Efficiency analysis of container ports in the Middle Estern Region

Abstract

More than 80 percent of merchandise traded by volume is seaborne. Consequently, container ports become the most important gateways for international trade, which constitute a key element for increasing trade and economic growth rate of countries. Therefore, improving container ports efficiency is critical as it could boost a country‟s competitiveness and economy. In this context, an increasing number of studies have been conducted on improving the efficiency of container ports. However, most of these studies have focused on measuring efficiency using operational variables. Little attention has been given to exogenous factors that could influence container ports efficiency. Consequently, the knowledge on the relationship between operational efficiency and these exogenous factors is limited. Also, most of these studies focused on container ports in developed countries, while none so far has examined the influence of exogenous factors on the efficiency of container ports in developing countries such as the Middle Eastern region. This research, therefore, aims to determine and evaluate the influence of exogenous factors on the efficiency of container ports in the Middle East region. Two-stage methodological approach was used. First, Data Envelopment Analysis (DEA) measures the technical efficiency of 12 container ports in the Middle Eastern region. Second, Ordinary Least Squares (OLS) regression examines the effect of exogenous factors on the technical efficiency derived from the first stage. MATLAB R2013a software validated by DEA frontier with Excel solver was used to measure the technical efficiency in the first stage. Then, SPSS software was used to identify the significant and non-significant factors in the second stage. Findings revealed that, from 12 container ports, only 3 (25%) container ports were efficient, while the remaining 9 (75%) were inefficient. Furthermore, result showed that the value of R2 for the OLS was 0.652, which suggests that the model is good as 65.2% of the variance in the dependent variable (container port efficiency) was explained by the regression model. In addition, the F-test indicates that the model as a whole significantly improved the ability to predict the outcome variable (p = 0.031  0.05). The result further showed that liner shipping connectivity is the only factor making a significant contribution to the prediction of the efficiency of container ports, while other factors were insignificant. The results showed that majority of container ports in the Middle Eastern region do not use the available resources to achieve maximum efficiency. This research concluded that the container ports authority should conduct yearly efficiency evaluation to compete globally, improve resources utilisation, and enhance their local economy. Also, any evaluation of efficiency should consider the effect of exogenous factors.