Group and individual heterogeneity in a stochastic frontier model: Container terminal operators

Tsz Leung Yip, Xin Yu Sun, John J. Liu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

19 Citations (Scopus)

Abstract

Container ports are a major component of international trade and the global supply chain. Hence, the improvement of port efficiency can have a significant impact on the wider maritime economy. This paper deconstructs a representation in the existing literature that neglects the heterogeneity of individual and group-specific terminal operators. In its place, we present a hierarchical model to make a connection between efficiency and terminal operator group characteristics. The paper develops a stochastic frontier model that controls not only individual heterogeneity but also group-specific variations. The model decomposes the total stochastic derivation from the frontier into inefficiency, individual heterogeneity, group-specific variations, and noise components, with the estimation being performed using Markov chain Monte Carlo simulations. The validity of the model is tested with a panel of container terminal operator data from 1997-2004. Our findings show that terminal operator groups are important in promoting terminal efficiency at the global level, and that the operators with stevedore backgrounds show a higher efficiency than carriers.
Original languageEnglish
Pages (from-to)517-525
Number of pages9
JournalEuropean Journal of Operational Research
Volume213
Issue number3
DOIs
Publication statusPublished - 16 Sep 2011

Keywords

  • Container terminal operators
  • Group-specific
  • Markov processes
  • Port globalisation
  • Stochastic processes
  • Stochastic production frontier

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Modelling and Simulation
  • Information Systems and Management

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