An Evaluation Of Technical Efficiencies Of Liaoning Seaports

Seaport efficiency is an important factor when it comes to handling of goods in the international supply chains. It affects transportation and logistics in both national and international supply chains. It is important to evaluate technical efficiency of seaports to reflect the extent to which they utilize resources relative to optimal levels and reveal their position in this competitive environment. This research uses combinatory approach of evaluating technical efficiency of Liaoning seaports using both DEA and stochastic frontier production function model to analyze technical efficiency of seaports and examines the factors significant to it.Data used in this research were both quantitative and qualitative by nature. Tools for data collection employed include published articles like books, journals and port annual reviews and information from the internet. Data used in this research largely came from communication department of Liaoning Government, available on official website. Reliability of data was tested to confirm accuracy and validity of the research.Evaluation of technical efficiencies was done first by using Malmquist DEA with variable return to scale, then Translog form of stochastic frontier production function which also calculated inefficiency effects. Two conditions were considered for proof of hypotheses in stochastic frontier analysis and Maximum Likelihood method was used to test the hypotheses. The presence of inefficiency effects was examined using one-sided generalized likelihood-ratio statistics.The results of this research unveil moves needed to improve technical efficiency of seaports, and indicate the significance of the examined characteristics. The findings of this research are that technical efficiency is influenced by port throughput, infrastructure like berthing facilities and level of private sector participation. The optimal level of private sector participation for best practice to achieve high technical efficiency in the four Liaoning seaports is found as 0.7527, between private/public and fully private level of participation. Port management and other stakeholders should therefore focus on measures that can boost utilization of port resources and also embrace strategic port expansion. Limitation of this research is that it did not consider cost factors due to lack of data. It also left out port services and human resource considerations. Another limitation is that the research only examined four main Liaoning ports with much focus on containers and less focus on cargo. Further research should focus on the areas left out by this research.