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## Analyzing Port Efficiency through DEA Analysis

Question:

Discuss About The Efficiency Changing Economic Environments?

Operational efficiency and benchmarking are some of key parameters which different areas have to achieve. Data envelopment analysis (DEA) is one of key method which is utilized to achieve and analyze the operational efficiency of different organs and sectors[1]. In this report, analysis will be made on two different sectors which include the container terminal set and oil and energy terminal set. Efficiency in ports and oil and energy production are important to enhance the operations of these organs and facilities. Analysis of the production rate and frontier costs helps to analyze the operational efficiency of the facilities[2]. First, this report will carry out an analysis of different ports and determine their efficiency through the use of the DEA. The period of analysis will be between 2006 and 2010.

In the DEA analysis of the container port efficiency, four ports are selected. These include Port of Spain (TT), Point Lisas (TT), Kingston container terminal (Jamaica), and MIT (Panama). This report will look at the different inputs which are placed on these ports and analyze the output achieved each year. This will help to determine the operational efficiency for the different ports according to their productivity[3]. Different in puts in the ports are essential to facilitate the efficiency of operation. This translates to an increase in the production rate of the ports. In addition, the efficiency is measures by the ration of the inputs used to the output achieved with a specific period. In this case, the efficiency will be measured per year. Different inputs are used in ports such as cranes, human capital, draft, trailers, stackers RTG and even Stackers[4]. All these input facilities are able to lead to efficiency of containers passing through the specific ports. The number of containers handled in the ports translates to the output of the port. The operational efficiency will therefore be the output achieved divided by the inputs used. For each specific year and port, the differences in inputs and outputs are experienced.

In the Port of Spain in Trinidad and Tobago, which covers an approximately 142 hectares whereby about 61 hectares are used for cargo handling. As noted earlier, the efficiency is found by calculating the ration of output to the input used. A total of 2595 inputs were used to produce and handle different number of containers at this port. Efficiencies such as 109.4, 111.90, 77.20, 146.91, 148.51, 115.21 and 119.46 were recorded and were experienced in 2006, 2007, 2008, 2009, 2010, 2011, and 2012 respectively. The analysis of the operational efficiency of this port seems to be fluctuating. Some years are experiencing low container handling, while at other year an increase in container handling is experienced. The port utilizes the berth width as an input. The area enjoys a really stabilized economic situation over the period[5]. Increasing berth length and cranes may result to higher output. Nevertheless, demand, competition and business issue will be unlikely to be controlled.

## Efficiency of Container Port Set

Point Lisas port is in Trinidad and Tobago. This port has 1331 inputs which help to handle containers in the port. The analysis on the container handled each year since 2006 to 2016 show an increase. The efficiencies from the container output included 129.96, 131.76, 140.5, 144.92, 157.0, 166.68 and 355.78, which happened for 2006, 2007, 2008, 2009, 2010, 2011, and 2012 respectively. This translates that the operational efficiency of the port is increasing each year. Point Lisas had limited inputs which resulted to low efficiencies. Nevertheless, economic stability was experienced since the efficiencies kept on increasing each year[6]. Increase on investment on inputs can therefore be a key factor which can help to increase the outputs.

Another port is the Kingston Container terminal in Jamaica. This port has a total of 3615 inputs. The following efficiencies were recorded; 499.27, 486.40, 467.65, 471.36, 453.14, 457.34 and 2641.96 for the period 2006, 2007, 2008, 2009, 2010, 2011, and 2012 respectively. The containers handled in this port are able to fluctuate year in year out. There is no consistent in the trend under which the containers are handled through this port. Competition is one of uncontrollable factor which may be resulting to this inconsistence[7]. In addition, the economic situation on the area is high and this can be derived from the high efficiencies recorded.

The performance of the port was high although it was not consistent. In addition, for the Freeport in Bahamas, the port had a total of 1629 inputs. From the available inputs, the port was able to achieve the following operational efficiencies; 69.94, 73.05, 76.73, 79.80, 82.25, 84.10 and 85.33, which happened in 2006, 2007, 2008, 2009, 2010, 2011, and 2012 respectively. According to these efficiencies, the Freeport was operating with growth. The output kept increasing year after year and this shows great performance of the port.

Lastly, the Panama Port, had 2373 total inputs. Overall, the port recorded an increasing output. This meant that the operational efficiency was able to increase each year apart from 2012. The ratio of output to the inputs was 279.8, 280.57, 286.93, 291.1, 295.17, 268.91, and 319.22. This port was able to record an increasing figure in efficiencies. This can be attributed the financial stability on the area.

In conclusion, the economic status of the different areas is able to affect the output. In addition, controllable factors such as input investments are some of key measures which the ports can take to enhance their outputs. In addition, the port has the highest number of inputs among the considered ports and this is the main reason for the high efficiency in the port[8]. The boom is experienced in 2012 and therefore reliability of production may be seen to be low if consistency was to be considered. The increase in efficiency can be attributed to the high number of inputs used for the production. Consistency in production is important which will ensure that the facilities are able to satisfy the available demand and increase their production.

## Efficiency of the Oil and Energy Terminal Set

In addition, for ports to achieve high production, energy and oil sector has to provide the best services. There key inputs which stipulate the way oil and energy sector have to operate in a port[9]. To achieve efficiency and high performance, these inputs have to function well. Their performances are able to dictate the amount of cargo which the port will be able to handle. In this analysis, some key input parameters such as fuel consumption rate, quay cranes, quay length, and oil reserve quantity, human resource and gas reserves[10]. All these parameter are related to the oil and energy used in the port and therefore dictating the amount of cargo handled. The increase of these input parameters increase the amount of oil and energy required. Additionally, this means that the amounts of operations are high and therefore more cargo is handled. The operation efficiency will be the ration of output to the amount of input used. The efficiency will be a reflection of the performance of the port. In this case, the energy and oil consumption will be efficiently used when the efficiency ratio is high[11].  This report will look at four key ports and analyze the different inputs and the resulting cargo handled.

The first port to look at is Point Lisas port. The total numbers of inputs in this port are 8843. This number is taken to be an indicator of amount energy and oil which is consumed in the port. The efficiencies on the year 2006, 2007, 2008, 2009 and 2010 are 26.46, 25.67, 34.06, 32.46 and 34.24 respectively. In the overall part, the efficiencies of the port are increasing. Although there are fluctuations, the overall results show an increase in efficiencies. Amount of cranes and terminal area covered are important factors which can enhance the operations of the ports[12]. The economical status of the location is low and this can be evident on low efficiencies.

The second port to look on it performance is the ALNG. This port had a total of 7280 inputs. This indicates that there is an increase in the amount of inputs which increases the amount of energy and oil consumed. The efficiencies achieved from the use of these inputs and outputs include 16.33, 31.70, 56.04, 81.06 and 122.28, which occurred on the years 2006, 2007, 2008, 2009 and 2010 respectively. Although this port has high inputs, the amounts of efficiencies are low. This means that the operational performance of the port is low[13]. The output which is achieved from the available resource is low and this show that the port is underperforming.

Another port which is analyzed in this section is Colombia from Cartagena. This port was able to attract 9177 inputs. There increase in the inputs in this sector indicates an increase in oil and energy consumption in the port. These inputs are able to attract efficiencies such as 64.17, 53.09, 63.09, 73.10 and 76.30 which happened in 2006, 2007, 2008, 2009 and 2010 respectively. These overall results show that the performance of the port was able to increase. Although some fluctuations do exists, the overall result is increasing and therefore the performance of the port can be termed to be positive.

## Conclusion

Lastly, the port analysis to be carried is on Port Lemon in Costa Rica. The overall performance inputs used in this section were 13370. This shows that there is a high increase on the number of inputs used to move the cargo. The available inputs where able to attract efficiencies such as 738.25, 739.01, 736.74, 740.51 and 745.74, which happened in the years 2006, 2007, 2008, 2009, and 2010 respectively. The efficiencies in this port are high but their overall increase is not much high. Although the port is performing fairly high, increase over the period is not high[14]. The high levels of efficiencies may be attributed to the high outputs which result from the high level of inputs used.

In conclusion, the efficiencies and operational performance of the ports can be determined from the use of DEA. The inputs used in the port result to certain levels of output. The ports do not have control over the economic status on the regions and competition from other ports. The performance of the ports depends on the efficiencies which result from the output. The level of the change on the efficiencies is therefore used to determine the level of performance of the ports. High levels of change of the efficiencies mean that the ports are highly performing. In addition, the level of fluctuations on the level of the efficiencies can be used to determine the performance of the ports. Low fluctuations are important indicator of high performance of the ports.

References

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Al-Eraqi, Ahmed., Khader, Ahamad. and Mustafa, Adli  “DEA Malmquist Index Measurement in Middle East and East African Containers Terminals”. International Journal of Shipping and Transport Logistics 1(3): (2009). 249–259

Baños-Pino, Jose., Coto-Millán, Pablo. and Rodríguez-Álvarez, Ana.  “Allocative efficiency and over-capitalization: an application”. International Journal of Transport Economics. Vol. 26(2), (2011). 181-199.

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Barros, C. Pestana.  “A Benchmark Analysis of Italian Seaports Using Data Envelopment Analysis”. Maritime Economics and Logistics 8(4): (2009). 347-365

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Notteboom., Theo., Chris, Coeck, and Van den Broeck, Julien. “Measuring and Explaining the Relative Efficiency of Container Terminals by Means of Bayesian Stochastic Frontier Models”. International Journal of Maritime Economics 2(2): (2008). 83-106

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Talley, Wayne. K. “Port performance: an economics perspective”. Research in Transportation Economics 17: (2016). 499-516

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My Assignment Help. (2019). Analyzing Operational Efficiency In Ports And Oil And Energy Terminals Using Data Envelopment Analysis. Retrieved from https://myassignmenthelp.com/free-samples/efficiency-changing-economic-environments.

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