THE EFFICIENCY OF MAJOR PORTS UNDER LOGISTICS RISK IN NORTHEAST ASIA

Abstract

In this paper, we present an empirical study on the efficiency of the major ports in Northeast Asia. To become the global hub in a newly emerging Northeast Asian logistics network, the efficiency of the ports and their success factors are important for sustainable development. Thus, the comparison of port efficiency may shed light on this rapidly changing and thus very risky logistics network in Asia. The paper analyzes empirical results on the efficiencies of major ports by applying the generally acceptable methodology of data envelope analysis (DEA) and its variant models. In our empirical results, most of ports showed the stronger position in pure efficiency, but weak position in scale efficiency. It implies that the promotion policies to become a hub under the rapidly changing logistics network should be based on the operational innovation such as the effective governance by the anchor companies or strategic alliances with global partners. So the paper strongly requests that the government should focus on the governance, instead of the infrastructure or facility to avoid the operational risks under the rapidly changing logistics network. Therefore, all the seaports should have sustainable development strategies that adapt to technological change. This paper concludes that the scale- or supply-oriented policies should be changed to emphasize more the governance of port operations. Also, the paper concludes that investment in infrastructure does not improve efficiency; rather self-created logistics demand and strategic alliances, such as anchor companies, do improve the efficiency as demonstrated by the Tobit model.