Assessing the role of port efficiency as a determinant of maritime transport costs: evidence from Canada

Abstract

The primary objective of this paper is to determine the role of port efficiency in determining a port’s associated maritime transport costs using direct and disaggregate measures, such as average truck turnaround time, berth utilization, and vessel turnaround time. Ports are complex places difficult to characterize by a single measure of efficiency. Port efficiency is better assessed by measuring the performance of a port’s constituent activities. Prior studies on port efficiency have primarily relied on indirect and aggregate measures of port efficiency, such as scores from the World Economic Forum’s Global Competitiveness Report or from data envelopment analysis. In the work presented herein, 11 port utilization indicators, collected over 6 years at Canada’s three leading container ports (Vancouver, Montreal, and Halifax), are used to econometrically estimate the unique impact and elasticity of each indicator on import and export container freight rates. Results suggest that higher berth utilization, longer truck turnaround times, longer container dwell times, and longer vessel turnaround times are associated with higher container freight rates (with elasticities ranging from 0.05 to 0.49). On the other hand, higher container throughputs, more vessel calls, and more containers, loaded and unloaded, per vessel are associated with lower container freight rates (with elasticities ranging from −0.07 to −0.53).