Port privatization, efficiency and competitiveness: Some empirical evidence from container ports/terminals

Abstract

Few studies have investigated the quantitative relationship between port ownership structure and port efficiency. This study will apply a Stochastic Frontier Model proposed by Battese and Coelli (1995), which incorporates the inefficiency effect, to show whether port privatization is a necessary strategy for ports to gain a competitive advantage. This study also investigates the determinants of port competitiveness. Both the Principal Component Analysis (PCA) method and the linear regression model are used to examine the effects of identified key factors on port competitiveness. Based on the sample of selected container terminals around the world, the results of this study show that the introduction of private sector participation in the port industry to some extent can improve the port operation efficiency, which will in turn increase the port competitiveness. These results provide some policy implications for port authorities and operators to formulate effective strategies to improve their competitiveness vis-? -vis competitors.