Typology of Long-Term Port Efficiency Improvement Paths: Malmquist Total Factor Productivity forWorld Container Ports

Abstract

The global seaport sector made huge efforts in relation to port reform and technological development since the 1990s. This study attempts to systematically estimate the impacts of these efforts on world ports’ efficiency changes between 1991 and 2004. The Malmquist Total Factor Productivity Index can effectively measure efficiency changes and identify sources of efficiency gains and losses. Based on the decomposed Malmquist Productivity Index efficiency indices, this study creates a typology of ports regarding whether, and how, they have improved their efficiency over the last decade. The results suggest that: (1) while scale efficiency, mainly representing impacts of external economic environments on port performance, is still one of the important factors to shape port efficiency, it is neither determining nor predominant any longer; (2) the globalized competition in the container shipping and terminal markets enables potential strategies to be used that combine institutional restructuring and capital investment, as a partial solution to overcome the external limitations of ports, such as lack of hinterlands; and (3) an exclusive focus on aggressive investment in technological progress is a limited strategy, as other competitor ports can relatively easily replicate the process, and, consequently, it may negate any increase in long-term competitiveness.