rail companies in monopoly situations with respect to hypothetical duopoly situations. More specifically, the aim is to test whether the operating costs function of such companies is subadditive. A cost function is subadditive when a single firm can produce all relevant output vectors cheaper than two or more firms. In order to do so the test developed by Evans and Heckman (1984) will be used. It was applied for the American phone company Bell System to assess the convenience of separating the management of local and long-distance services. The results indicate that at least for the companies of a greater size, an efficiency increase (as measured by lower costs), would be obtained from the separation of the current companies in two different companies of a lower size. Besides, these efficiency gains are greater when the two new companies specialize their production, either on passenger or on freight traffic.     

Evaluating efficiency in the Norwegian bus industry using data envelopment analysis

This paper focuses on the performance of Norwegian bus companies subsidized by the government. The performance is evaluated from a productive efficiency point of view. The framework is that of a deterministic non-parametric Data Envelopment Analysis (DEA) approach to efficiency measurement. In this context several important issues are addressed: efficiency rankings, distribution and scale properties in the bus industry, potentials for efficiency improvements in the sector, the impact of ownership, area of operation and scope, and ways of improving efficiency in the sector. The findings show that the average bus company exhibits increasing return to scale in production of its services. The extent of such returns however vary, with size and is more prevalent among smaller companies. The average bus company is found to have a considerable input saving potential of about 28 percent. Neither economies of scope nor company ownership are found to have an influence on company performance. It is suggested that geographical factors need a closer attention in future research. The implications of DEA results are discussed and concluding remarks offered.     

Technical characteristics and efficiency of urban bus companies: The case of Spain

The aim of the present study is twofold. First, to provide new information concerning the technical characteristics of urban bus companies on the basis of a sample of medium and large-size cities in Spain. Second, to analyze the degree of efficiency of those companies and to quantify the reasons for this efficiency. The results should be useful in evaluating possible changes in public policies relating to urban transport, specifically changes in the way the market is organized and in pricing.The analysis is carried out by estimating a cost function. The sample is made up of a panel data set consisting of observations of nine Spanish companies that operated during the period 1983–1995. The specified functional form is translogarithmic. The output unit of measure adopted is bus*kms run. The cost function includes the network length for each company, thus permitting evidence concerning economies of density and economies of scale.The use of panel data allows us to estimate the cost function, taking into account that each company is affected by the specific characteristics of each individual city, the different features of the network in question and by different levels of efficiency. The economies of scale have been calculated, taking into account that the features of the network and of the city – represented by their specific individual effect – will vary with the company's level of output.Finally, an analysis is made of the relative productive efficiency of the companies, as well as of the variables likely to influence that efficiency.     

In Search of the Link between Ship Size and Operations

Abstract

Since 1990s the liner shipping industry has faced a period of restructuring and consolidation, and been confronted with a continuing increase in container vessel scale. The impact of these changes is noticeable in trade patterns, cargo handling methods and shipping routes, in short ‘operations’. After listing factors influencing size, growth in container ship size is explained by economies of scale in deploying larger vessels. In order to quantify economies of scale, this paper uses the liner service cash flow model. A novelty in the model is the inclusion of +6000-20-foot Equivalent Unit (TEU) vessels and the distinction in costs between single and twin propeller units on ships. The results illustrate that scale economies have been – and will continue to be – the driving force behind the deployment of larger container vessels. The paper then assesses the link between ship size and operations, given current discussions about the increase in container vessel scale. It is found that (a) ship size and operations are linked; (b) optimal ship size depends on transport segment (deep-sea vs. short-sea shipping, SSS), terminal type (transhipment terminals vs. other terminals), trade lane (East-West vs. North-South trades) and technology; and (c) a ship optimal for one trade can be suboptimal for another.     

Organisation form,scale effects and efficiency in the British bus industry

The British bus industry is examined in light of fundamental reform in ownership and regulation. The industry is divided between privately and publicly owned companies, with the private sector further split between publicly listed owned subsidiaries and private limited companies. The change in ownership structure since privatization is analysed, and Data Envelopment Analysis used to estimate the extent of returns to scale and technical efficiency, as defined by one output and three inputs. Technical efficiency is further divided into managerial and organisational components, and comparisons made of median efficiency levels using a Mann Whitney statistical test.Increasing returns to scale are found for smaller companies, but the size of such returns varies with the company type. A minimum efficiency scale is identified, with constant returns above this point. A high degree of technical inefficiency is found to be present in the industry, which may initially suggest a lack of competition and reflect the oligopolistic structure that has emerged since privatisation. Privately owned companies are identified as more technically efficient, however this is due to significantly less organisational constraints, and considerable managerial inefficiency exists in this group. It is finally concluded that the high level of inefficiency may not reflect ownership, but rather industry characteristics, and rather than a lack of competition may be indicative of wasteful competition. It is suggested therefore there may be a need to make the market contestable rather than openly competitive.     

What Happened to the National Road Carrier in a Post‐Communist Country? The Case of Poland's State Road Transport

Abstract

The purpose of this article is to seek to reconstruct the ownership transformation involving Poland's State Road Transport (PKS) companies passed through after 1990. Data collected from various sources (above all the Internet) were used to establish the degree of advancement of the transformation processes. Despite the passage of 18 years since the new economic reforms were launched, privatization processes are not well advanced. State ownership remains dominant, in the form of Treasury companies as well as state‐owned enterprises. Privatization processes have encompassed fewer than half of all firms, the most popular form taken (in about a quarter of all analysed cases) involving leasing by workers. This would seem of major interest, attesting as it does to the greater activity of some worker's teams, as well as the passive role of the state in privatization processes. A much smaller number of firms (26) have been purchased by external investors, the only important international concern among these being Veolia, which had taken control of 11 PKS companies as of mid‐2006. By and large, it is the firms carrying passengers or passenger and goods that are in a much better situation, as opposed to the companies that are commodity‐carriers only. The majority of the latter have collapsed, or have undergone the kind of privatization that involves simultaneous shutdown. Mixed passenger and goods carriers have had to reduce their level of activity in commodity transport.     

Productivity changes in Taiwan's port industry incorporating environmental regulations on harbor water quality

Abstract

This paper evaluates the productivity changes in Taiwan's port industry for the period 2003–2007. Based on a ‘three-year-window’ data envelopment analysis method, Luenberger productivity indicators are employed to estimate the productivity changes that account for the success of attempts by port agents to control harbor water quality. This is one of the typical environmental concerns in port operations that prior studies on port productivity changes over time have not considered. The results show that the productivity of Taiwan's port industry has experienced growth over the study period, regardless of whether water quality has been considered or not. At a disaggregated level, however, if a port agent has succeeded in controlling water quality, but we do not consider it, the results will misclassify the agent by understating the port's productivity.     

Port privatization policy and practice

In recent years a significant number of countries have implemented policies aimed at reforming their port industry. In the belief that it will improve efficiency and reduce the heavy financial burden placed upon governments that attempt to support such a capital-intensive industry, privatization has often formed an important strand of such policies. A key claim in favour of privatization is that the transfer of ownership from public to private hands will ultimately lead to an improvement in economic efficiency and, hence, financial and operational performance. This paper investigates the theoretical underpinnings and practical validity of this claim and concludes that privatization is only a partial cure for what ails the world's ports and that, if implemented in isolation, it simply cannot deliver the much-needed panacea for the industry's woes.     

Strategic beliefs of port authorities

Over the last decade, insights from the strategic management discipline have increasingly been applied to ports. A review of literature shows that in the analysis of port authority strategy, mainly outside-in approaches are applied. This paper adds to the emerging understanding of the port authority’s strategy by applying a cognitive perspective. Specifically, the strategic cognition of firms’ executives is one of the explanatory variables behind firms’ strategic decisions. Furthermore, cognitions are influenced by the organisational contexts in which port authority executives have worked. As a result, managerial “mental maps’ may vary across industry contexts and over time. This research investigates the strategic cognition of a global set of port authority executives through a survey-based instrument. The results show that, to a large extent, PAs resemble “regular” for-profit companies, but that they possess some specific beliefs that distinguish them from “regular” companies.     

Framing the Nexus of Globalisation,Logistics and Manufacturing in Europe

Abstract

Under the ongoing influence of globalisation, supply chains have changed significantly. New logistics and manufacturing systems have emerged, causing longer transport distances and increasing transport emissions. The existing research into the sustainability impacts of freight transport has largely viewed it as being a macro-level economic and political phenomenon and has ignored the interdependencies amongst micro-level economic actors, including firms and businesses in the private sector. In this paper, we presume that the lack of conceptualisation of freight transport in relation to wider institutional contexts and firm behaviour results in the lack of a holistic approach to understanding freight governance in the face of globalisation. We argue for the use of institutional economic geography lenses to elucidate the distribution networks of emerging logistics and manufacturing practices and its implications for freight transport. We illustrate our argument through a broad look at the European logistics and manufacturing practices and global production.     

Does Bus Rapid Transit Influence Urban Land Development and Property Values: A Review of the Literature

Abstract

Despite the proliferation of bus rapid transit (BRT) systems over the past few decades across developed and developing world cities, the impacts across these systems on the urban spatial development and property markets have not been comprehensively studied. The current paper attempts to fill this gap in the literature by reviewing the methodologies, underlying theories, and findings presented in the individual academic studies on BRT land-use and price impacts, mostly drawing on those that have focused on Latin American and Asian systems. The review shows that the land-use and value impacts have been less uniform across systems compared to such operational performance metrics as speed and travel time improvements. While predominantly relying on cross-sectional modeling techniques, the approaches used to evaluate land-use changes induced by the transit systems are not uniform either, with only some studies explicitly measuring changes in types of land use as opposed to simply land or rental price. The study also concludes that more rigorous evaluation is needed as to whether the BRT systems have improved accessibility for the populations that inhabited the corridors previously or whether, instead, the desired land value increases have in fact resulted in significant population displacement.     

Transport state enterprises: the Canadian experience

Abstract

In most economies, the ownership and control of state enterprises has been an important government policy instrument. This has been particularly true in the transportation sector in which governments have intervened extensively through the acquisition and creation of state enterprises. While the genesis of and rationale for transportation state enterprises have varied from country to country and even from time to time within each country, at present, most governments do exercise a significant degree of ownership and control in transportation. Some of these enterprises enjoy monopoly status and others are in competition with and behave similarly to their private sector counterparts.

Consequently, and in recent years, questions have been raised about government intervention in the market‐place as it relates to effective management control and accountability of state enterprises. Questions have also been raised about the continuing need for transportation state enterprises and some governments have promoted some form of divestiture (privatization).

This paper addresses the accountability and control of transportation state enterprises based on the Canadian experience. It discusses their role and policies related to diversification, financing and divestiture, and the need for development of a performance framework.     

An evaluation of web site services in liner shipping in Taiwan

This paper empirically evaluates web site services in the liner shipping industry based on the service requirements of the user firms, i.e., shippers. The results suggest that shippers perceive tracing to be the most important service attribute of a web site, followed by customs response, vessel schedules, and electronic document service. Based on the concept of market segmentation, we employed cluster analysis to classify users (shippers) of web site services provided by liner shipping companies into four segments, namely support and performance services oriented firms, equipment information oriented firms, performance information oriented firms, and transaction services oriented firms. Theoretical and practical implications of the research findings are discussed.     

The evolution of urban traffic control: changing policy and technology

Abstract

The history of urban traffic control (UTC) throughout the past century has been a continued race to keep pace with ever more complex policy objectives and consistently increasing vehicle demand. Many benefits can be observed from an efficient UTC system, such as reduced congestion, increased economic efficiency and improved road safety and air quality.

There have been significant advances in vehicle detection and communication technologies which have enabled a series of step changes in the capabilities of UTC systems, from early (fixed time) signal plans to modern integrated systems. A variety of UTC systems have been implemented throughout the world, each with individual strengths and weaknesses; this paper seeks to compare the leading commercial systems (and some less well known systems) to highlight the key characteristics and differences before assessing whether the current UTC systems are capable of meeting modern transport policy obligations and desires.

This paper then moves on to consider current and future transport policy and the technological landscape in which UTC will need to operate over the coming decades, where technological advancements are expected to move UTC from an era of limited data availability to an era of data abundance.     

Estimation of urban bus transit marginal cost without cost data

We develop a method to study the industrial structure of urban bus transit without using cost data. To do so, we estimate the marginal cost function under the assumption that firms compete on frequency and adjust frequency to maximize profits. Our methodology is applied to Santiago, Chile. In this case, demand is modeled with a simplified model of transit network assignment. The goal is to consider how frequency, capacity, and on-board passengers affect the bus line’s demand. The marginal cost function is estimated by using the first-order conditions of the firm’s profit maximization problem, using the results of the demand model as data. We conclude that the urban bus transit industry in Santiago exhibits increasing returns to scale for low levels of demand and that these returns are exhausted rapidly at a moderate demand level. Additionally, firms exhibit economies of network expansion, on average.     

Safety Management Evaluation in Bus and Coach Companies

Abstract

In recent years, different initiatives have been carried out to develop Safety Management System guides or standards for coach and bus companies. They all consist of a set of safety and management requirements to be followed by organizations. However, none of them offers a complete set of tools to evaluate the safety level of the company and find the main weak points in order to improve them. The INSIA (Automotive Research Institute of Madrid, Spain) has developed a complete model that includes not only a set of elements that determine the safety level of the company but also a set of indicators and criteria to evaluate these elements by a team of auditors. The model allows companies to measure their safety level, find the weakest points and propose improvement actions.     

Multioutput analysis of cargo handling firms: An application to a Spanish port

Cargo handling in ports is a multioutput activity, as freight can arrive in many forms such as containers, bulk, rolling stock, or non-containerised general cargo. In this paper, the operation of cargo handling firms in a Spanish port is analysed through the estimation of a multioutput cost model that uses monthly data on three representative firms located at the Las Palmas port. This permits the calculation of product specific marginal costs, economies of scale (general and by firm) and economies of scope, which help identifying optimal pricing policies and the potential cost advantages of increasing production.