A Study on the Evaluation of the Management Efficiency of the International Freight Forwarding Companies in Korea
Yoo, Byung Ryong
Department of Shipping Management
The Graduate School of
Korea Maritime University
The purpose of this paper is to evaluate the management efficiency of the international freight forwarding companies in Korea using DEA(Data Envelopment Analysis).
Even though there have been a few studies relating to the freight forwarding industry in Korea, the management efficiency analysis has not been conducted. Applying mathematical programming techniques, DEA enables relative efficiency ratings to be derived within a set of analysed units. Thus it does not require the development of standard against which efficiency is measured. Such standards can be incorporated in the DEA analysis. The efficiency of units are compared with an 'efficiency envelop' that contains the most efficient units in the group. DEA does not require any assumption for functional form and calculates a maximal efficiency measure for all Decision Making Units(DMUs).
DEA has been used to measure the performance of organizations such as banks, insurance companies, universities, and hospitals. This study is the first attempt to apply DEA to measure comparative efficiency of the international freight forwarding companies in Korea.
This paper investigates the efficiency employing DEA-CCR Model and DEA-BCC Model on data for 41 ocean freight forwarding companies and 37 air freight forwarding companies in Korea for the period of 2002-2005. It also investigates the change in productivity employing EMS program over a 4-year period from 2002 to 2005. Th input data used for analysis include the number of employees, selling and administrative expenses and sales, operating profit, net income and house bill of lading weight(kgs) are chosen to be used as the output variables. To compare the relative efficiencies among various DMUs, Supper Efficiency Ranking Method was used.
According to the data analysis it was found that the business performance of freight forwarding companies was affected by characteristics such as number of employees, sales, economic conditions of a country and so on. To increase the management efficiency, it is important to increase the sales and operating income and decrease the number of employees and selling and administrative expenses. The outcomes of this study will enable the international freight forwarding companies to identify current slacks and to set up a proper management strategy to improve their productivity.