The Productive Efficiency of Container Terminals
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BOOK REVIEW The Productive Efficiency of Container Terminals. By D-W. Song, K P B Cullinane, and M. Roe (Ashgate Publishing Ltd, Aldershot, 2001), pp. viii + 249, ISBN 0 7456 1639 8. doi:10.1057/palgrave.ijme.9100047 The authors have sought to produce a book for which the objectives are to: . . .
Critically review the characteristics of international port privatisation along with the economic theory of privatisation; Introduce a novel method for efficiency measurement which is applicable to the port industry; and Assess policy implications for the Korean government and port authority.
A recently developed econometric method for efficiency measurement known as the `frontier production function model' is employed as an analytical tool to determine whether or not port privatisation has improved the efficiency of Korea's port industry. The book begins by providing a useful overview of Korean economic development, culminating in the `near financial catastrophe' in 1997/1998 during the Asian economic crisis. This is followed by a very detailed analysis of the Korean port industry which highlights the significance of the container terminal sector to the national economy. However, according to the authors the container terminal sector, suffering from acute capacity and congestion problems, has been generating a negative influence on the national economy. One interesting statistic quoted related to the fact that almost 16 ships out of every 100 arriving at Pusan have to wait more than 12 hours for a berth. The average wait for a container berth was in some instances far in excess of this. The desire by lines to have their own dedicated berths in order to overcome this congestion is becoming more evident, albeit with `national lines' appearing to receive preference over other carriers (not that this has helped Hyundai much, given the recent disposal of its terminal interests). Since 1998 greater emphasis has therefore been placed on bringing in private sector investment in new port capacity. In tackling the issue of privatisation, the authors have first elected to analyse privatisation theory in general, followed by a more focused investigation of privatisation as it relates to seaports. In both quests they succeed admirably. In the first instance, all relevant theories (eg competitive markets, market failure, public goods, inefficiencies of the public sector etc.) are considered, with
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emphasis placed on the objectives and methods of privatisation, especially in regard to the UK experience, reflecting the fact that the latter rather led the field in relation to the modern doctrine (in ideological as well as in practical terms). The book then provides a very good analysis of port privatisation theory and practice. Critical in this regard is the clear distinction between port ownership and port operation, as well as the different types of port services which can be undertaken by either private or public sector entities. The emphasis then changes, with an empirical estimation of the productive efficiency o
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