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.     

Port Economics,Policy and Management: Content Classification and Survey

This paper presents a taxonomy and analysis of the content of published research in port economics, policy and management (port studies). The recent increase of these publications suggests a growing interest in the study of ports. However, the research characteristics and directions of this research field are unidentified. This paper provides a systematic analysis of port studies published during the period 1997–2008. A comprehensive cross-citation and analysis of the themes, approaches and findings of all 395 relevant journal papers identifies the extent to which the research field is maturing, and the leading papers. This paper also presents an extensive analysis of the content, based on the classification of all port studies into seven research themes. For each theme, research topics, widely used research questions, concepts and research methods and the most important research findings are discussed. Finally, we identify emerging research challenges and research questions that still need to be answered.     

Influential factors in port infrastructure tariff formulation,implementation and revision

The process of formulation, revision and approval of port infrastructure tariffs is complex and involves different stakeholders. The extant literature focuses more on port pricing research but pays less attention to the practice of port infrastructure tariff setting. This paper aims to identify and analyses the influential factors in the port infrastructure tariff formulation process using survey data collected from 67 port authorities. Exploratory factor analysis (EFA) is first conducted before confirmatory factor analysis (CFA) is applied to analyse the latent factors underlying port infrastructure tariff setting. The analysis results suggested the four factors influential to infrastructure tariff practice, namely tariff policies, transparency, tariff regulation and stakeholder participation. The paper also presents the implications for port authorities, management and stakeholders.     

A Strategic Diagnostic Tool Applied to Iberian Seaports: An Evolutionary Perspective

The highly competitive and rapidly changing environment faced by businesses has greatly increased the need for strategic planning. The importance of formulating strategies to reach competitive advantages with implications in the performance is becoming increasingly evident in the seaport context. Thus, it is relevant and appropriate to apply strategic positioning tools to seaports given the role of competitive strategies in the growth and development of this industry. This research aims to analyse the strategic positioning of the leading Iberian Peninsula seaports (Portuguese and Spanish seaports) using the Boston Consulting Group (BCG) matrix as a strategic tool in an evolutionary perspective. The portfolio analysis developed subsequently focuses on the annual data of eight seaports in a selected period of 18 years (1992–2009) and on five categories of traffic: liquid bulk (LB), dry bulk (DB), containers (CO), ro-ro (roll-on/roll-off) and conventional cargo (CC). This research allows us to compare and analyse different levels of performance and identify which of the seaports have improved their strategic positioning during the considered period. The findings reveal a better positioning of Spanish seaports in relation to total traffic and that most of the seaports in the BCG matrix had changed from the first to the third period. The seaport of Valencia is the only one that has maintained its Star Performer position in all the 18 years analysed. Furthermore, considering container traffic, the results evidence the seaports of Algeciras, Valencia and Barcelona as having attained a remarkable position of leadership.     

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.     

Managing passenger behavioral intention: an integrated framework for service quality,satisfaction, perceived value,and switching barriers

This paper seeks to improve our understanding of passengers’ behavioral intention by proposing an integrated framework from the attitudinal perspective. According to the literature in marketing research, we establish a causal relationship model that considers “service quality-satisfaction-behavioral intentions” paradigm, perceived value theory, and switching barrier theory. Exploring passengers’ behavioral intention from satisfaction and perceived value help to understand how passengers are attracted by the company, while switching barriers assist in realizing how passengers are “locked” into a relationship with the current company. Furthermore, in order to capture the nature of service quality, we adopt a hierarchical factor structure which serves service quality as the higher-order factor. In this study, coach industry is selected as our research subject. The empirical results, as hypothesized, show that all causal relationships are statistically significant, and perceived value us the most important predictor of satisfaction and passengers’ behavioral intention. In conclusion, the managerial implications and suggestions for future research are discussed.     

Risk-Sharing in Seaport Terminal Concessions

Over the last two decades, infrastructure development has often been supported by public–private partnerships, particularly under concession arrangements. This paper addresses terminal concession contracts in the seaport sector, and especially the problem of risk-sharing. An effective allocation of risks is the base for the well functioning of the market, and for the success of the ‘landlord’ model. Under this model, the relationship between concessionaires and port authorities is fully dependent on a contract that should be in force for the period of the concession (20, 30 or more years). Based on several Portuguese concession contracts, this paper addresses the issue of risk-sharing agreements. Some policy implications are drawn, namely, alternative contract arrangements to decrease opportunistic behaviour by concessionaires, and to provide incentives to improve efficiency.     

On modeling telecommuting behavior: option, choice, and frequency

The current study contributes to the already substantial scholarly literature on telecommuting by estimating a joint model of three dimensions—option, choice and frequency of telecommuting. In doing so, we focus on workers who are not self-employed workers and who have a primary work place that is outside their homes. The unique methodological features of this study include the use of a general and flexible generalized hurdle count model to analyze the precise count of telecommuting days per month, and the formulation and estimation of a model system that embeds the count model within a larger multivariate choice framework. The unique substantive aspects of this study include the consideration of the “option to telecommute” dimension and the consideration of a host of residential neighborhood built environment variables. The 2009 NHTS data is used for the analysis, and allows us to develop a current perspective of the process driving telecommuting decisions. This data set is supplemented with a built environment data base to capture the effects of demographic, work-related, and built environment measures on the telecommuting-related dimensions. In addition to providing important insights for policy analysis, the results in this paper indicate that ignoring the “option” dimension of telecommuting can, and generally will, lead to incorrect conclusions regarding the behavioral processes governing telecommuting decisions. The empirical results have implications for transportation planning analysis as well as for the worker recruitment/retention and productivity literature.     

Modal shift from road haulage to short sea shipping: a systematic literature review and research directions

ABSTRACT

Modal shift from road haulage to short sea shipping (SSS) has been advocated by authorities and researchers for more than two decades. This paper provides a review of literature on modal shift and pinpoints paths for future research on topics in six categories: (1) factors influencing SSS competitiveness, (2) the policy-oriented perspective, (3) environmental legislation, (4) SSS performance, (5) port characteristics, and (6) the multi-agent perspective. In particular, we propose first, in evaluating the performance of SSS versus road haulage in different trade corridors, three performance-related dimensions – the economic dimension (e.g. external costs), the environmental dimension, and the dimension of service quality – should be considered. Second, researchers should use rich, real-world, numerical data and operational research techniques to identify the relative importance of individual drivers and barriers for a modal shift from road haulage to SSS. Third proposed direction is related to assessing which groups of actors certain policies should target. In doing so, researchers should extend their policy-related focus beyond the European Union, which has long encompassed the major geopolitical scope of research on the modal shift. Fourth, to moderate the adverse impact of environmental legislation on SSS, strategic solutions need to be identified. Fifth, we also suggest that the influence of contingencies, particularly port strikes and cyberattacks, on SSS operations and approaches for managing them should be investigated. Sixth, the economic and financial advantages of coordination and alliance for each transport chain agent need to be evaluated.     

A two-phase model for dry port location with an application to the port of Dalian in China

This paper provides guidance for an optimal and reasonable dry port layout for the port of Dalian in China. We present a two-phase framework on the location of dry ports, which solves the selection of candidate inland cities and optimal dry port location choice, respectively. Fuzzy C-Means Clustering is applied to select alternative cities in the vast hinterland of the seaport of Dalian, with a view to identify evaluation factors that affect the location selection decision. A cost-minimisation linear programming solution is proposed, with the aid of a genetic algorithm, to choose the optimal location as well as capacity level among the candidate inland cities.     

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.     

A spatial autoregressive panel model to analyze road network spillovers on production

The production function approach is used to introduce the effect of public infrastructure on economic growth focusing on its spillover effects. We improve the existing literature both from a conceptual and methodological perspective. As regressors we incorporate variables related to the new concepts of internal and imported transport infrastructure capital stocks, which are actually used in commercial flows, calculated by network analysis performed in GIS. The internally used capital stock represents own infrastructure that benefits accessing markets within the region itself, while the imported capital stock captures the spillover effect associated to the use of the infrastructure situated in neighboring regions. From a methodological perspective, we introduce spatial interdependence into these models, applying the most recent spatial econometric techniques based on instrumental variables estimation in spatial autoregressive panel models in comparison with Maximum Likelihood estimation methods. We illustrate the methodology with Spanish provincial panel data for the period 1980–2007. Results support the hypothesis that the imported capital has a positive spillover effect on production.     

Big data in public transportation: a review of sources and methods

ABSTRACT

The collection of big data, as an alternative to traditional resource-intensive manual data collection approaches, has become significantly more feasible over the past decade. The availability of such data, coupled with more sophisticated predictive statistical techniques, has contributed to an increase in attention towards the application of these data, particularly for transportation analysis. Within the transportation literature, there is a growing emphasis on developing sources of commonly collected public transportation data into more powerful analytical tools. A commonly held belief is that application of big data to transportation problems will yield new insights previously unattainable through traditional transportation data sets. However, there exist many ambiguities related to what constitutes big data, the ethical implications of big data collection and application, and how to best utilize the emerging data sets. The existing literature exploring big data provides no clear and consistent definition. While the collection of big data has grown and its application in both research and practice continues to expand, there is a significant disparity between methods of analysis applied to such data. This paper summarizes the recent literature on sources of big data and commonly applied methods used in its application to public transportation problems. We assess predominant big data sources, most frequently studied topics, and methodologies employed. The literature suggests smart card and automated data are the two big data sources most frequently used by researchers to conduct public transit analyses. The studies reviewed indicate that big data has largely been used to understand transit users’ travel behavior and to assess public transit service quality. The techniques reported in the literature largely mirror those used with smaller data sets. The application of more advanced statistical methods, commonly associated with big data, has been limited to a small number of studies. In order to fully capture the value of big data, new approaches to analysis will be necessary.     

Evaluation of the dry port concept from an environmental perspective: A note

This study evaluates the dry port concept from an environmental perspective using modelling and simulation. A model of a transport system, with and without a dry port, is created and the results of the simulations compared. The benefits of the dry port implementation are defined from an environmental perspective; calculated CO₂ emissions are approximately 25% lower with an implemented dry port for the chosen case, while congestion and truck waiting times at the terminal are significantly reduced.     

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.     

Research trends in urban transport science: Some empirical evidence from academic research

The field of urban transport planning is now established as a scientific activity. Its historical evolution shows an intense search for the appropriate methodological approach, in view of the significant changes on the nature of the transport problem. This relationship between methodology and problem is studied on the basis of Kuhn's theory for scientific progress. Changes in paradigm are detected and analysed through the use of data from academic research leading for higher degrees in both the United Kingdom and the United States for a period of 20 years (1962–1981). A number of different classifications are proposed. The results of the analysis suggest that research in transport is passing through a transition phase, or paradigm shift, and that coping with the increasing level of complexity of the transport problem is the next step forward.     

Port privatization,efficiency and competitiveness: Some empirical evidence from container ports (terminals)

Few studies have investigated the quantitative relationship between port ownership structure and port efficiency with mixed results. This study applies a stochastic frontier model proposed by Battese and Coelli [Battese, G.E., Coelli, T.J., 1995. A model for technique inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics 20, 325–332], which incorporates the inefficiency effect, to show whether port privatization is a necessary strategy for ports to gain a competitive advantage. While this stochastic frontier model has been used to a wide number of industries where the technical inefficiency effect is required, this method has rarely been employed to port industry. This study also investigates the determinants of port competitiveness. Both the principal component analysis (PCA) and the linear regression model are used to examine the effects of identified key factors on port competitiveness. Based on a sample of selected container terminals around the world, the results of this study have shown that private sector participation in the port industry to some extent can improve port operation efficiency, which will in turn increase port competitiveness. Another important determinant of port competitiveness is the adaptability to the customers’ demand. All these results provide some policy implications and guidance for port authorities and port operators in formulating effective strategies to improve their competitiveness vis-à-vis rivals.     

Assessing communicative rationality as a transportation planning paradigm

Communicative rationality offers a new paradigm for transportation planning. Drawing on the literature and lessons from transportation planning practice, this paper describes the characteristics of a “communicative” form of transportation planning and compares them with conventional practices. A communicative rationality paradigm would place language and discourse at the core of transportation planning. The paper argues that it would lead to greater attention to desired transportation ends (goals), better integration of means and ends, new forms of participation and learning, and enhanced deliberative capacity. The paper explains the implications of this paradigm for the role of the transportation planner, the purpose of planning, the planning process, communicative practices, problem framing, and the nature of planning analysis. The paper concludes with an assessment of communicative rationality's ability to promote more effective transportation planning. It seeks to create a dialogue that will support the investigation of new transportation planning processes. This revised version was published online in June 2006 with corrections to the Cover Date.