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.     

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.     

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.     

A slacks-based network DEA efficiency analysis of European airlines

Conventional data envelopment analysis (DEA) models consider a system as a single-process ‘black box’. There are, however, DEA approaches that consider a system as composed of distinct processes or stages, each one with its own inputs and outputs and with intermediate flows among the stages. In this paper, a network DEA approach to airline efficiency assessment is presented. One conclusion of the study is that the network DEA approach has more discriminative power than the single-process DEA approach and that the computed targets, efficiency scores and rankings are more valid. This is because network DEA allows for a more fine-grained analysis that leads to a more realistic estimation of the overall system production possibility set than the one assumed by conventional DEA. In other words, compared with network DEA the conventional, single-process DEA represents an aggregated analysis that merges all system processes with their inputs and outputs and ignores their internal flows. The main drawbacks are the need for more detailed data (i.e. at the process level) and the greater complexity of the resulting models, especially if there are inputs or outputs that are shared among the processes.     

A data envelopment analysis model for evaluating the performance of taxi operators: a case study in Harbin,China

ABSTRACT

This paper measures the performance of taxi operators using data envelopment analysis (DEA) and the improvement of performance based on benchmarks. This includes basic DEA models and a cross efficiency model. In the present work, a sample set of 20 taxi operators are considered, and an evaluation indicator framework is constructed, which mainly involves the identification of decision-making units (DMUs) and the determination of input-output variables. The combined results of multiple DEA models are used to evaluate the performance of taxi operators in a case study of Harbin. The results highlight the significance of the combined application of multiple DEA models, especially a cross-efficiency model that can obtain more objective efficiency values. Finally, the benchmarking method is used to capture the achievements of best-performing operators and provide valuable improvement recommendations for inefficient operators. Conclusions provide a suitable basis for the operation and management of the taxi market.     

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 supply chain efficiency based on a hybrid approach

Supply chain management has a tremendous impact on the success of a company. One of the critical issues for gaining competitive advantages for companies is improving supply chain performance. Most studies about the application of Data Envelopment Analysis (DEA) Supply chain models do not identify the benchmarking units for inefficient supply chains. On the other, measuring the short run and long run of the supply chain efficiency is another challenge for decision makers in supply chain management. Hence, we propose a methodology of DEA for measuring of the supply chain. We integrated two approaches as special cases of the hybrid model and compare the short and long run strategies of supply chain and can be identified benchmarking.     

When it comes to container port efficiency,are all developing regions equal?

In this paper we carry out a container port performance analysis of the developing world between 2000 and 2010, using both parametric and nonparametric approaches. From a unique dataset – our sample covers 70 developing countries, 203 ports, and 1750 data points–, we examine the evolution and drivers of productivity and efficiency changes across developing regions. We show that productivity growth rates between 2000 and 2010 vary significantly and that this heterogeneity is explained by pure efficiency changes rather than scale efficiency of technological changes. Therefore, we carry out a detailed efficiency analysis to determine the drivers of port efficiency. Time series results show an upward trend for port efficiency in developing regions, as it increased from 51 percent in 2000 to 61 percent in 2010. Our analysis indicates that private sector participation, the reduction of corruption in the public sector, improvements in liner connectivity and the existence of multimodal links increase the level of port efficiency in developing regions.     

Efficiency in Asian railways: a comparison between data envelopment analysis approaches

Performance analysis has become a vital part of the management practices in the logistics infrastructure. Although there are numerous applications using Data Envelopment Analysis (DEA) models to estimate efficiency in ports and airports, research on railway efficiency remains scarce. Most of the efficiency studies of railways assume that inputs and outputs are known with absolute precision. Here, we compare Stochastic-DEA and Fuzzy-DEA models to assess, respectively, how the underlying randomness and fuzziness impact efficiency levels in railway operations in six different Asian countries: Japan, Thailand, Vietnam, Malaysia, Myanmar, and Indonesia. Findings reveal that conclusions with respect to the ranking of these railways may vary substantially depending upon the type of model chosen, although efficiency scores are similar to some extent when compared within the ambits of Stochastic-DEA and Fuzzy-DEA models. Additionally, modeling choices on fuzziness, rather than randomness, appear to be the most critical source for variations in efficiency rankings.     

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.     

Evaluation of Potentially Successful Barge Innovations

Abstract

The main objective of this article is to analyse the changes in productivity of the Taiwan Bus Transit System (TBTS) before and after the execution of the ‘Alternatives for Promoting the Development of the Public Transportation Sectors’ (APDPTS), which is designed to provide a better operating environment for the public transport sector in the provision of public transit services. We use a decomposition of the Malmquist productivity index to locate the sources of productivity growth, namely technical change and efficiency change. The former is further decomposed into an output bias, an input bias and a magnitude term to test neutrality. The latter is also decomposed into changes in pure technical efficiency and scale efficiency. In our case, between the pre‐ and post‐APDPTS periods, the efficiency increased only marginally. As a result of a five‐year enhancement programme, the technical regress slowed down slightly, and inward neutral shifts of a transformation frontier were interpreted as being the main contributor to technical regress. In particular, evidence of biased technical change was found, i.e., the effects of output capability increased slightly, but the efficient use of inputs declined during the post‐APDPTS period.     

Measuring the Cost Effectiveness of Multimode Bus Transit in the Presence of Accident Risks

Abstract

This study employs the directional graph distance function and the multiactivity data envelopment analysis (DEA) approach, which incorporates both desirable and undesirable outputs, in order to provide a more complete representation of the multimode bus production technology from which environmentally and risk-sensitive cost effectiveness measures can be generated. We treat accident cost as the risky output in the sense that we wish to increase desirable outputs and decrease risky output and inputs. The approach is applied to the problem of measuring the cost effectiveness of 24 bus companies in Taiwan. An empirical illustration suggests that the overall cost effectiveness rankings turn out to be very sensitive to whether or not the graph multiactivity DEA approach is adopted. This implies that the conventional DEA cost effectiveness measure may be seriously misleading if it ignores the cost effectiveness of organizations that carry out various activities whilst sharing common resources.     

Commentaries

Abstract

This paper surveys the technologies available for constructing a pervasive, national‐scale road pricing system. It defines the different types of road pricing, the methods by which a vehicle’s position can be determined, and then examines possible pricing regimes in the context of their technological requirements and implications. The issue of enforcement and the distribution of pricing policies are considered, and further complexities are outlined. An examination of the security aspects of such systems is made, focusing particularly on the need to ensure privacy using technological, rather than solely procedural, methods. The survey concludes that a pervasive, national‐scale deployment is unlikely to be technically achievable in the short‐term.     

An intersection control strategy for a short‐headway P.R.T. network

Much PRT development and research is currently being undertaken assuming quasi‐synchronous longitudinal control of guideway vehicles. This method of control has the characteristic that intersection performance has a substantial influence on the efficiency of trip demand processing. An algorithm for the control of a PRT intersection is discussed here, which would appear to have significant advantages over all other known existing stratagems. The stratagem is not only efficient but its flexibility facilitates tailoring to diverse local conditions; furthermore, the algorithm does not require intractable computations or excessive computer memory requirements. The algorithm is described and simulation results are presented. A comparative study is also made between this algorithm and its fore‐runner.     

An application of the directional distance function with the number of accidents as an undesirable output to measure the technical efficiency of state road transport in India

By using the directional distance function (DDF) of data envelopment analysis (DEA), this study measures the technical efficiency of 37 Indian state road transport undertakings (SRTUs) for the year 2012–13. We employ the DDF as a tool for analyzing a joint production function with both desirable and undesirable outputs (i.e., the number of accidents). A comparison between the results with and without accidents shows that several SRTUs have experienced significant changes in their efficiency scores as well as in their rankings after accounting for the undesirable output. This indicates the importance of including the number of accidents – a safety standard – as representative of the undesirable output in computing the efficiency scores of SRTUs. The results of the Tobit model indicate that SRTUs with greater vehicle productivity are more efficient under both conventional DEA and DDF approaches. We also employed zero-truncated negative binomial model to assess the factors influencing the number of road accident experienced by the Indian SRTUs and found that the accident count was significantly influenced by fleet utilization and vehicle productivity.     

Comparative performance analysis of European airports by means of extended data envelopment analysis

Data envelopment analysis (DEA) has become an established approach for analyzing and comparing efficiency results of corporate organizations or economic agents. It has also found wide application in comparative studies on airport efficiency. The standard DEA approach to comparative airport efficiency analysis has two feeble elements, viz. a methodological weakness and a substantive weakness. The methodological weakness originates from the choice of uniform efficiency improvement assessment, whereas the substantive weakness in airport efficiency analysis concerns the insufficient attention for short‐term and long‐term adjustment possibilities in the production inputs determining airport efficiency. The present paper aims to address both flaws by doing the following: (i) designing a data‐instigated distance friction minimization (DFM) model as a generalization of the standard Banker–Charnes–Cooper model with a view to the development of a more appropriate efficiency improvement projection model in the Banker–Charnes–Cooper version of DEA and (ii) including as factor inputs also lumpy or rigid factors that are characterized by short‐term indivisibility or inertia (and hence not suitable for short‐run flexible adjustment in new efficiency stages), as is the case for runways of airports. This so‐called fixed factor case will be included in the DFM submodel of the DEA. This extended DEA—with a DFM and a fixed factor component—will be applied to a comparative performance analysis of several major airports in Europe. Finally, our comparative study on airport efficiency analysis will be extended by incorporating also the added value of the presence of shopping facilities at airports for their relative economic performance. Copyright © 2012 John Wiley & Sons, Ltd.     

The evaluation of transportation energy efficiency: An application of three-stage virtual frontier DEA

In this paper, transportation energy efficiency is newly defined and its inputs and outputs are obtained through literature review. Labor input, capital input and energy input are selected as the inputs, passenger turnover volume and freight turnover volume are defined as the outputs. A new model—three-stage virtual frontier DEA (three-stage virtual frontier Data Envelopment Analysis) is proposed to evaluate transportation energy efficiencies. The case of thirty Chinese PARs (provincial administrative regions) from 2003 to 2012 is applied to verify its rationality. In the three-stage virtual frontier DEA, the reference DMU (decision-making unit) set and the evaluated DMU set are two different sets so that it can distinguish the DEA efficient DMUs. And in the evaluating process, the reference DMU set remains unchanged to assure its results more reasonable than Super DEA model. The results show that transport structure and management measures have important impacts on transportation energy efficiency.     

Evaluating the operational performance of airside and landside at Chinese airports with novel inputs

ABSTRACT

This paper evaluates the operational performance of airside and landside at Chinese airports with two novel inputs. Furthermore, the airport landside operation is decomposed into passenger-terminal operations and cargo-warehouse operations. One novel input is the capability of the runway system which is introduced into airside performance evaluation. The other novel input is cargo warehousing which is introduced into landside performance evaluation. To address multiple optimal solutions when estimating Returns to Scale in Data Envelopment Analysis, we adopted the Zhu and Shen method. This empirical study shows that neither the number of runways nor total runway length is a genuine index of runway system capability in the evaluation of airside performance. Only four airports achieved full efficiency in all eight measures while eight airports did not achieve any full efficiency. In addition, one airport did not perform well in the benchmark analysis.     

Seaport performance analysis using robust non-parametric efficiency estimators

Abstract

Seaport services have been developing year on year, playing an increasingly important role in the economy and the transportation markets of each country. This increases interest in measuring their performance. This paper evaluates the performance of a set of European seaports by means of robust non-parametric approaches. Using order-m and bootstrap procedures, the major problems of traditional data envelopment analysis and free disposal hull methods – concerning noise, presence of outliers and the ‘curse of dimensionality’ – are overcome. With this study considerable levels of inefficiency were found in the European seaports sector.