Transportation Research Part E 40 (2004) 339356

www.elsevier.com/locate/tre

North American containerport productivity: 19841997

Hugh Turner *, Robert Windle, Martin Dresner
Robert H. Smith School of Business, University of Maryland, College Park, MD 20742, USA
Received 31 January 2003; received in revised form 31 March 2003; accepted 1 June 2003

Abstract
This paper undertakes two tasks: measurement of seaport infrastructure productivity growth in North
America from 1984 to 1997, and exploration of several theorized causal relationships between infrastructure
productivity and industry structure and conduct. A methodology is presented, data envelopment analysis
(DEA), for measuring infrastructure productivity. Tobit regression is presented as a means of examining
the determinants of infrastructure productivity in seaports. The study supports the presence of economies
of scale at the containerport and terminal level. Among other factors, the longstanding relationship between seaports and the rail industry appears to remain a critical determinant of containerport infrastructure
productivity.
2003 Elsevier Ltd. All rights reserved.
Keywords: Containerport; Containerport productivity; Infrastructure; Data envelopment analysis; Tobit

1. Introduction
The existence of systemic unproductive infrastructure in North American seaports serving
containerized trade, i.e. containerports, as well as the root causes and magnitude should such a
problem exist, is a question that has been debated for over two decades. 1 Despite this debate,
empirical research addressing this issue is extremely limited. Theorized causes of over investment in seaport capacity are based upon either industry structure, in particular the presence of

Corresponding author.
E-mail addresses: hturner@rhsmith.umd.edu (H. Turner), rwindle@rhsmith.umd.edu (R. Windle), mdresner@
rhsmith.umd.edu (M. Dresner).
1
Hershmann et al. (1978), De Neufville and Tsunokawa (1981), National Research Council (1986), Hayuth (1988),
Heikkila (1990), James (1991), Slack (1993), MARAD (1994), Heaver (1995), Burke (1996), Mongelluzzo (1996, 1997,
1998), Fleming (1997), and USDOT (1998).
1366-5545/$ - see front matter 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tre.2003.06.001

340

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

economies of scale and/or location and the lumpiness of capital provision or the conduct of
public port authorities and ocean carriers. 2
We have two goals for this paper. The rst is to measure the growth in productivity of seaport
infrastructure in North America from 1984 to 1997 in order to assess trends in productivity. A
methodology is presented for measuring infrastructure productivity, data envelopment analysis
(DEA), that addresses several problems noted in previous seaport performance research. The
second task of this paper is to explore factors that impact infrastructure productivity. A causal
relationship between infrastructure productivity and industry structure and conduct is theorized
and an appropriate methodology, Tobit regression, is presented as a means of examining the
determinants of infrastructure productivity in seaports.
This study oers signicant contributions for both public policy leaders and a broad range of
managerial decision makers concerned with the productivity of the North American seaport
industry. From a public policy perspective, employing infrastructure productivity as a performance measure addresses allocation of scarce resources and social welfare considerations. In an
industry that receives substantial public nancial support, ecient use of scarce public funds is of
interest. From a managerial perspective, the many public and private managers whose organizations interact at North American seaports clearly would benet from an understanding of
trends in productivity and factors that inuence that productivity. Of particular individual interest
are the factors under which their own organizations may exert as measures of control.

2. Background
Waterborne cargo ows at a seaport are often broken down into various categories based on
the characteristics of the commodities being transported. General cargo is essentially all cargo not
dened as bulk cargo. 3 While manufactured goods are the dominant general cargo, virtually any
cargo can be carried as general cargo. Prior to 1957, nearly all general cargo was transported in
break-bulk vessels, however, since the mid-1970s, most general cargo has been transported in
containers. Containerization refers to the unitization or aggregation of freight into standardized
metal shipping containers. Containerization dramatically reduces labor costs and is considered to
reduce damage rates. In addition, it greatly reduces the time these specially congured general
cargo vessels spend in the seaport as well, as the time containerized freight spends in transit. The
latter savings result from the relative ease of exchange between modes as well as the reduction in
handling of the actual freight. However these savings come only through substantial seaport and
vessel capital investment. In addition, ineciencies and congestion at any point in the system can
greatly reduce the benets.
Marine container terminals may be under the direct control of the port authority or operated as
a franchise granted by the port authority. In the case of the franchise, the operator is either an
2

Regarding structure see: Walters (1976), Bennathan and Walters (1979), De Neufville and Tsunokawa (1981).
Regarding conduct see: De Neufville and Tsunokawa (1981), Slack (1993), Burke (1996), and Fleming (1997).
3
Stopford (1988, p. 185) observes that the range of items transported as general cargo is almost limitless. General
cargo can be carried in the cargo holds of break-bulk vessels or in cargo containers stowed on their decks. However, for
containers, the dominant form of ocean carriage is the fully-cellular containership.

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

341

independent for-prot marine terminal operator (MTO) or an ocean carrier-controlled marine

terminal operator; the latter frequently given the option of operating the assigned marine terminal
as a franchise or as an exclusive service to the controlling carrier. Regardless of which organization manages these operations, longshore labor accomplishes the required work. In most instances, the marine container terminals within the seaport become the foci of the carrier-port
authority relationship (Heaver, 1995). Together these entities comprise a system designed, at least
in theory, to eciently and eectively serve the needs of international shippers. This study will
look exclusively at containerport productivity in North America by focusing on the inputs and
outputs associated with the containerport segment of the maritime industry.

3. Literature review
Despite the signicance of the seaport industry worldwide, relatively few empirical studies have
been conducted, owing in part to the diculty in obtaining reliable comparable data.
Tongzon (1995) conducts a short-term analysis of terminal eciency. His performance measure
is container throughput (twenty-foot equivalent units/year). The author (Tongzon, 1995, p. 248)
nds a signicant correlation between throughput and terminal eciency as the latter is dened as
average number of containers per berth hour. Others have observed this relationship between
output and eciency, including Caves and Christensen (1988) and De Neufville and Tsunokawa
(1981).
Chang (1978) employs multiple regression to estimate a CobbDouglas production function using annual data over a 21-year period for the port of Mobile, Alabama. Gross port
authority earnings are the output employed by Chang, while the port authoritys net assets
and direct labor are the inputs. Chang does not consider stevedore and longshore labor an
input, so that the labor included represents only the direct labor employed by the port authority
itself. 4 Thus the result is more indicative of port authority productivity than overall seaport
productivity.
In a longitudinal study of East Coast port authorities, De Neufville and Tsunokawa (1981) nd
support for the presence of economies of scale in containerports. The authors consider metric tons
of cargo as the seaports output. Inputs are quay length and the number of cranes employed for
the ve US East Coast seaports comprising their sample. The authors argue that these inputs are
proxies for all other inputs including labor, noting that labor is thought to be supplied in proportion to the number of cranes employed. Similarly, quay length is argued to be proportional to
the amount of land dedicated to the marshalling and storage of containers.
Beyond North America, Kim and Sachish (1986) conducted a time-series study of the Port of
Ashdod (Israel) employing a translog cost function and total factor productivity (TFP) measures.
The time period chosen (19661983) straddles the introduction of container handling technology.
The inputs are annual direct labor and seaport capital expenditures with metric tons of general
cargo as the output. The authors nd a signicant contribution to productivity as a result of the

Stevedore refers to the organization whose function is to manage the cargo operations of the terminal. This is
distinct from the longshore labor that is responsible for the physical work of handling cargo.

342

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

adoption of container handling technology at Ashdod. In addition to containerizations impact on

TFP growth, Kim and Sachish (1986) nd support for long run returns to scale.
Sachish (1996), in his study of productivity and its determinants at the Israeli seaports of Haifa
and Ashdod, nds that the volume of activity and capital investment are main inuences on total
productivity. To reach this conclusion, he develops engineering standards that are then used to
derive partial productivity values for each of his 23 observations. These partial productivity
measures are then weighted to allow the calculation of a total productivity value. In a unique
approach, the author employs data envelopment analysis to develop the appropriate weights for
his productivity function. Sachish follows with a linear programming model to determine the
inuence of six explanatory factors, or families, on both partial and total productivity values.
Several of these families are latent variables (constructs). In addition to production volume and
actual capital, Sachish (1996) suggests the number of workers, technological levels,
management quality, and exogenous factors aect partial and total productivity.
Jara-Daz et al. (2002) estimate a multi-output cost function using a exible form and a sample
of 26 Spanish seaports over an 11 year period. Outputs are containerized general cargo, breakbulk general cargo, liquid bulk, dry bulk, and total rent received for leases of port space. Input
prices indices for labor, capital, and an index for other prices incurred in the provision of services.
Capital employed and total dock length are used as measures of seaport size. The authors results
support the presence of economies of scale and scope.
De Neufville and Tsunokawa (1981) describe a saw-tooth production function. Demand for
a containerports services increase eventually reaching the limits of existing capacity. While 100%
utilization of the port authoritys infrastructure is ecient from the ports standpoint, any further
increase in demand results in costly queues for vessels and cargo. In a competitive situation, the
port authority is obliged, if possible, to add capacity. Under such circumstances, a middle-of-thedata approach to estimating a production function may not be as appropriate as a methodology
that estimates the ecient frontier of the production surface such as data envelopment analysis.
Such a methodology has been suggested by Roll and Hayuth (1993) as appropriate in relation to
seaports.
A general conclusion of the literature is that the seaport industry, and the containerport segment in particular, is characterized by economies of scale. This results from the capital intensive
nature of the industry, the presence of indivisibilities in the provision of terminals, and the cost
savings resulting from pooling demand in a system characterized by queues and congestion. 5

4. Methodology
Containerport infrastructure productivity is a key performance measure and is inuenced by
industry structure, conduct and demand. For this reason, this paper has two distinct objectives:
measurement of the trend in infrastructure productivity during the study period; and examination
of the factors that determine infrastructure productivity.

Chang (1978), Bennathan and Walters (1979), De Neufville and Tsunokawa (1981), Bobrovitch (1982), Jansson and
Shneerson (1982), Kim and Sachish (1986), Varaprasad (1986), Heaver (1995), and Turner (2000).

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

343

Sachish (1996) identies several methodologies for measuring seaport productivity: econometric methods; partial productivity indices; accounting methods; data envelopment analysis
(DEA); and engineering approaches. In the words of Charnes et al. (1981) whose methodology,
DEA, is considered: The objective is to measure the eciency of resource utilization in whatever
combinations are present (loose or tight) in the organizations as well as the technologies utilized.
As De Neufville and Tsunokawa (1981) note, short-term productivity analyses of container
terminals may be biased by the impact of short-term uctuations in demand. Bennathan and
Walters (1979, p. 58) add that cross-sectional analyses suer from the lack of comparable port
situations in respect to both trac and geography. It is therefore advisable to adopt a long-term
approach controlling for the impact of changes in industry output and allowing for dynamic
adjustments to conditions of supply and demand. This paper will use a pooled time series/cross
section approach, examining a number of North American ports over a 14 year period.
Oum et al. (1992) review methods employed in recent productivity research contrasting the two
broad methodological approaches to productivity measurement: the nonparametric index number
approach, of which data envelopment analysis is an example; and parametric statistical approaches, i.e. econometrics. Oum et al. (1992) conclude statistical approaches, and specically the
estimation of a parametric cost function based on the translog model, are more common today.
However the authors state that data availability and reliability can inuence the choice of
methodology. When physical, or quantity data is more readily available or deemed more
reliable in comparison to cost data, they note DEA is an appropriate methodology. Oum et al.
(1992, p. 497) observe no major disadvantages come from the nature of the DEA method although they do caution outliers can have a signicant impact on DEA scores.
Thanassoulis (1993) compares regression analysis to data envelopment analysis when performance assessment is the objective. He concludes that DEA is a more accurate method for eciency assessment in that it is a boundary, or frontier, methodology but cautions that it is more
prone to extreme inaccuracies with respect to individual decision making units (DMUs) in
comparison to regression. He notes this is due to the sensitivity of DEA scores to data swings at
the individual DMU level.
Further support for the methodology can be found in Windle and Dresner (1995) who nd data
envelopment analysis used in conjunction with Tobit regression may be as useful as parametric
models, including total factor productivity, for measuring productivity and determining the
sources of gains. The authors recommend Tobit regression to decompose DEA scores into the
various sources of eciency.
Based on the above issues and literature, this paper follows Roll and Hayuth (1993) and
suggests date envelopment analysis be employed to evaluate container port infrastructure productivity during the study period. The data envelopment method, initially presented by Charnes
et al. (1978), encompasses the ecient frontier approach of Farrell (1957). DEA structures the
production process as a constrained optimization problem and solves it using a linear programming approach. The methodology identies those decision making units (DMUs) that are
most ecient and thus species the shape of the ecient frontier as delineated by these units. 6 All

For this eort the DMU is a containerport-year; e.g. Boston-1990.

344

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

DMUs not on the ecient frontier are scored with reference to the hyperplane dened by those
that are located on the frontier. The result is a relative measure of eciency.
When attempting to explain dierences in data envelopment analysis scores through regression
analysis, the dependent variable is continuous but truncated at 1.0. As a result, ordinary least
squares regression is not appropriate, as its use will lead to inconsistent estimates. In such situations, a Tobit regression (Tobin, 1958) is suggested as an appropriate methodology (Maddala,
1983). The base Tobit model is similar to ordinary least squares regression but assumes a truncated normal distribution in place of the normal distribution and employs the maximum likelihood-ratio estimation method.
The general form of the Tobit model to be estimated is:
Infrastructure Productivity
f seaport industry structure; port authority conduct; ocean carrier conduct;
situational factors; control variables:
The dependent variable measuring infrastructure productivity is the DEA score of each port in a
given year.
Seaport industry structure. One possibility for explaining dierences in productivity is the
presence of returns to scale and density. In order to measure returns to scale the sum of twentyfoot equivalent units handled at all container terminals within the seaport during the year of
observation is included in the model. Also included is a second measure of scale: the average
container terminal size at the seaport measured as total containerport twenty-foot equivalent units
(TEU) divided by the number of container terminals at the seaport.
Port authority conduct. It has been noted by Verhoe (1981) that port authorities often pursue
economic development objectives. In the highly competitive environment of the North American
seaport industry, large carriers often seek dedicated terminal leases requiring substantial port
authority investment in terminal capacity (Slack, 1993). This capacity reduces costs for the ocean
carrier, but may increase the ports costs by requiring investments in terminals in excess of economically ecient level. As Varaprasad (1986) and Turner (2000) show, dedicated terminal
leasing to ocean carriers can lead to reduced utilization and productivity and increased total
delays to carriers and cargo. Dedicated leasing also reduces the impact of returns to scale by
eectively creating smaller ports out of the larger whole. Therefore dedicated leasing is hypothesized to be negatively correlated with infrastructure productivity.
Ocean carrier conduct. Based on queuing theory, Jansson and Shneerson (1982) note that the
total cost minimizing berth occupancy rate decreases with increasing vessel size. This has been
supported by other researchers including Talley (1990). Given this, increasing vessel size will lead
to decreasing berth utilization. As Caves and Christensen (1988) note, utilization levels inuence
productivity measurement. For a given level of infrastructure, reduced berth occupancy rates, i.e.
idle capacity, will translate into a gross reduction in infrastructure productivity, all else equal.
However, the relationship between vessel size and productivity is complex in the case of seaports.
As vessel size increases, investment in port facilities could also be expected to increase as management seeks to address the needs of larger vessels. The model employed below controls for both
vessel size and seaport size and thus attempts to disentangle these confounding eects. Thus it is
hypothesized that as average container vessel size increases at a containerport, berth occupancy

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

345

rates decline with infrastructure productivity declines following occupancy rates. Given that the
relationship may not be linear, we include the squared vessel size as an additional variable.
Situational factors. Intermediacy is dened as the ability to serve as an intermediary between
regions (Fleming and Hayuth, 1994). Intermediacy is therefore related to the cost, quality and
capabilities of intermodal services, particularly rail carrier services, at the seaport.
The eect of intermediacy on seaport infrastructure productivity is captured by three variables
dening the quality and capability of each seaports connection to the North American intermodal
network. The rst variable is the existence of sucient overhead clearance to allow use of doublestack railcars on the railroad lines entering the terminal area of the seaport. The second variable is
the sum of class I rail carriers serving the seaport. 7 In the case of terminal railroads intervening
between the seaport and the class I carrier, or carriers, as is the case at several study seaports, the
seaport is still considered to be served by the class I carrier or carriers. The third variable is the
sum of terminal hectares with immediate access to on-dock rail connections divided by total
terminal hectares. For a terminal to be considered as having on-dock rail, the data source or
sources must specically identify the intermodal facility as on-dock.
A nal situational variable included in the model is the harbor approach channel and berth
depth. This is a measure of the maximum draft of vessels entering the harbor. 8 The deeper the
channel, the larger the vessels that can utilize the port.
Control variables. These include other factors that may inuence seaport productivity. One such
factor is longshore labor actions during the study period. Such work stoppages reduce output
during the year of occurrence and may have an impact on carrier and shipper perceptions of the
ports labor. Longshore labor actions are measured as the duration of work stoppage in calendar
days.
Certain vessel types may also inuence the productivity of the seaport. For example, roll-on/
roll-o vessel (ro/ro) operations consume large amounts of land for marshalling trailers and
chassis-mounted containers as well as use of berthing space for vessels, but they make no use of
quayside container gantry cranes as the units are driven on and o the vessels similar to a traditional ferry. Failing to recognize and control for ro/ro operations this could bias results. For the
same reason, failing to account for container barge operations could bias results. In North
America, container barges are commonly employed in feeder services due to their relatively low
operating cost. 9 As a result the percentage of ro/ro arrivals in comparison to total arrivals and the
percentage of feeder services arrivals out of total arrivals are included as control variables.
Another factor that could inuence port productivity is the presence of newer quayside gantry
cranes (QSG) and their capability to serve large vessels. In order to control for this technology the
model includes the average outboard reach of all QSG cranes for each port-year observation. This
is measured in meters from the shoreside to the seaside rail. Additional measures of crane technology such as average lifting capacity in tons, average lift height in meters, average trolley speed
7

Based on Interstate Commerce Commission/Surface Transportation Board classication.

Draft is dened as the distance from the waterline to the lowest point of the vessel; i.e. how deep the water must be
to prevent the vessels grounding on the bottom.
9
Cabotage laws in the US and Canada restrict purely domestic waterborne cargo movements to vessels registered in
the respective country. This has resulted in the low cost but low speed container barge dominating as the vessel of choice
for short-haul feeder services.
8

346

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

Table 1
Variable names and denitions
Type

Variable name

Denition (measure)

Containerport structure

SSIZE

Containerport structure

TSIZE

Port authority conduct

DEDQUAY

Ocean carrier conduct

Ocean carrier conduct
Situation (intermediacy)
Situation (intermediacy)

VSIZE
VSIZE2
ODR
DS

Situation (intermediacy)
Situation

CI
DFT

Situation

LBRRA

Control

FDSVC

Control
Control
Indicator
Indicator

RRSVC
QSGREACH
PORT
YR

Total containerport size (annual twenty-foot

equivalent units)
Average container terminal size (annual TEU/number
of container terminals)
Dedicated terminal infrastructure (dedicate quay/total
quay)
Mean vessel size (TEU slots)
Mean vessel size squared (TEU slots)
ODR (terminal hectares/total terminal hectares)
Double-stack capable (binary variable for DS
clearance into seaport area)
Class I railroads serving seaport
Draft (mean draft of entering vessels at or above
90th percentile)
Labor relations (Sum of labor (ILA/ILWU) strike
days)
Feeder services (container carrying barge arrivals/total
arrivals)
Ro/ro services (ro/ro vessel arrivals/total arrivals
Mean QSG reach (m)
Series of binary variable for seaport of observation
Series of binary variables for year of observation

in meters per second and average hoist speed in meters per second are all highly correlated with
the average maximum outboard reach.
Firm and time dummies are also included in the regression to account for unobserved port and
time eects. Assuming all other relevant variables are included in the model, time dummies
provide a means of assessing the impact of technological change not already specied. Inclusion of
the port dummies control for port specic factors that inuence infrastructure productivity that
are not already specied in the model.
Descriptions of independent variables employed in the estimation of this model are presented in
Table 1. The nal model to be estimated is:
DEAxi b0 C b1 SSIZExi b2 TSIZExi b3 DEDQUAYxi b4 ODRxi b5 VSIZExi
b6 VSIZE2 b7 DSxi b8 CIxi b9 DFT
xi b10 LBRRA
xi b11 FDSVCxi
X
X
b12 RRSVCxi b13 QSGREACHxi
bx PORTx
bi YRi Exi
where x designates seaport; i designates year.

5. Data
Table 2 presents the sample seaports. The selected seaports are the top 26 continental US and
Canadian containerports for 1984 according to American Association of Port Authorities

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

347

Table 2
Study seaports (state/province)
Baltimore (MD)
Boston (MA)
Charleston (SC)
Halifax (NS)
Hampton Roadsa (VA)
Jacksonville (FL)
Montreal (QC)
NY/NJ
Philadelphia (PA)
Saint John (NB)
Savannah (GA)
Wilmington (DE)
Wilmington (NC)
a

Galveston (TX)
Houston (TX)
Miami (FL)
New Orleans (LA)
Port Everglades (FL)
Long Beach (CA)
Los Angeles (CA)
Oakland (CA)
Portland (OR)
San Francisco (CA)
Seattle (WA)
Tacoma (WA)
Vancouver (BC)

Includes Newport News, Norfolk, and Portsmouth, VA.

(AAPA) data. Four of the study seaports are Canadian and the remaining 22 are US seaports. In
1984 these 26 containerports accounted 94.1% of the total North American continental
throughput measured in twenty-foot equivalent units for containerized waterborne commerce,
and in 1997 for 90.7%. The Canadian share of TEU output ranged from a low of 7.9% in 1992 to a
high of 9.4% in 1988.
The period chosen for this investigation (19841997) is driven not by convenience but by
regulatory changes in the environment. It lies between two signicant regulatory acts; the Shipping Act of 1984 and the Ocean Shipping Reform Act of 1998. 10 These regulatory reforms, in
combination with US surface freight transportation deregulation, the introduction of new
intermodal railcar technology, the increasing emphasis on logistics cost control, and the liberalization of trade and transport barriers in North America have signicantly altered the competitive
environment faced by North American seaports (USDOT, 1990; Slack, 1993).
The data envelopment analysis model requires selection of inputs and outputs appropriate to
the research question being investigated. For this eort, inputs were restricted to physical measures of containerport infrastructure and outputs to those produced by this infrastructure. The
most notable factor omitted is longshore labor. However, following De Neufville and Tsunokawa
(1981), longshore labor hours are excluded as an input under the assumption that dierences in
labor productivity between North American seaports are minimal, owing to standardized collective bargaining agreements that establish longshore labor gang size and related work rules.
For each port-year, inputs to the data envelopment analysis model were total terminal land
dedicated to container operations, total quayside container gantry cranes, and total container
berth length. Total twenty-foot equivalent units handled was used as the measure of output. While
consideration was given to dening two outputs (TEU and short-tons), preliminary analysis
found that these two outputs were signicantly and highly correlated. TEU was considered to be

10

Formally known as Public Law No. 98-237An Act to Improve Ocean Commerce Transportation Systems of the
United States.

348

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

Table 3
DEA variable descriptive statistics
Output (TEU)
Quay length (m)
Terminal land (ha)
Container cranes (number)

Number of cases (N )

Minimum

Maximum

Mean

Standard deviation

360
360
360
360

5553
254
20
1

3,504,803
9050
572
52

622,376
2624
150
12

644,943
1950
129
11

superior to short-tons because short-tons would capture cargo activity but not the additional use
of resources required to handle empty containers. Given this and the fact that a larger sample size
was possible when TEU was the only output, a single-output (TEU) DEA model was chosen. 11
Table 3 contains descriptive statistics on both input and output variables used in the data
envelopment analysis model. In order to evaluate the DEA model, individual containerport input
and output data as described above were required for the study seaports. Annual twenty-foot
equivalent unit output totals were obtained from the American Association of Port Authorities
(AAPA) for all study containerports throughout the study period. These data are self-reported for
all major North American containerports and published by the AAPA on its web site. 12 In
addition to the output measure, AAPA data were used to construct seaport size and, in conjunction with the terminal data described below, average terminal size.
Data on terminal inputs (hectares and meters of quay) needed to calculate data envelopment analysis scores were obtained from annual editions of Containerization International Yearbook (CIY). 13 This data set has been used in previous published research (Fleming and
Hayuth, 1994; Fleming, 1989, 1997; Vandeveer, 1998) and has been shown to be accurate and
reliable.
The major data sources were supplemented by a number of other sources. Detailed data on
quayside gantry cranes, used to construct the QSG reach variable were obtained directly from the
researcher supplying CIY. 14 These data were collected through annual surveys and interviews
with port authority administrators. Regarding the double stack and class I rail variables, Landside
Access to US Ports (National Research Council, Transportation Research Board, 1993) and
various editions of the US Corp of Engineers Port Series were used in addition to CIY. Where
specic terminal or rail service questions remained unresolved, a structured content analysis
search of an automated database services was employed. The seaport industry was well covered
during the study period by a handful of trade publications (Trac World, The Journal of Commerce, and American Shipper) that were accessed through this service. This approach was particularly useful in identifying double-stack services. Archives of these searches were created and
are available for reference.
In addition to these data, the Tobit model estimation required data on ocean carrier operations
including container vessel, roll-on/roll-o, and barge arrivals as well as slot capacity of the

11
12
13
14

Containerized cargo data before 1990 was not available.

www.aapa-ports.org.
National Magazine Co., Ltd., London.
Andrew Foxcroft, London.

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

349

container vessels. The US Maritime Administration (MARAD) provides detailed data on vessel
arrivals in US seaports, including the vessel name, the date of entry, the type of vessel (container,
ro/ro, etc.), draft, registered net and gross tonnages, and indicators identifying the vessels last
port of call (domestic or foreign) including the country if the arrival is from a foreign seaport or
the US Port District if the last port was domestic. 15 Various annual issues of Containerization
International Yearbook were used to identify the slot capacities of vessels based on the names of
the vessel provided in the MARAD data set. With these data, the average container vessel size in
slots was constructed by matching each port-years list of arriving vessels with the vessel slot
capacity data yielding a vessel size for each port-year. The draft variable was also constructed
from these data by capturing each vessels draft as reported at the time of arrival and, based on
these data, calculating the draft at the 90th percentile for each port-year.
Given 26 seaports studied over a 14-year period, the maximum sample size would be 364
observations. However, data availability aected the actual sample size. For the model, and any
variations on the model, missing data within an observation resulted in the exclusion of that
observation from the sample. For data envelopment analysis scores, Wilmington (DE) was not
included for the years 19841987 as the seaport had no quayside gantry cranes during this period.
For the four Canadian seaports (Halifax, Saint John, Montreal, and Vancouver), no data on
vessel arrivals were obtained for the entire study period. Thus average vessel size, draft, feeder
services, and roll-on/roll-o services variables had missing values for these four seaports reducing
the sample that could be employed in the Tobit regression model by 56. Similarly, for US seaports, data on vessel arrivals was not available for years prior to 1987. This further reduced the
Tobit sample by 66. Thus the maximum sample for the Tobit model was 242. Given that there was
no DEA score for Wilmington (DE) in 1987 as noted, the actual sample size for the Tobit
regression was 241.

6. Results
Fig. 1 provides a graphical representation of the growth of output and the three inputs for
North American ports. Looking at the totals, it is clear that output has grown at a faster rate than
any of the three containerport inputs. Clearly productivity has improved over this time period and
resulted in a reduction of the excess capacity problem.
As Fig. 2 shows, the results for the three regional groupings varies. Productivity at the Gulf
Cost ports rose steeply from 1992 to 1997. The West Coast ports showed a steady improvement in
productivity across the entire sample period. The East Cost ports were the worst performing
subgroup with growth in output falling below the growth in all three inputs from 1984 to 1993. It
was only in the last four years of the sample period that growth in output accelerated for the East
Coast ports to a pace faster than input growth.
With this evidence, we can state unequivocally that during the study period gross infrastructure
productivity rose on average for North American containerports. This growth is likely a combined
eect from both improved capacity management (i.e. fewer unused inputs) and improvements

15

Registered net and gross tonnage are measures of cargo carrying capacity and vessel size respectively.

350

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

2.20

2.00

1.80

1.60

1.40

1.20

1.00

0.80
1984

1985

1986

1987

1988
TEU

1989

1990

Hectares

1991

1992

QSG Cranes

1993

1994

1995

1996

1997

Quay (m)

Fig. 1. Input and output trends, North America.

in operational eciency (i.e. more ecient use of inputs). Since it is not possible to separate these
impacts using trend analysis, a regression analysis is warrented.
The parameter estimates from the Tobit regression are presented in Tables 4 and 5. Table 4
includes the primary model variables and Table 5 presents the parameter estimates for the year
and port binary variables. The year variable for 1987 and the port variable for Baltimore have
been omitted from the model to prevent perfect collinearity in the model estimation.
Seaport industry structure. The parameters associated with containerport size and terminal size
are both signicant (p < 0:001) and positively correlated to the dependent variable as hypothesized.
Containerports, therefore, exhibit returns to scale. Larger containerports are more ecient producers, supporting the ndings of De Neufville and Tsunokawa (1981) and Kim and Sachish (1986).
Port authority conduct. The parameter estimate associated with dedicated terminal capacity
(DEDQUAY) is insignicant (p 0:999) for the sample. Based on the sample, port authority
conduct with respect to this aspect of leasing policy is not a signicant inuence on infrastructure
productivity. This lack of signicance could indicate that dedicated terminals are operated in
much the same manner as other terminals. It is also plausible that dedicated terminals benet
from more ecient scheduling resulting from a higher degree of operational control exercised by
the leasing carrier thus osetting the negative relationship hypothesized above. Given the proliferation of carrier alliances, particularly toward the end of the study period, it is possible that the
controlling carrier further exploits its ability to coordinate schedules with alliance partners in a
terminal sharing arrangement. This is particularly likely given the use of minmax leases that
encourage maximization of throughput by the carrier.

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

351

1.0000

0.9000

0.8000

0.7000

0.6000

0.5000

0.4000
1984

1985

1986

1987

1988

1989

1990

NA

East

1991
Gulf

1992

1993

1994

1995

1996

1997

West

Fig. 2. DEA trends.

Table 4
Parameter estimates
Variable

Coecient
estimate

Standard
error

t-Statistic

P -value

Constant
Container port size (millions of TEU)
Terminal size (millions of TEU)
Dedicated container port quay/total quay
On-dock rail (hectares with access/total terminal
hectares)
Vessel size (thousands of TEU slots)
Vessel size squared (millions of TEU slots)
Double-stack clearance
Class I railroads (number)
Draft (mean of vessel at or above 90th percentile
in feet)
Labor strikes (duration in days)
Feeder services (container carrying barges/total
arrivals)
Ro/ro service arrivals/total arrivals
Mean container crane reach (m)

)0.199
0.196
0.900
)0.000
)0.070

0.249
0.030
0.072
0.106
0.027

)0.800
6.520
12.444
)0.001
)2.607

[0.424]
[0.000]
[0.000]
[0.999]
[0.009]

0.271
)0.050
)0.025
0.137
)0.005

0.076
0.019
0.022
0.017
0.003

3.585
)2.584
)1.156
8.330
)1.531

[0.000]
[0.010]
[0.248]
[0.000]
[0.126]

0.001
0.279

0.003
0.253

0.303
1.104

[0.762]
[0.270]

)0.533
)0.028

0.343
0.005

)1.553
)5.170

[0.120]
[0.000]

352

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

Table 5
Parameter estimates for year and port dummies
Variable

Coecient estimate

Standard error

t-Statistic

P -value

YR88
YR89
YR90
YR91
YR92
YR93
YR94
YR95
YR96
YR97
Boston
Charleston
Galveston
Houston
Hampton Roads
Jacksonville
Los Angeles
Long Beach
Miami
New Orleans
New York, NJ
Oakland
Port Everglades
Philadelphia
Portland
Savannah
Seattle
San Francisco
Tacoma
Wilmington, DE
Wilmington, NC

)0.013
)0.026
)0.022
)0.013
0.009
0.013
0.001
0.003
)0.015
0.014
0.086
0.046
)0.503
)0.189
0.048
0.101
)0.145
)0.212
0.251
)0.386
)0.361
)0.128
0.602
)0.025
)0.124
)0.098
0.067
0.006
0.337
0.553
)0.116

0.019
0.020
0.020
0.020
0.021
0.021
0.022
0.023
0.025
0.027
0.045
0.036
0.062
0.063
0.034
0.035
0.071
0.062
0.049
0.081
0.066
0.064
0.049
0.047
0.043
0.045
0.057
0.044
0.053
0.065
0.039

)0.677
)1.326
)1.095
)0.628
0.457
0.625
0.024
0.133
)0.589
0.525
1.905
1.261
)8.054
)3.008
1.419
2.861
)2.046
)3.422
5.117
)4.746
)5.463
)2.008
12.398
)0.545
)2.897
)2.205
1.171
0.137
6.404
8.521
3.005

[0.498]
[0.185]
[0.273]
[0.530]
[0.648]
[0.532]
[0.981]
[0.894]
[0.559]
[0.599]
[0.057]
[0.207]
[0.000]
[0.003]
[0.156]
[0.004]
[0.041]
[0.001]
[0.000]
[0.000]
[0.000]
[0.045]
[0.000]
[0.586]
[0.004]
[0.027]
[0.242]
[0.891]
[0.000]
[0.000]
[0.003]

Ocean carrier conduct. The mean capacity of container vessels calling on the port is associated
with increased infrastructure productivity. The relationship is signicant (p < 0:001). This nding
is surprising and contradicts the literature based on queuing theory (Jansson and Shneerson,
1982) which holds that the optimal (total cost minimizing) berth occupancy rate declines as vessel
size increases. In reality, more ecient containerports may attract larger vessels owing to the
diseconomies of scale these large vessels experience in port (Talley, 1990). This is intuitively
appealing and must be considered as a valid explanation. It is also possible that there are both
economies and diseconomies to the port of dealing with larger vessels. The economies occur as a
result of dealing with fewer ships, but diseconomies occur as the result of an increase in capacity
to handle larger ships. It may also be the case that economies of vessel size are nonlinear, so that
diseconomies set in for very large ships. This result is supported by the signicant (p 0:01) and
negative sign for the squared vessel size variable.

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

353

Situational factors. The parameter associated with double-stack capabilities is insignicant

(p 0:248). It can be concluded that while double-stack clearance into the terminal area is a key
marketing tool for containerports, a direct impact on containerport infrastructure productivity in
North America was not realized during the study period.
The parameter associated with the number of class I railroads serving the port is both positive
and signicant (p < 0:001). For the sample, the greater the number of class I railroads serving the
seaport, the greater the productivity of the containerport infrastructure. This is clear support for
the importance of rail service quality, perhaps including frequency of service, and rail service
competition, to the success of containerports. A point that port authority management frequently
stresses.
Contrary to the hypothesis stated above, the coecient associated with on-dock rail (ODR) is
negative and signicant (p 0:009). In the sample, the greater the share of terminal capacity
served by on-dock rail, the less productive the containerport infrastructure. On-dock rail facilities
consume terminal land for staging cars and assembling/breaking trains. Based on the results of the
model, it is possible that any productivity gains from shiprail exchange within terminals are not
sucient to oset the investment in the additional land required to support these facilities.
The parameter associated with draft is not signicant (p 0:126), although the sign is unexpectedly negative. Further investigation of the data suggest draft could be inuenced by an
outlier. The port of Philadelphia exhibited extreme values on the high end of the range in 1990,
1991, 1995, 1996, and 1997. It is possible that data on vessel draft for the port of Philadelphia, and
other ports as well, includes the draft of liquid and dry bulk cargo vessels arriving at anchorage
and partially discharging onto barges at that anchorage (a process known as lightering) before
proceeding to the berth.
The parameter associated with longshore labor relations is insignicant (p 0:762). Labor
actions have had no systemic eect on infrastructure productivity in the sample. Given the relative
infrequency and short duration of wildcat strikes and the fact that the few multi-port strikes that
did occur were of short duration, this is not surprising. Whatever impact labor relations have on
productivity, the impact is likely local and captured in the port binary variable.
Control variables. The ratio of container carrying barge arrivals to total arrivals is included
in the model to control for the potential but uncertain impact of feeder operations on inputs
and outputs. Since feeder services most often use the same containerport assets as container
vessels themselves, and their output is included in that of the containerport, omission would
clearly lead to a bias. However the coecient for feeder services is insignicant (p 0:270)
suggesting such operations neither contribute nor detract from infrastructure productivity in the
sample.
Unlike feeder services, an a priori assumption regarding the impact of roll-on/roll-o services
on infrastructure productivity is possible. For containerports having a high proportion of total
arrivals attributed to roll-on/roll-o vessels, it was speculated that data envelopment analysis
scores would be higher. The output of ro/ro services are often included in the twenty-foot
equivalent unit output for the containerport but these vessels do not require quayside gantry
cranes to load and discharge. Thus one of the inputs employed in the date envelopment models is
not required to produce the output. Failure to control for this would surely bias the results in
favor of containerports with high ro/ro volumes. Although positive, the coecient for ro/ro
services, was not signicant (p 0:12).

354

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

The reach of quayside gantry cranes, a proxy for improvements in QSG crane technology, was
expected to be positively correlated with the dependent variable. However, the coecient is
negative and signicant (p < 0:001). This seems to be the result of a correlation between the reach
of QSG cranes and the number of cranes at containerports. The number of cranes represents an
increase in the inputs of a containerport and therefore would be associated with a decline in
productivity, holding output constant. Since virtually all new cranes have a larger reach than old
cranes, and since old cranes do not disappear when new cranes are purchased, the increase in
reach is positively associated with the number of cranes. A model that includes the number of
cranes in the specication results in an insignicant coecient in the reach variable.
The year binary variables are all insignicant. Recall that 1987 is the base year. This suggests
that the other variables in the model have adequately explained the observed positive trend in data
envelopment analysis scores during the period 19871997 and that no particular events associated
with specic years during this period have signicantly inuenced the trend in the dependent
variable.
Many of the port specic binary variables are signicant. The fact that both positive and
negative signs were observed suggests that port specic factors, not already specied in the model,
inuence infrastructure productivity. These factors probably include the productivity of local
labor and the eectiveness of port authority administration and policies, including decisions
regarding the timing of additions to capacity.

7. Conclusion
As with many other research eorts, this study concludes size matters. The implications are
clear for policy makers. It may not be wise to invest public funds in small facilities at small
seaports without a clear commitment from carriers and shippers to utilize the facility and
encourage expansion. Without such commitments, investments are unlikely to attain sucient
volumes to recover costs, particularly in the face of competition from larger seaports.
Regarding rail service, the longstanding relationship between seaports and the rail industry
appears to remain a critical determinant of containerport infrastructure productivity. This study
found greater numbers of railroads serving a port are correlated with increased port productivity.
Unfortunately, rail service is a factor seemingly beyond the control of seaport management.
Eorts to increase rail competition may be challenging but the eort is well warranted from the
perspective of the port authority and those concerned with the economies they serve. Further,
while investment in on-dock rail facilities may attract large carriers to the containerport, there is
no evidence in this study that these facilities make productive use of the land required to support
them.
By employing data envelopment analysis as its measure of infrastructure productivity, this
paper has addressed numerous methodological hurdles presented by industry characteristics and
data limitations. The addition of Tobit regression has allowed investigation and identication of
key factors impacting containerport infrastructure productivity during the study period. The effort supports the presence of economies of scale as has been observed in other eorts using a
variety of approaches to productivity measurement. By examining the inuence of port authority,
ocean carrier and rail carrier conduct on containerport productivity, valuable guidance is pro-

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

355

vided for those with managerial and policy interests directed at improving the performance of this
complex and critical system.

References
Bennathan, E., Walters, A., 1979. Port Pricing and Investment Policy for Developing Countries. Oxford University
Press, Oxford.
Bobrovitch, D., 1982. Decentralized planning and competition in a national multi-port system. Journal of Transport
Economics and Policy (January), 3142.
Burke, J., 1996. Field of dreams or prudent investment: just how much port capacity is enough? Trac World (March
25), 31.
Caves, D., Christensen, L., 1988. The importance of economies of scale, capacity utilization, and density in explaining
interindustry dierences in productivity growth. Transportation and Logistics Review 24 (1), 332.
Chang, S., 1978. Production function, productivities, and capacity utilization of the port of mobile. Maritime Policy
and Management 5, 297305.
Charnes, A., Cooper, W., Rhodes, E., 1978. Measuring the eciency of decision making units. European Journal of
Operational Research 2, 429444.
Charnes, A., Cooper, W., Rhodes, E., 1981. Evaluating program and managerial eciency: an application of data
envelopment analysis to program follow through. Management Science 27 (6), 668697.
De Neufville, R., Tsunokawa, K., 1981. Productivity and returns to scale in container ports. Maritime Policy and
Management 8 (2), 121129.
Farrell, M., 1957. The measurement of productive eciency. Journal of the Royal Statistical Society 120 (3), 25281.
Fleming, D., 1989. On the beaten track: a view of US West-Coast container port competition. Maritime Policy and
Management 16 (2), 93107.
Fleming, D., 1997. The meaning of port competition. Paper presented at the Plenary Session of the International
Association of Maritime Economists conference, London, September 22, 1997.
Fleming, D., Hayuth, Y., 1994. Spatial characteristics of transportation hubs: centrality and intermediacy. Journal of
Transport Geography 2 (1), 318.
Hayuth, Y., 1988. Rationalization and deconcentration of the US container port system. The Professional Geographer
40 (3), 279288.
Heaver, T., 1995. The implications of increased competition among ports for port policy and management. Maritime
Policy and Management 22 (2), 125133.
Heikkila, E., 1990. Structuring a national system of ports. Portus, 1923.
Hershmann, M., Goodwin, R., Rootstalk, A., McCrea, M., Hayuth, Y., 1978. Under New Management. Division of
Marine Resources, University of Washington, Seattle.
James, R., 1991. Privatization and consolidation seen as answers for ailing ports. Trac World (September 30), 27.
Jansson, J., Shneerson, D., 1982. Port Economics. MIT Press, Cambridge, MA.
Jara-Daz, S., Martnez-Budra, E., Cortes, C., Basso, L., 2002. A multioutput cost function for the services of Spanish
ports infrastucture. Transportation 29, 419437.
Kim, M., Sachish, A., 1986. The structure of production, technical change and productivity in a port. The Journal of
Industrial Economics 35 (2), 209223.
Maddala, G., 1983. Limited-dependent and Qualitative Variables in Econometrics. Cambridge University Press.
MARAD, 1994. Public Port Financing in the United States. US Maritime Administration, Washington, USDOT.
Mongelluzzo, B., 1996. Whispers of overcapacity dog US ports. Journal of Commerce (14 February), 1A.
Mongelluzzo, B., 1997. Ports, lines seen building too big. Journal of Commerce (11 February), 1B.
Mongelluzzo, B., 1998. West coast ports push for even larger terminals. Journal of Commerce (11 December), 1A.
National Research Council, Marine Board, 1986. Improving Productivity in US Marine Container Terminals. National
Academy Press, Washington, DC.
National Research Council, Transportation Research Board, 1993. Landside Access to US Ports. US Department of
Transportation, Maritime Administration, Washington, DC.

356

H. Turner et al. / Transportation Research Part E 40 (2004) 339356

Oum, T., Tretheway, M., Waters II, W.G., 1992. Concepts, methods and purposes of productivity measurement in
transportation. Transportation Research A 26A (6), 305493.
Roll, Y., Hayuth, Y., 1993. Port performance comparison applying data envelopment analysis (DEA). Maritime Policy
and Management 20 (2), 153161.
Sachish, A., 1996. Productivity functions as a managerial tool in Israeli ports. Maritime Policy and Management 23 (4),
341369.
Slack, B., 1993. Pawns in the game: ports in a global transportation system. Growth and Change 24 (Fall), 579588.
Stopford, M., 1988. Maritime Economics. Unwin Hyman, London.
Talley, W., 1990. Optimal containership size. Maritime Policy and Management 17 (3), 165175.
Thanassoulis, E., 1993. A comparison of regression analysis and data envelopment analysis as alternative methods for
performance assessments. Journal of Operational Research Society 44 (11), 11291144.
Tobin, J., 1958. Estimation of relationships for limited dependent variables. Econometrica 26 (1), 2436.
Tongzon, J.L., 1995. Determinants of port performance and eciency. Transportation Research A 29a (3), 245252.
Turner, H., 2000. Evaluating seaport policy alternatives: a simulation study of terminal leasing policy and system
performance. Maritime Policy and Management 27 (3), 283301.
US Department of Transportation, 1990. Double stack container systems: implications for US railroads and ports,
Task I report double-stack status. June 1980.
US Department of Transportation, 1998. The impacts of changes in ship design on transportation infrastructure and
operations. Oce of Intermodalism. February 1998.
Vandeveer, D., 1998. Port productivity standards for long-term planning. Ports 98, ASCE.
Varaprasad, N., 1986. Optimum port capacity and operating policies: a simulation study. Transport Policy and
Decision Making 3, 297312.
Verhoe, J., 1981. Seaport competition: some fundamental and political aspects. Maritime Policy and Management 8
(1), 4960.
Walters, A., 1976. Marginal cost pricing in ports. The Logistics and Transportation Review 12 (3), 99144.
Windle, R., Dresner, M., 1995. A note on productivity comparisons between air carriers. The Logistics and
Transportation Review 31 (2), 125134.