Measurement and benchmark of economic performance in the Mediterranean port sector

Abstract

Over the past two decades, the hub & spoke system has significantly changed the behavior of strategic investment decisions in the port sector. Transshipment has significantly changed the composition and throughput traffic for the maritime industry, as a result, capacity has largely increased. This work aims to measure and compare the terminal economic performance based on two criteria: technical efficiency and scale efficiency for 33 container terminals in the Mediterranean basin. We have opted for the DEA (Data Envelopment Analysis) method for the measurement of the economic performance and we have used cross-sectional data for the benchmark in one point of time. DEA doesn't require any specification of the functional form. DEA as a non-parametric programming approach helps in determining the efficiency of a DMU (Decision Making Unit). The findings of this work show that 58% represents the Constant Return to Scale Technical efficiency, this result is broken down into 69% for pure technical efficiency and 83% for scale efficiency, therefore, the findings show that terminals are suffering from a shortfall in terms of overall technical efficiency. Most terminals are operating on decreasing scales. Strategic decisions in terms of investment are of major interest to the management of the container terminals sector.