(An) Empirical Study on the Efficiency of Container Terminals in Russian and Korean Ports using DEA model

Abstract

The steady growth of seaborne trade has resulted in the increase of container ships, ports and their container terminals. The operating efficiency of a container terminal is the critical element for its competitiveness in the international market. The aim of this research is to evaluate the efficiency of container terminals and to study how to improve their scale efficiency. In this paper the efficiency and performance is evaluated for 31 container terminals in Russian and South Korean seaports in 2010-2014, using DEA (Data Envelopment Analysis), a non-parametric linear programming method, which evaluates relative efficiencies of a homogenous set of decision making units (DMUs) in the presence of multiple input and output factors. Similar comparative studies of Russian and Korean ports/terminals operating efficiency were not conducted previously. The results show that the total average of Korean terminals’ operating efficiency scores is higher in both DEA-CCR and DEA-BCC models, in comparison with Russian efficiency scores. Russian terminals showed relatively low scale efficiency and relatively high VRS efficiency scores that may indicate that resource utilization is relatively efficient, but the operational sizes of the terminals are not proper. Korean terminals showed relatively high scale efficiency and relatively low VRS efficiency scores that may indicate that input level (the size of the terminals) is chosen correctly, but container terminals are not using their resources efficiently. Most Russian container terminals show increasing returns to scale, whereas Korean terminals show tendency to constant returns to scale.