The impact of governance on the technical efficiency of container ports

Abstract

We examine the impact of ownership, competition and regulation on the technical efficiency of container ports, with a focus on governance-related factors. We employ stochastic frontier analysis to investigate the interplay between privatization levels, hinterland and transhipment competition and economic regulators across the Far East and Asian regions. Our findings suggest that independent regulators foster higher technical efficiency compared to regulation by government ministries or port authorities. Moreover, majority privately owned ports demonstrate higher technical efficiency than those with minority private ownership. Additionally, our results reveal that transhipment competition positively affects container port efficiency. Perhaps surprisingly, the independence of the economic regulator is more critical to technical efficiency than hinterland competition. We recommend that policymakers promote the independence of regulators and encourage privatization to enhance the technical efficiency of container ports, thereby strengthening global supply chains.