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.     

Traffic consolidation in East Asian container ports: A network flow analysis

The proliferation of hub-and-spoke operations in maritime container transportation has resulted in the widespread consolidation of traffic flows. Utilising liner shipping network configurations, this paper assesses the impact of freight traffic consolidation in the container port industry by exploring the spatial pattern of traffic flow movements and identifying the variety of roles that container ports play within this context. On the basis of the network concept, the spatial inequality of freight traffic consolidation is determined by the density and direction of all meaningful connections (i.e. significant flows) identified by applying Multiple Linkage Analysis (MLA) to an initial traffic flow matrix.The effectiveness of the chosen methodology is tested empirically using a sample comprising the 18 major container ports in East Asia, together with another 21 important container ports located on the East–West trading route. Based on this sample network, the spatial structure of traffic flow consolidation reveals the nature and structure of hub-and-spoke operations within a port system, the relative hub-dependence of ports, the variety of roles which individual ports play within the overall structure of inter-port interactions and the hierarchical configuration of the port industry structure. The paper concludes that MLA offers new insights into the distributional inequality of traffic flows, the spatial and economic interactions between ports and the extent to which hinterlands overlap. Furthermore, the analysis clearly shows that inter-port relationships can no longer be evaluated as isolated phenomena; any change in a specific port’s competitiveness will directly impact upon the structure of the whole maritime transportation system. Port authorities and terminal operators will need, therefore, to carefully analyse and disentangle specific inter-port relationships in order to provide the most appropriate basis for their decision making.     

Corporatisation and Performance: A Literature Review and an Analysis of the Performance Effects of the Corporatisation of Port of Rotterdam Authority

Abstract

The ongoing process of port reform has led to an increasing number of publicly owned but corporatised port authorities (PAs). The performance effects of corporatisation have been analysed, for example, for the airports industry, often showing positive effects. This paper reviews the literature on port reform and the relationship between port governance structures and performance. It also presents a first case study on the effects of corporatisation of PAs, namely for the Port of Rotterdam Authority, a publicly owned but corporatised port development company. In 2004, this organisation was transformed from a municipal department to an independently operating company. The performance indicators to evaluate the effect of this corporatisation include market share, turnover, operating costs, profits, and investments. These indicators are evaluated for two periods, one prior to the corporatisation (1997–2003) and the other afterwards (2005–11). The comparison of these two periods shows that corporatisation has led to significant improvements of all performance indicators. The findings derived from this case study are relevant for the ongoing discussion on port governance models.     

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.     

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.     

Characteristics of European inland ports: A statistical analysis of inland waterway port development in Dutch municipalities

Most scientific attention in port studies centers on deep-sea ports, in particular container ports. In our paper, in contrast, we focus our attention on the characteristics of inland waterway ports in a European context. This is an overlooked part in the scientific literature on inland port development, which is up to now mainly concerned with US-based understandings of inland ports. We try to broaden the application of the inland port concept by explaining the development of inland ports in terms of inland waterway bounded cargo throughput. Based on a large-scale quantitative dataset of inland port development in Dutch municipalities we perform various statistical analyses to arrive at a more detailed understanding of the question: What are the characteristics of European inland waterway ports and what transport and economic factors influence cargo throughput on the municipal level? The results in particular highlight the importance of the presence of a container terminal, the diversity in types of goods which are being handled by the inland port and the accessibility of the inland port relative to the regional motorway network as important factors in explaining the size and growth of inland ports. Interestingly, the popular claim in policy of ‘investments in inland port development leading to employment growth’ cannot be confirmed.     

An Institutional Analysis of Coordination in Liberalized Port-related Railway Chains: An Application to the Port of Rotterdam

Abstract

The European railway market has gone through a period of liberalization over the last two decades. The liberalization of the railway market has also affected port-related railway transport. Efficient port-related transport chains are key in the competition among ports, however providing this efficiency is to a large extent a coordination challenge. Many forms of coordination are needed to ensure that the railway chain operates efficiently, including the bundling of cargo, and good organization between railway companies, terminal operators and the infrastructure managers to realize an efficient use of assets. From the literature, it appears that less attention has been paid to the economic organization of port-related railway transport in general, and specifically in the new liberalized institutional environment. The goal of this paper is to come up with a framework to better understand the issue of coordination in port-related railway chains in a liberalized institutional environment. This paper presents a conceptual framework rooted in Transaction Cost Economics (TCE). Based on an in-depth study into coordination in liberalized container railway market at the Port of Rotterdam, empirical illustrations are used to adjust the TCE approach toward a dynamic model influenced by Douglas North's theory on economic and institutional change. Empirics from the port of Rotterdam show that new players have entered the railway market and their role has changed. This paper shows that coordination of railway operations has become more complex after the regime change. From a port perspective, liberalization does not lead to an optimal allocation of resources in a process that is highly operationally interdependent. In the liberalized environment, coordination arrangements are necessary to enable efficient coordination of railway operations in Rotterdam.     

Port-city exhaust emission model: An application to cruise and ferry operations in Las Palmas Port

Exhaust emissions cause air pollution and climate change. The exhausts of shipboard fuel combustion are equally damaging particularly, so close to the environmentally sensitive mainland and island coasts, as well as at ports due to their urbanized character. This paper estimates, for the first time, exhaust pollutants related to cruise and ferry operations in Las Palmas Port and, in an island context. Emission assessment is based on a full bottom-up model and messages transmitted by the Automatic Identification System during 2011. Results are described as a breakdown of NOx, SOx, PM_2.5, CO and CO₂, according to ship classes, operative type and time, providing valuable information to environmental policy makers in port-city areas and islands under similar conditions. It is generally concluded that vessel traffic and passenger shipping in particular are a source of air pollution in Las Palmas Port. Emission maps confirm location of hot spots in quays assigned for cruise and ferry operations. Policy recommendations encourage regular monitoring of exhaust emissions and market-based incentives supported by details on polluting and operative profiles. On the other hand, feasibility studies are suggested for automated mooring, LNG bunkering facilities and also shore-side energy services, prioritizing berthing of shipping sectors (or sub-sectors) with the highest share of exhaust emissions once their local effects have been confirmed by a dispersion, exposure and impact assessment.     

From hierarchy to networking: the evolution of the “twenty-first-century Maritime Silk Road” container shipping system

ABSTRACT

Container shipping gives a rise of international trade since the 1960s. Based on navigation data start from the mid-1990s to 2016, this paper empirically analyses the spatial pattern of China’s international maritime linkages along the “twenty-first-century Maritime Silk Road”. We interpret such evolutionary dynamics in terms of growth, hierarchical diffusion and networking phases. Networking is a new stage of the evolution of the port system, which is approached based on the graph theory, complex network methods and geomatics, the paper discusses the networking’s basic characteristics: multi-hub spatial agglomeration, the connection of the network develops across space, functional differentiation and a division of labour appear among ports. Our results show that, while the scope of China’s maritime linkages had expanded overtime, more foreign ports become connected to the “Maritime Silk Road”. In addition, the external linkages of domestic ports tend to be dispersed, reflecting upon the decline of Pearl River Delta ports and the rise of Yangtze River Delta ports, with mixed evidence for the Bohai Rim region. Lastly, the analysis underlines the emergence of a polycentric shipping system, from the Hong Kong dominance to the more diversified Shanghai/Ningbo/Shenzhen configuration. Academic and managerial implications are included.     

Port choice in container market: a literature review

As a result of the intense changes occurring in port environment over the last decades, new models of competitiveness have been developed, where port authorities try to increase their attractiveness. In this context, one of the most debated issues in this area of research is still the role played by port authorities in defining port competitiveness. The aim of this paper is to provide a review of port choice literature enabling to identify the main port choice’s criteria in order to define the role played by Port Authorities and to point out future lines of research that should be undertaken to fully incorporate current ports’ environment and performance. The results show that although some studies point out the importance of geographical factors in port choice, a larger number of studies defend the increasing role played by port authorities in determining the competitiveness through investing in port infrastructure, improving port efficiency or hinterland accessibility. Despite the existing models contributing on this topic, there are still some gaps in terms of measuring the port performance, including port strategies and studying the port choice for specific industries.     

A ‘Less-flexibility-first’ Heuristic for the Placement of Inland Vessels in a Lock

Abstract

Inland vessels move goods along waterways (canals and rivers) and they visit ports. Because of their tidal nature, vessels make use of locks to enter ports or waterways. From a port management point of view, fast access to and from the port and high utilization of locks are important objectives. Where the former relates to low inbound and outbound waiting times, the latter relates to the placement of as many vessels as possible in the lock before its operation. This article includes a case study that relates to the operation of the Van Cauwelaert lock in the port of Antwerp, Belgium. Lock operation policy is as follows: vessels wait in front of the lock for a port administrator to assign places in the lock based on knowledge of the vessels’ dimensions. As such, there is no FIFO-discipline, but a ‘group-FIFO’-discipline, i.e. if n vessels are allowed into the lock, they are the first n vessels in the arrival queue. A heuristic algorithm is formulated for the placement of vessels in the lock. This algorithm supports the decision where to place the vessel in the lock, aiming to place as many vessels as possible from the arrival queue. At the same time, it supports the decision to start a locking operation or not, based on information about vessels that are announced but which have not yet arrived at the lock's entrance. The heuristic is called a ‘less-flexibility-first’-heuristic as it looks for pseudo-placements, showing which flexibility is left for the remaining vessels after placing a vessel. This article describes the implementation of the heuristic and provides numerical examples. A comparison is made between the heuristic results and daily practice, based on real-life vessel movements through the Van Cauwelaert lock in 2002.     

The Impact of Container Type Diversification on Regional British Port Development Strategies

Abstract

Despite a concentration of container traffic in the southeast of the UK over the last few decades, regional ports are attempting new development strategies to capture or retain specific traffic segments. These include intra-European short-sea traffic and a potentially increasing feeder market. These trends are reflected in the movement of different container types, which result in a number of planning challenges related to changing infrastructural and operational requirements. This paper uses highly disaggregated data on container type movements to address three issues that can inform these planning challenges. First, the imbalance of trade resulting in empty container repositioning; second, the requirement for gauge-cleared rail routes to cater for the increasing proportion of high-cube containers; and third, the specialisation of European short-sea traffic at secondary UK ports. The results reveal the disproportionate repositioning of empty containers at Scottish ports and the importance of 45?ft, high-cube and pallet-wide containers at regional ports, highlighting their focus on intra-European short-sea traffic and raising difficulties relating to their lower quality of landside infrastructure (particularly rail) in comparison to the large south-eastern ports. The potential repercussions on hinterland infrastructure development raise questions about both public and private sector responses to regional port development.     

Competitiveness prioritisation of container ports in Asia under the background of China’s Belt and Road initiative

ABSTRACT

The understanding of the competitiveness of different ports under the background of China’s “Belt and Road Initiative” (BRI) is critical for drafting appropriate plans and taking suitable actions to select the best port in the logistics supply chains. A novel Multi-Attribute Decision Analysis (MADA) was proposed for the evaluation of port competitiveness. In the developed MADA method, the interval Analytic Hierarchy Process and the projection method was combined for the evaluation of port competitiveness. Three container ports in Asia including Shanghai, Hong Kong, and Singapore were studied under the background of China’s BRI. The results demonstrate that the port of Singapore is the most competitive at the initial stage of China’s BRI, followed by Hong Kong and Shanghai in the descending order. The results were validated by sum weighted method and Technique for Order Preference by Similarity to an Ideal Solution method, and sensitivity analysis was also carried out. The competitiveness of the three ports in the next ten years were also studied with the consideration of the influences of China’s BRI, and the results reveal that Shanghai port can even exceed Hong Kong port and Singapore port if it can effectively take the advantage s of China’s BRI.     

Segment-based alteration for container liner shipping network design

Container liner shipping companies only partially alter their shipping networks to cope with the changing demand, rather than entirely redesign and change the network. In view of the practice, this paper proposes an optimal container liner shipping network alteration problem based on an interesting idea of segment, which is a sequence of legs from a head port to a tail port that are visited by the same type of ship more than once in the existing shipping network. In segment-based network alteration, the segments are intact and each port is visited by the same type of ship and from the same previous ports. As a result, the designed network needs minimum modification before implementation. A mixed-integer linear programming model with a polynomial number of variables is developed for the proposed segmented-based liner shipping network alternation problem. The developed model is applied to an Asia–Europe–Oceania liner shipping network with a total of 46 ports and 11 ship routes. Results demonstrate that the problem could be solved efficiently and the optimized network reduces the total cost of the initial network considerably.     

Container Railfreight Services in North‐west Europe: Diversity of Organizational Forms in a Liberalizing Environment

Abstract

The institutional environment of rail transport has changed as a result of recent European directives, but the changes have taken different forms from one country to another. In the case of international maritime chains, the development of door‐to‐door services makes inland haulage from the loading and discharging ports extremely important, and it highlights the need to reshape the rail freight industry. This paper analyses the degree of involvement of different actors drawn from the maritime industry in developing and commercializing rail services in the changing regulatory environment. Several maritime operators, shipping lines, port‐handling companies and port authorities have been involved in some container rail services since the early days of liberalization. Their commitments take very different forms, however. Whereas contracts are mainly used for the provision of service, particularly for train haulage, integration by means of shareholding or creating subsidiaries or joint ventures is used for marketing. Important differences between France, the UK, Germany and the Netherlands are detailed. In the latter two countries, there is more involvement in the provision of rail services. Marketing rail services appear to be the main strategic issue for the maritime operators in all four countries     

Efficiency evaluation and PM emission reallocation of China ports based on improved DEA models

The emission of particulate matter (PM) and other atmospheric pollutants in port operations and shipping have caused a huge negative impact on the environment. Consequently, how to evaluate the environmental efficiency of ports and put forward corresponding countermeasures on this basis is becoming a more important issue than ever before from the perspectives of the government, academia, and society. We construct three data envelopment analysis (DEA) models to evaluate the environmental efficiency of ports under the circumstances of environmental control, non-environmental control and PM emission through inter-ports cooperation. The innovation of the DEA models constructed in this paper lies in: (1) Setting environmental control parameters to uniformly manipulate the situations of environmental control and non-environmental control, etc.; (2) Allowing non-equal proportional change of input index, expected output and non-expected output index; (3) Setting preference coefficients for ports to admit favorable decisions; (4) Providing a distance formula of expected output for PM emission reallocation. Further, data from 11 major ports in China are collected to compare the expected output under different PM emission standards assuming the situation of environmental control and non-environmental control, port cooperation, and non-cooperative sewage discharge. The empirical results show that: (1) Ports in the eastern China (Shanghai, Ningbo, and Nanjing) have higher port efficiency; (2) Port cooperation can improve the overall expected output but it will lose its edge with the improvement of PM emission standards. (3) Ports follow the same trend of output loss regardless of favorable decisions. In the end, the author makes a summary, puts forward relevant policy suggestions and makes the recommendation for future research.     

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.     

A decision support system for port selection

Abstract

A number of studies have been carried out on the factors determining port choice, derived from the perspectives of shippers, carriers or both. Recently, some studies using multi-criteria analysis, more specifically Saaty's analytical hierarchy process (AHP), have been undertaken to address port competitiveness and port selection by shipping lines. Based on a review of the literature on port selection, this article proposes a decision support system (DSS) for port selection using AHP methodology. The proposed DSS is web-based and thus it can be accessed by more decision makers and data collection can be carried out faster. Moreover, AHP addresses the issue of how to structure a complex decision problem, identify its criteria, measure the interaction among them and finally synthesise all the information to arrive at priorities, which depict preferences. AHP is able to assist port managers in obtaining a detailed understanding of the criteria and address the port selection problem utilising multi-criteria analysis. This article presents the architecture and the port selection procedure of the web-based DSS, and then illustrates three different cases. It shows how technology advancement can bring positive effects of strategic planning to shipping firms.     

A critical review of conventional terminology for classifying seaports

Seaports are complex and dynamic entities, often dissimilar from each other, where various activities are carried out by and for the account of different actors and organisations. Such a multifaceted situation has led to a variety of operational, organisational and strategic management approaches to port systems. It is noticeable in the current body of port literature that the conceptualisation of the port business has taken place at different disciplinary levels without producing a comprehensive and structured port management discipline. Much of the current literature on ports has been developed by international organisations and institutions in the field (United Nations Conference on Trade and Development (UNCTAD), World Bank Group, etc.) and a resulting terminology has evolved depicting specific concepts hardly understood by professionals and academics outside the field. On the other hand, many areas of port operations and management still remain unexplored, and there are few academic references outlining the different features of operational and strategic management in ports.This paper examines the validity of the conventional terminology for classifying ports, questioning the assumption that ports should be conceptualised as separate markets and distinct operational and business ventures. It seeks to demonstrate that in today’s inter-related global markets and businesses with integrated logistics and supply chain flows, there is less of a case for the traditionally isolated and restricted port terminology.     

Evaluating the competitiveness of container ports in Korea and China

Changes in world trade and the shipping environment have created ever-increasing competition between ports in North-east Asia, especially Korea and China. Following intensive state investment in port developments through large-scale projects, Chinese ports now threaten to oust Busan in Korea as the regional hub. To identify and evaluate the competitiveness of major ports in the region, this paper identifies the components influencing their competitiveness and presents a structure for evaluating them. Based on the literature related to port selection and competition, a regional survey of shipping companies and owners employed factor analysis to reveal that port service, hinterland condition, availability, convenience, logistics cost, regional centre and connectivity are the determining factors in these regions.