A Benchmarking Study of the Impacts of Security Regulations on Container Port Efficiency

Abstract

Since the terrorist attacks in the USA in September 2001, several regulations have been introduced with a special emphasis on the security of containerised port operations. Global security measures specifically targeting container-port operations include the International Ship and Port Facility Security (ISPS) code, the Container Security Initiative (CSI), and the 24-hour Advance Vessel Manifest Rule (the 24-hour rule). Nevertheless, no attempt has been made to-date to investigate the ex-post impacts of security on the operational efficiency of container ports and terminals. This PhD research seeks to adopt an approach that incorporates within an analytical framework the association of security with operational efficiency, tools for modelling procedural security, and techniques for benchmarking container-port efficiency. A panel data set of 39 ports and 60 container terminals from 2000 until 2006 is used resulting into 420 container-terminal decision-making units (DMUs). In order to account equally for container terminal operational configurations and the multi-input/ multi-output nature of container port production, we apply both process modelling and analytical benchmarking techniques. These are the Integrated Computer Aided Manufacturing Definition (IDEF0) for operational and security modelling, and Data Envelopment Analysis (DEA) for efficiency measurement and benchmarking. Based on the results of IDEF0 modelling, we disaggregate container-port operations by terminal sites (quay, yard and gate) and spatial scope of security and apply alternative DEA models to analyse (i) the operational impact of individual and aggregate security regulations and (ii) the influence of operating and exogenous factors on port efficiency. We then estimate a Malmquist productivity index (MPI) to measure and decompose productivity changes following the introduction of new security measures. The results of the research confirm that both handling configurations and operating procedures have a direct effect on container terminal’s productive efficiency. The analysis of the impact of security on operational efficiency shows that the latter varies greatly by security regulation and terminal group but there is evidence of generalised productivity gains from the technological progress prompted by investments in the new security technology. More importantly, the implementation of the new port security measures revealed several inherent logistical inefficiencies especially in the way terminal policies and work procedures are being designed, operated, and managed.