Operational Performance Evaluation of Korean Major Container Terminals

As the competition among the container terminals in Korea has become increasingly fierce, every terminal is striving to increase its investments constantly and lower its operational costs in order to maintain the competitive edge and provide satisfactory services to terminal users. The unreasoning behavior, however, has induced that substantial waste and inefficiency exists in container terminal production. Therefore, it is of great importance for the terminal to know whether it has fully used its existing infrastructures and that output has been maximized given the input. From this perspective, data envelopment analysis (DEA) provides a more appropriate benchmark. This study applies three models of DEA to acquire a variety of analytical results about the operational efficiency to the Korean container terminals. According to efficiency value analysis, this study first finds the reason of inefficiency. It is followed by identification of the potential areas of improvement for inefficient terminals by applying slack variable method and giving the projection results. Finally, return to scale approach is used to assess whether each terminal is in a state of increasing, decreasing, or constant return to scale. The results of this study can provide terminal managers with insight into resource allocation and optimization of the operating performance.