Have Emission Control Areas (ECAs) harmed port efficiency in Europe?

Ports in the European Union and North America have enforced environmental regulations on controlling SO_x and NOx emissions from ships in their coastal areas known as Emission Control Areas (ECAs). This study uses two-stage approaches to examine whether ECA regulations impact the efficiency of ports operating in such areas. First, port efficiencies are estimated using non-radial slacks-based measure (SBM) Data Envelopment Analysis (DEA) models. The efficiency scores estimated by the SBM DEA models are then regressed on explanatory variables, including the ECA factor, and macroeconomic indicators using bootstrapped truncated regression (BTR) models. Panel data is collected on countries in EU ECAs and non-ECAs regarding such input variables as capital and labor, with cargo as an output variable. The results indicate that ECA regulations can harm port efficiency, reflecting concerns of policy-makers and industrial managers: the average efficiency loss from an ECA designation amounts to 0.058–0.066 on a scale of 0–1, accounting for a 15–18% loss from ECA ports’ average efficiency scores.     

Modelling emission control taxes in port areas and port privatization levels in port competition and co-operation sub-games

Using a game theory approach, this paper analyses a situation in which the government imposes a certain emission tax on vessels and port operations for emission control in port areas. Two ports are considered: a purely private port and a landlord (partial public) port. These two ports are in Cournot or Bertrand competition or cooperation with differentiated service. Our model outcomes lead to the following conclusions. First, the optimal private level of port 2 under Cournot and Bertrand competitions varies between fully private and highly public concerned port, while government will prefer a highly public concerned or close to highly public concerned port in the cooperation scenario. Second, government will have to make more and stricter efforts to enhance environmental protection in the situation of port cooperation (monopoly) than in the case of inter-port competition, and all the optimal emission tax should be always lower than the marginal emission damage. Third, port privatization has a non-monotonous effect on ports’ environmental damage in the inter-port competition scenarios and a monotonous decreasing effect in the cooperation scenario. Fourth, the total emission tax revenue is always higher than the overall environmental damage in the cooperative scenario, and it may or may not be able to cover the whole environment damage in Cournot and Bertrand competitions. Finally, the government may face a trade-off among environmental protection, maximizing social welfare, satisfying individual motivation, when considering port cooperation (monopoly).     

Efficiency measurement of selected Australian and other international ports using data envelopment analysis

Available studies have not provided a satisfactory answer to the problem of making international comparisons of port efficiency. This study applies data envelopment analysis (DEA) to provide an efficiency measurement for four Australian and twelve other international container ports. While DEA has been applied to a wide number of different situations where efficiency comparisons are required, this technique has not previously been applied to ports. The DEA technique is useful in resolving the measurement of port efficiency because the calculations are non-parametric, can handle more than one output and do not require an explicit a priori determination of relationships between output and inputs, as is required for conventional estimation of efficiency using production functions. The ports of Melbourne, Rotterdam, Yokohama and Osaka are found to be the most inefficient ports in the sample, based on constant and variable returns to scale assumptions, mainly due to the enormous slack in their container berths, terminal area and labor inputs. The study also draws some policy implications for ports and recommends certain areas for future research.     

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

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.     

Measuring foregone output under industry emission reduction target in the transportation sector

Numerous countries have implemented or are considering a range of policies to lower emissions from transportation. An analysis of the impacts of environmental regulation is a crucial issue, which has not been properly highlighted in the transportation literature, particularly in terms of the foregone output by such regulation. This study develops a novel DEA model that measures the foregone output when the industry emissions target is imposed. This model reflects the real regulatory process more appropriately than other models in that the authority in charge sets the emission reduction target first, and the transport operators respond to it. In addition, the model can test the industrywide impacts over a wide range of emission target values, which can help policy makers determine the optimal emission target. Finally, the proposed model was applied to the port industry in Korea. The results suggest that Korean ports can reduce their emissions by a maximum of 239,850 tons of CO₂, which accounts for 13% of the total emissions in 2010. The 13% reduction in emission, however, would result in $ 91,109,000 of foregone cargo traffic to the Korean economy. In addition, the foregone cargo traffic increases at much faster rate than the emission reduction rate. For example, the shadow price of emission differs by 2.25 times between the most moderate and strictest emission targets. This suggests that the government needs to impose moderate emission targets at the initial stages if it decides to minimize the regulatory impacts on the industry.     

International emission regulation in sea transport: Economic feasibility and impact

Emissions from shipping due to the burning of the sulphur content of marine fuels conduce to air pollution in the form of sulphur dioxide and particulate matter. Various international organisations and institutions impose environmental standards on their member states to limit the emission of greenhouse gases. This paper examines both the potential effects of the emerging international maritime emission regulations on the competition between seaports and the potential underlying economic motivations fostering the discussion of introducing Emission Control Areas. It focuses on deepsea shipping. Another novelty is that the environmental issues are addressed from a policy, an economic and a legislative viewpoint. For the policy-related part, it is found that the political theory of public choice suggests that not the green lobby but rather the petrochemical lobby is the major driving factor behind the very strict emission caps. A potential port shift from Northern Europe to Mediterranean ports seems unlikely due to logistics disadvantages and service problems in Southern European ports. Finally, no convincing proof was found that the main liner companies would be unprepared for this legislation and should be persuaded to change their routes in favour of Mediterranean ports solely on account of the various emission regulations. The legal analysis, however, showed that the current enforcement regime of MARPOL Annex VI should be improved in order to rule out the possibility of a low degree of compliance and to protect the competiveness of complying ships.     

Towards improved port capacity investment decisions under uncertainty: a real options approach

ABSTRACT

Port activity plays an important role in facilitating international trade. Sufficient capacity is indispensable for a port to attract flows to a region and retain them. The capacity decision is the result of a trade-off between investment and waiting costs. Traditional methods to value expansion projects do not deal adequately with managerial flexibility in the face of uncertainty from different sources in the complex port environment. In this paper, real options (RO) models are identified as an alternative method to making project valuations and investment decisions, as they attribute the correct value to managerial flexibility under uncertainty. In order to be able to build and use such RO models for port capacity investment decisions, the sources and implications of uncertainty in the port and the different RO model specifications need to be understood. To this end, both the literature about uncertainty in the port context and the literature about real options models are reviewed in order to provide researchers who want to build their own decision-making models, with the necessary knowledge of both fields. The review makes clear that the complex interactions in and competition between the logistics chains and their actors coming together in ports have significant impacts on port capacity. Uncertainty is also caused by uncertain international trade flows and changes in legislation following new technologies and environmental impacts. An analysis of the components of some general RO models shows how the options of flexible output, investment size and timing are valued by RO models in a setting with demand uncertainty. Moreover, the review presents researchers with insights in how to deal with cooperative and competitive interactions in the chain, time to build, cyclical markets and legislation changes. It also shows how to value the expansion and the phased investment options. The new insights resulting from this review are subsequently combined in a framework that serves as a guideline to build RO models for port capacity investments. Finally, an exemplifying application of the framework is used to build an actual port capacity investment decision model.     

A Critical Analysis of DEA Applications to Seaport Economic Efficiency Measurement

Abstract

The significant increase in the adoption of Data Envelopment Analysis (DEA) for seaport efficiency measurement renders a literature synthesis and critical analysis of the application of the technique relevant and worthwhile. This paper provides a thorough review and critical analysis of the major studies undertaken to date, and highlights some problems and limitations in the application of the technique in the seaport context particularly in the specification of parameters, the sampling domain and the type of DEA to be applied. The paper informs the decision process as to the merits and limitations of DEA approaches for seaport efficiency measurement and makes a contribution towards methodological improvement by considering variations not yet applied to the port sector.     

The Greening of Ports: A Comparison of Port Management Tools Used by Leading Ports in Asia and Europe

Abstract

From the policy and management perspective, this study aims to investigate the port management tools that port/public authorities have at their disposal and then to analyse to what extent the tools are used to enforce or encourage green port development at functional activities of port operations and development. We conduct an exploratory and comparative review based on two axes: on the one hand, the range of tools available to port authorities (pricing, monitoring and measuring, market access control and environmental standard regulation) and on the other hand, the functional activities in ports (shipping traffic, cargo handling and storage operations, intermodal connection, industrial activities, and port expansion). The situations in the leading ports in Asia and Europe, namely Singapore, Shanghai, Antwerp and Rotterdam are studied and compared, whereby the policies' effectiveness is discussed accordingly. Findings show that the ports are particularly mature in exercising environmental standard regulations which reveals that the enforcement approach is more prevalent. The most focused functional activity is shipping traffic which reflects that the ports are driven by the International Maritime Organisation. The respective port authorities in Antwerp and Rotterdam have a higher level of influence on devising green port policy in comparison to the two Asian ports.     

Port performance in Asia: Does production efficiency imply environmental efficiency?

Atmospheric and water pollution are two main sources of negative environmental externalities generated by shipping. This study recognizes the negative externalities in the production of port services in East Asia by explicitly incorporating environmental impacts of shipping. Programming techniques are used to analyze 156 Origin–Destination pairs between 13 major East Asian ports, to derive the externality-augmented measures of port productivity and efficiency at the waterside. The results suggest that the inclusion of externality mitigation strategies can exert a considerable influence on efficiency performance.     

Ship emissions and their externalities in cruise ports

This paper presents an estimation and analysis of ship exhaust emissions and their externalities in the popular cruise destinations of Dubrovnik (Croatia) and Kotor (Montenegro) along the eastern coast of the Adriatic Sea. To this extent, the recent record (2012–2014) of cruise ships calling at these ports is used to model and estimate the ship exhaust emission inventories and externalities within the associated bays and ports.The results indicate that cruise ship traffic produces continuously increasing air pollution in both ports over recent years. More importantly, however, the analysis of the ship operating characteristics reveals that for any given ship traffic involving specific vessels using marine fuel of a given quality, the presence of other factors (e.g. berth availability, berth accessibility etc) can also influence the ship emission levels. This is particularly evident in the case of the port of Kotor where berth space insufficiency dictates the need for ship anchorage thus leading to increased air pollution and costs of associated damage.The application and results of the aforementioned ship activity-based methodology to the ports of Dubrovnik and Kotor improves our understanding of ship emissions in cruise bays and ports, and contributes toward the implementation of port policies for the effective control of air quality in such environmentally sensitive locations.     

Assessment of hub status among Asian ports from a network perspective

This paper proposes a novel network-based hub port assessment (NHPA) model through explicit formulations of connectivity and cooperation indices. Such a model is useful for port operators and policy makers to evaluate the relative influences of various quality characteristics from which carriers base their port choices on and identify port partners. Key insights can be obtained for port authorities to improve their port infrastructures and operations to achieve a competitive and sustainable hub port status. Three comprehensive case studies are conducted to assess the current standings and potentials of major Asian ports within networks of major carriers.     

Competition Between New Port Governance Models on the Iberian Peninsula

The aim of this article is to analyze the interaction between port devolution processes in Portugal and Spain in their common geographical environment, the Iberian Peninsula. Firstly a review is done of the different port devolution processes in the world which specifically analyses the transition of numerous public and centralized ports to the landlord model. Among the conclusions that we can highlight with respect to the Iberian port systems are the need for a reflection process before any change is made to the port governance model, and greater cooperation between the two countries to avoid any possible future port tariff price wars. The over-investment process that the Spanish port devolution process, especially, has generated must also be mentioned, for highlighting once again the almost inexhaustible ability of ports to eat up public funds for investment that precludes profitability.     

Determinants of Efficiency at Major Brazilian Port Terminals

This paper reports on the use of different approaches for measuring the efficiency of major Brazilian port terminals. Two of the most important approaches, DEA (Data Envelopment Analysis) and SFA (Stochastic Frontier Analysis), were performed on data collected from 25 terminals. The findings indicate that the majority of Brazilian terminals are running short on capacity due to the export boom that has occurred over the past few years and due to the lack of investment in capacity expansion. Furthermore, efficiency measurements derived from a reduced model with only one input and one output were explained based on variables such as type of cargo handled (container or bulk), connectivity of the terminal to railroads, and control (state or private) of the terminal. Implications and directions for future research are explored.     

Railway transportation and environmental efficiency in China

Railway is one of the most efficient and environmental-friendly ways to transport people and goods. High-speed railway has been developing rapidly and the railway mileage has increased by 21.18% in China during the period of 2006–2011 and thus it is interesting to evaluate whether the railway transportation has reduced the environmental impact of transport in China. In this paper, we first use a non-radial DEA under managerial disposability to measure the environmental efficiency of 30 regions in China; then we propose a panel beta regression with fixed effects to model the impact of railway transportation on environmental efficiency. The results indicate that the environmental efficiency slowly increased during 2006–2011 and it exhibits regional disparities with the eastern area having the highest environmental efficiency and the western area being the lowest one; Moreover, we also find a significant positive impact of railway transportation on higher environmental efficiency.     

Classifying Ports for Efficiency Benchmarking: A Review and a Frontier-based Clustering Approach

Abstract

Port efficiency and port clustering are two aspects that have received different degrees of attention in the existing literature. While the actual estimation of port efficiency has been extensively studied, the existing literature has paid little attention to developing robust methodologies for port classification. In this paper, we review the literature on classification methods for port efficiency, and present an approach that combines stochastic frontier analysis, clustering and self-organized maps (SOM). Cluster methodologies that build on the estimated cost function parameters could group ports into performance metrics’ categories. This helps when setting improvement targets for ports as a function of their specific cluster. The methodology is applied to a database of Spanish port authorities. The dendrogram features three clusters and five outlier Spanish Port Authorities. SOM are employed to track the temporal evolution of Spanish Port Authorities that are of special interest for some reasons (i.e. outliers). Results show that use of a combination of cost frontier and cluster methods to define robust port typology and SOMs, jointly or in isolation, offers useful information to the decision-makers.     

Greenhouse gas emissions from ships in ports – Case studies in four continents

Emissions of GHG from the transport sector and how to reduce them are major challenges for policy makers. The purpose of this paper is to analyse the level of greenhouse gas (GHG) emissions from ships while in port based on annual data from Port of Gothenburg, Port of Long Beach, Port of Osaka and Sydney Ports. Port call statistics including IMO number, ship name, berth number and time spent at berth for each ship call, were provided by each participating port. The IMO numbers were used to match each port call to ship specifications from the IHS database Sea-web. All data were analysed with a model developed by the IVL Swedish Environmental Research Institute for the purpose of quantifying GHG emissions (as CO₂-equivalent) from ships in the port area. Emissions from five operational modes are summed in order to account for ship operations in the different traffic areas. The model estimates total GHG emissions of 150,000, 240,000, 97,000, and 95,000 tonnes CO₂ equivalents per year for Gothenburg, Long Beach, Osaka, and Sydney, respectively. Four important emission-reduction measures are discussed: reduced speed in fairway channels, on-shore power supply, reduced turnaround time at berth and alternative fuels. It is argued that the potential to reduce emissions in a port area depends on how often a ship revisits a port: there it in general is easier to implement measures for high-frequent liners. Ships that call 10 times or less contribute significantly to emissions in all ports.     

Explaining shipping company participation in voluntary vessel emission reduction programs

Ports are under increasing pressures to increase sustainability and reduce the local and global emissions impacts associated with their operations. Due to limits on their jurisdictional authority, ports may design effective voluntary programs and appropriately motivate participation from global shipping companies that visit their ports. This paper investigates the success of the Vessel Speed Reduction Program at the Ports of Los Angeles and Long Beach and uses qualitative methods to analyze the factors that contributed to the success of the program at reducing local air quality pollutants. In particular, why did individual private firms participate in a non-required, voluntary effort? This research found that external pressures such as community concerns about emissions and regulatory threats are important to motivating voluntary behavior and may even be more important than financial incentives. Furthermore, simplicity of program design, clear goals and presence of a monitoring mechanism are important in influencing participation. These findings broaden our understanding of the business strategy behind slow steaming and its applicability as an operational practice as much work to date is focused on how fuel prices and financial incentives influence the choice for shipping companies to slow their speeds. While the VSR program led to significant emission reductions, an additional lesson for voluntary programs is the need for them to evolve and strive for continuous improvement.     

Port Administrative Structure Change Worldwide: Its Implication for Restructuring Port Authorities in Taiwan

Abstract

This paper aims to review the evolution of the port authority’s role and recent changes in port administrative structure worldwide, and to discuss its implication for restructuring Taiwanese port authorities. It is found that the port authority is expected to play a proactive role in strategically managing overall port operations, and aggressively market its ports to port customers with a view to increasing cargo throughput and economic growth in its region. The change in the port authority’s role has driven a change in port administrative management structure worldwide. The proposed restructuring of port authorities in Taiwan is accompanied by some potential pitfalls. These include that the legislative framework of the programme is driven by political rather than professional concerns, and the port authority’s dual role as a regulator and as an operator at ports is against the principles of ‘separation of port administration (regulatory functions) and business management’ recently adopted worldwide. These pitfalls can impede the achievement of the objectives, including directing port authorities towards becoming independent commercially oriented entities. Therefore, this paper recommends that port corporatization approach will be a good alternative for restructuring Taiwanese port authorities.     

The impact of competition on container port (in)efficiency

There are many studies on container port efficiency and that seek to understand what factors, such as technical and scale efficiency, private versus public terminal management or macro-economic factors, play on the efficiency score of a given port. There are fewer studies that focus on the role played by the inter-port competitive environment. This role remains difficult to assess. In fact, on the one hand, a port subject to high inter-port competition may record higher efficiency scores due to the pressure from the competitive environment. On the other hand, a port subject to high competition may be forced to over-invest and could therefore records a lower efficiency score. This article investigates this issue and examines how the degree of competition measured at different levels (local, regional and global level) impacts the efficiency score of a given container port. To do so, we implement a truncated regression with a parametric bootstrapping model. The model applied to information gathered for 200 container ports in 2007 and 2010 leads to the following conclusions: port efficiency decreases with competition intensity when measured in a range of 400–800 km (regional level); and the effect from competition is not significant when competition is measured at a local (less than 300 km) or at a global (more than 800 km) level. Estimates also show a tendency for ports who invested from 2007 to 2010 to experience a general decrease in efficiency scores, an element which could be explained by the time lag between the investment and the subsequent potential increase in container throughput.