Estimating the Productivity and Efficiency of Container Ports and Terminals

The continuous monitoring of comparative measures of performance (in all relevant forms) is pivotal to the successful management of port and terminal operations. The pressure for this comes from the relentless trend towards greater competition, within both inter-port and intra-port contexts. This chapter defines the fundamental nature of productivity and efficiency estimation, before focusing specifically on ports and terminals. It contrasts modern methods of estimating port efficiency, based on DEA (data envelopment analysis) and the SFM (stochastic frontier model) with more traditional approaches. Through a comprehensive précis of applications to the port sector, the development over time of practical and policy-relevant research into the measurement of port and/or terminal productivity and efficiency is illustrated. It is shown that the progression of applications mirrors and corresponds closely with the theoretical and empirical evolution of techniques for evaluating productivity and efficiency. The chapter concludes that great scope exists for the continued expansion and further development of port efficiency studies, pointing explicitly to the potential for applications beyond container handling and to a more holistic approach where not only are multiple outputs accounted for but also the role of port performance within a wider logistics and supply chain management context.