EXAMINING THE IMPACTS OF GLOBALLY FRANCHISED OPERATORS (GFOS) ON PORT EFFICIENCY

This study estimates impacts of the container production of Globally Franchised Operators (GFOs) on port efficiency. Based on different institutional origins and features, GFOs are classified as Global Stevedores (GS), Global Hybrids (GH), and Global Carriers (GC). Do these different GFO institutions result in their different strategies, creating various impacts on port efficiency? Both crane efficiency and technical efficiency of ports are evaluated to address the question. Technical efficiency is measured through Tiered Data Envelopment Analysis (TDEA). By wrapping successive frontiers around the sets of ports, the TDEA procedure generates seven different peer groups based on technical efficiency levels. The peer groups and DEA scores of ports were examined in relation to levels of participation by different types of GFOs in container production. While GFOs do not necessarily outperform local operators, in general, different types of GFO institutions produce different impacts on port efficiency. The participation of GS in the terminal operation of a port induces higher crane efficiency. Yet this efficiency is not effectively transformed into a port level efficiency. This is related to the GS’s intensive utilization of ship-to-shore gantry cranes, while the landside operation is greatly influenced by different regional practices and hinterland distribution networks. In contrast, many carrier-controlled global operators and dedicated leased terminals do not produce the same efficiency levels as other GSs do. This is partly because their major incentive to participating in terminal operation is to secure accessibility to key regional port facilities. This analysis implies that port authorities may opt to increase levels of intra-port competition to address efficiency concerns and maintain low container charges at a port level.