Developing Measures of US Ports Productivity and Performance: Using Data Envelopment Analysis (DEA) and Free Disposal Hull (FDH) Approaches

Due to its high capital investment, operating and maintenance cost, a port should be managed as efficiently as possible. Learning from the best practices ports operating under similar conditions is a very useful strategy for maintaining competiveness. Under such a competitive environment, port performance measurement is not only a powerful management tool for port operations, but also constitutes a most informative input for regional and national port planning and operation. Measuring port and container terminal productivity is an interesting issue especially if an automated system across terminals and port is required. Amongst other methods, the efficiency of container port or terminal production can potentially be analyzed by Data Envelopment Analysis (DEA) or by the Free Disposal Hull (FDH) model. Twentyfive ports from US were assessed. The analysis modeled a port as a decision making unit (DMU) utilizing three major operating inputs, i.e. quay length, gantry cranes, and container yard to produce one major target output, i.e. number of throughput containers. Three main results are presented. First, an efficient frontier or a set of the best practice ports is identified, where inefficient ports may wish to emulate. Second, the sources and extent of inefficiency on which inefficient ports should focus in order to improve their operations are determined. Third, port efficiency is compared among North American ports. The results can be very useful for planning and managing an airport in a competitive multiple-port network.