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MD
46,10 National port competitiveness:
implications for India
Yen-Chun Jim Wu
1482 Department of Business Management, National Sun Yat-Sen University,
Kaohsiung, Taiwan
Chia-Wen Lin
Department of Logistics Management,
National Kaohsiung First University of Science & Technology,
Kaohsiung County, Taiwan

Abstract
Purpose – The purpose of this study is to perform an international comparison of logistics/port
operations with a main focus on India.
Design/methodology/approach – Using data from the transportation and freight service industry
during 2000-2005, this study first conducts revealed comparative advantage (RCA) analysis to
investigate India’s logistics competitiveness and then uses data envelopment analysis (DEA) to
analyze the efficiency of India’s container port operations.
Findings – The study’s findings suggest that in terms of India’s logistics competitiveness, its freight
industry is relatively competitive while its transportation industry is not. Overall, while the study
indicates that India’s largest container port (Jawaharlal Nehru) is not very efficient; the RCA analysis
shows that India still has a relative comparative advantage over its industrialized counterparts except
for Japan and France in the transportation service industry. Interestingly, the DEA results also
indicate that the efficiency value of the container port in India is second only to the US port of Los
Angeles among the ports examined in industrialized countries.
Research limitations/implications – RCA indicators are only able to examine past and present
industry conditions based on export results, and do not provide a detailed explanation of the reasons
for changes in levels of competitiveness. As for DEA analysis, this study focused only on land and
equipment as input variables primarily because of a lack of data on worker efficiency. It is suggested
that there is an urgent need for an overhaul of port equipment if India wants to accommodate the
growing volume of imports and exports in the future.
Originality/value – This paper provides a first step toward gaining insights into India’s current
logistics/port competitiveness position in comparison with other emerging markets and advanced
economies. This paper also contributes to providing a better understanding of the competitiveness of
emerging economies (BRICs & Next 11), which are viewed as rising stars and have not yet been fully
investigated in the existing literature. Several recommendations are also provided.
Keywords Competitive strategy, Emerging markets, Transport industry
Paper type Research paper

Management Decision
Vol. 46 No. 10, 2008
pp. 1482-1507
q Emerald Group Publishing Limited
0025-1747
DOI 10.1108/00251740810920001
1. Introduction
The BRIC’s (Brazil, Russia, India and China) have three common characteristics –
plentiful natural resources, relatively young populations and large land areas – that
have prompted economic analysts to group them together as countries that will have a
Research grant support from National Science Council of Taiwan (NSC 97-2511-S-110-006-MY2)
is gratefully acknowledged.
profound effect on the global economy in the future. Economists suggest they will National port
assume major roles in the energy, natural resource and capital resource markets to one competitiveness
day become the world’s leaders in manufacturing and consumption. Another set of
developing countries, “The Next Eleven (N-11),” was viewed as having great economic
development potential that could rival or even surpass the BRICs (O’Neill et al., 2005).
The 11 were South Korea, Indonesia, Vietnam, the Philippines, Pakistan and
Bangladesh in Asia, Nigeria and Egypt in Africa, Mexico in North America, Iran in the 1483
Middle East, and Turkey. The study estimated that by 2050, the combined GDP (gross
domestic product) of the N-11 would equal that of one United States or four Japans.
Aware of these economic development trends, many multinational companies have
made these emerging markets such as the BRICs their primary investment destinations
(Zhang, 2007), with an eye to cutting production and labor costs and gaining a decisive
competitive advantage. That in turn is sure to spur the development of the logistics
sector in those countries. Time-based competition strategies aligned to logistics can
help firms respond more quickly to the different needs of customers located around the
global (Tammela and Canen, 2008). Logistics is an important component of a nation’s
economy since it affects productivity, distribution efficiency, interest rates, energy
availability and energy costs (Razzaque, 1997). The experiences of developed
economies such as those in Europe, the United States and Japan illustrate that
countries’ logistics industries grow more prominent and achieve a larger scale the more
economically developed countries become. Following China’s rise, India will emerge as
a new economic power, and the scale of its logistics sector will inevitably expand as a
result.
India today spends about 14 percent of its US$691 billion GDP on logistics, and
transportation accounts for 35 percent of the country’s logistics costs (Ujjainwala,
2008). During the last decade, total transport demand in India has grown at 10 percent
a year. India’s domestic transport system, however, has serious deficiencies, with
services that are, by international standards, highly inefficient, and this deficient
system has become a major barrier to economic growth (Langley et al., 2007).
A recent report by the Asia Development Bank (ADB, 2007) noted that based on
current trends, 2 billion tons of cargo will pass through Indian ports in 2015-2016, or
250 percent more than the 569 million tons handled in 2005-2006. It is anticipated,
therefore, that the volume of goods entering and leaving India’s ports will increase
dramatically, meaning that the capacity and efficiency of those ports cannot be
overlooked and should be made a priority before the ports’ facilities are overwhelmed.
While scholars have devoted considerable research to the question of how to
measure a nation’s competitiveness, without ever coming to an agreed definition
(Krugmam, 1996; Jusoh and Parnell, 2008; Kao et al., 2008), some scholars have
emphasized that port efficiency is an important factor for a nation to gain an
international competitive advantage (Tongzon, 1989; Chin and Tongzon, 1998). As
most of any nation’s import and export cargo passes through container ports,
improving the efficiency of a nation’s ports is a challenging yet critical task. Ports are
an important link in the logistics chain, and thus port efficiency affects – to a large
extent – the country’s competitiveness. Greater port efficiency can lead to lower tariffs
on exports which, in turn, favor the competitiveness of a country’s products in
international markets (González and Trujillo, 2007). India has already shown its
prowess in the service sector and that it now strongly intends to become a global
MD techno-manufacturing hub (Johnson, 2005). However, in comparison with the leading
46,10 nations and its BRIC’s counterparts, India’s performance in several knowledge
dimensions is clearly lagging behind these economies, suggesting there is still a long
way to go for India (Pillania, 2007a).
The main focus of current research on Indian industry centers on the IT industry
(Basant, 2004; Ojha, 2005; Pillania, 2005a; Pillania, 2007b; Chandra et al., 2006;
1484 Ainavolu, 2007; Heeks, 2007), pharmaceuticals (Pillania, 2005b; Pillania, 2006; Popli,
2006; Sampath, 2006; Chandel et al., 2007; Chander and Aggarwal, 2007;
Mallikarjunappa and Goves, 2007), and the supply chain sector (Mitra, 2006;
Rajeshkumar and Babu, 2006; Srivastava, 2006). Little comparative research has been
conducted on the international transportation and shipping industries.
India has experienced a massive increase in output in recent years, with its potential
economic growth rate estimated at around 8.5 percent per year in 2006. GDP per capita
is now rising at 7.5 percent annually, a rate that will lead to its doubling in a decade.
The government’s target of reaching GDP growth of 10 percent in 2011 is achievable
(ISCC, 2007). With India’s gross domestic product growing at over 9 percent per year
and the manufacturing sector enjoying double digit growth rates, India’s logistics
industry is at a turning point, and is expected to reach a market size of over $125 billion
a year in 2010 (OECD, 2007). Based on the above discussion, exploring the
consequences of the problems spawned by India’s economic growth on its
transportation and shipping industries is of considerable importance, but an area
that few scholars to date have pursued. This study will first review and discuss the
country’s logistics industry and the efficiency of its container ports and then describe
respectively the use of revealed comparative advantage (RCA), DEA models and the
derivation of inputs and outputs and their respective influence on the efficiency of
container ports in the DEA sector.
The research objectives of this paper are twofold. The first research objective is to
evaluate the current status of India’s port competitiveness in comparison with its
counterparts in emerging markets and advanced economies. The second research
objective is to help the reader gain a better understanding of the advantages and
disadvantages of India’s port operations and make recommendations for future actions
to improve the country’s logistics sector.

2. Literature review
2.1. National logistics
Some studies on countries’ logistics sectors have focused on the current state of the
logistics industry in an individual country, for instance, Mexico (Fawcett, 1995), Korea
(Kim, 1996), and Bangladesh (Razzaque, 1997). Others have taken a regional
perspective in looking at supply chain management and the state of logistics areas
(McMullan, 1996; Goh and Ang, 2000), and some have investigated regional and
inter-regional logistics systems (Bookbinder and Tan, 2003). All of the above scholars
have used questionnaires as their main methodology in understanding a nation’s
logistics issues (Fawcett, 1995; Kim, 1996; McMullan, 1996; Razzaque, 1997). This
study, however, will not rely on questionnaires because it would be difficult to obtain
through them a better understanding of the logistics competitiveness of India, the G7
countries, the BRICs, and the N-11. When comparing the logistics systems of Asia and
Europe, key macroeconomic indicators, such as public infrastructure, performance,
information systems, human resources, and the business and political environments, National port
and applied cluster analysis were used to divide the logistics systems of European and competitiveness
Asian countries into three tiers (Bookbinder and Tan, 2003). The study by Bookbinder
and Tan also used sensitivity analysis to decide which indicators needed to be
improved to upgrade a country’s logistics system. Rather surprisingly, the UK ended
up being placed in tier II rather than in the highest ranked tier I, while Denmark and
Singapore were found to have the best logistics systems in Europe and Asia 1485
respectively. The paper took a detailed look at the logistics systems of the two highest
ranked countries.
Because the logistics sector is a service industry, using service industry indicators
to judge logistics efficiency might also be helpful. The RCA approach was found as an
effective tool to evaluate indicators of service industry competitiveness (Peterson and
Barras, 1987), and to analyze travel services in 11 countries (Peterson, 1988). This
study will use RCA to weigh the logistics competitiveness of India, the G7 countries,
the BRICs and the N-11, and to explore and rank the efficiency of the container ports in
those 22 countries.

2.2 Efficiency of ports

Previous scholars have used stochastic frontier analysis (SFA), data envelopment
analysis (DEA), multiple linear regression, total factor productivity (TFP) and free
disposal hull (FDH) as their methodology to estimate the efficiency of container ports.
This section will compare the methodologies used in the above-mentioned studies on
container port efficiency.
Translog distance function was applied to the shipping industry to gauge whether
ten Spanish ports saw their technical efficiency improve during three waves of reforms
(González and Trujillo, 2008). The study not only found clear changes in the
development of port activities, it also observed a substantial improvement in the use of
technology.
In terms of stochastic frontier analysis (SFA), SFA was used early on to study UK
ports, taking data for eight consecutive years from 1983 to 1990 to compare their
technical efficiency and evaluate the impact of privatization and nationalization on the
ports’ operational efficiency (Liu, 1995). Researchers also used three different SFA
models (Cobb-Douglas, Translog – no technological change, and Translog – no
technical inefficiency) to evaluate the technical and allocative efficiencies of 11 Mexican
ports between 1996 and 1999 (Estache et al., 2002). Stochastic frontier production
models was applied by scholars based on three distributional assumptions
(half-normal, exponential and truncated normal) to compare the efficiency of 15
container ports and terminals in Asia between 1989 and 1999 (Cullinane et al., 2002).
The same assumptions were later applied again in their study to compare the
productivity of two Korean container terminals and three UK container terminals
between 1978 and 1996 (Cullinane and Song, 2003).
In addition, multiple linear regression was adopted by scholars to build a model of
the efficiency of ports, deriving estimates of relative efficiency for a sampling of 23
international container ports (Tongzon, 1995). Total factor productivity (TFP) was
used to investigate the annual growth of the Israeli port of Ashdod’s economic and
technical scales (Kim and Sachish, 1986). Later, TFP’s Malmquist index (MI) analysis
MD was performed to evaluate the state of operations at 11 major Mexican ports between
46,10 1996 and 1999 (Estache et al., 2004).
As for data envelopment analysis (DEA), scholars began to apply different types of
DEA models in their studies. The DEA-CCR (constrained categorical regression) model
was advocated to evaluate and determine the efficiency of ports (Roll and Hayuth,
1993), and their work was treated as a theoretical exploration of applying DEA to the
1486 port sector rather than as a true application since no actual data were collected or
analyzed. The CCR model was later favored by many scholars (Valentine and Gray,
2001; Kaisar et al., 2006). A total of 26 Spanish ports were evaluate using DEA-BCC
model, collecting data from 1993 to 1997 to compare their relative efficiencies and
divide them into three tiers (Martinez-Budria et al., 1999). DEA-CCR and DEA-additive
models were chosen to study the efficiency of four Australian and 12 other
international container ports, and tested whether differences in output affected the
performance and efficiency of the ports (Tongzon, 2001). Other scholars used both the
CCR and BCC models to analyze the efficiency of two Greek and four Portuguese ports
(Barros and Athanassiou, 2004) and to evaluate the world’s top 30 container ports to
discuss whether container port privatization benefited efficiency (Cullinane et al.,
2005b). Some preferred to try more than two models to analyze the performance of
eight international ports in Japan between 1990 and 1998 (Itoh, 2002). Based on the CCR
model, the port of Tokyo was found to have maintained a high level of efficiency, while
under the BCC model, it was suggested that the ports of Yokkaichi and Shimizu could
develop a small-scale operations blueprint.
Free disposal hull (FDH) and DEA were used to analyze 28 of the world’s most
important international ports and the efficiency of their container terminals (Wang
et al., 2003), suggesting that the two models yielded different results, and the scholars
suggested that DEA was the more effective model in evaluating efficiency in terms of
decision making units’ operational performance. The same results was obtained and
indicated that the FDH model was not a sensitive tool in that it depends on its
underlying logic and step function solution algorithm (Cullinane et al., 2005a). The
FDH model in fact concluded that the performance of decision-making units was
efficient when it actually was not. Later, SFA and DEA were used to evaluate 28 of the
world’s largest international ports and the efficiency of their container terminals
(Cullinane et al., 2006). The research findings concluded that the SFA model was
preferable when analyzing port operations because the hypothesis of constant returns
to scale in the production frontier could not be rejected.
As we can see from the above-mentioned literature comparing SFA, FDH and DEA
techniques and applicability, the DEA approach seems the most appropriate for the
purposes of this study, not only because it is non-parametric but also because it does
not require an explicit a priori determination of relationships between inputs and
outputs, or the setting of rigid importance weightings for the various factors. It also
has the advantage of being an efficiency evaluation model based on mathematical
calculations.

3. Methodology
When it comes to appraising a country’s competitiveness, many scholars use the
concept of revealed comparative advantage (RCA) introduced by Balassa (1965) to
assess the competitiveness of different nations’ industries and products. The model
was initially applied to the service industry (Peterson and Barras, 1987; Peterson, National port
1988), agriculture (Gorton et al., 2000; Fertö and Hubbard, 2003; Wu and Thomson,
2003), the textiles and apparel industry (Balasubramanyam and Wei, 2005) and exports
competitiveness
and imports (Clark et al., 2005; Ahrend, 2006; Ciburiene and Zaharieva, 2006). Logistics
are part of the service industry, and because scholars have used RCA to evaluate the
service industry’s competitiveness (Peterson and Barras, 1987; Peterson, 1988), it can
be also applied to appraising the competitiveness of a country’s logistics industries. 1487
3.1. Revealed comparative advantage
Revealed comparative advantage is based on countries’ foreign trade performance. It
assumes that a country’s exported products and services that dominate other countries’
markets are competitive. It also considers the scale of each country’s economy and the
relative global market share of their exported goods. Using trade statistics, it’s possible
to calculate the comparative advantage index of each country’s industries or products,
and based on the result judge the relative competitive strength of their exports. The
mathematical formula is expressed as:

X ji X i
RCAji ¼ =
Wj W
X i j is country i’s export value of product or service j, while W j is product or service j’s
total worldwide export value. X i is the total export value of country i’s goods and
services, while W is the total worldwide export value of goods and services. An RCA
index exceeding the value of one indicates the country has a comparative advantage in
the product.
3.1.1. Data. The International Monetary Fund’s (IMF) balance of payments data is
used in this study. The only statistics related to the logistics industry in the IMF data
are figures on transportation services, which are then divided into the categories of
passenger transportation, freight services and other forms of transportation services.
Passenger transport is usually not considered part of the logistics industry, and
therefore, numbers from this category were excluded. “Other transportation services”
comprise business sectors that support the transportation industry, such as those
leasing equipment or contract workers. Aside from India, the other countries chosen as
the focus of this study were the G7, the BRICs and the N-11, in part because the Global
Economics Paper released by Goldman Sachs indicated that the economies of the
BRICs and the N-11 would one day overtake those of the developed world (Wilson and
Purushothaman, 2003; O’Neill et al., 2005). Because economic growth and logistics are
closely intertwined, the goal of this study is to analyze the relative logistics
competitiveness of the G7, BRICs and N-11. We will not only determine if India is more
or less competitive than the G7, we can also use the results to predict the rankings of
India and other newly emerging economies.

3.2. Data envelopment analysis

Looking back at previous studies, scholars who have addressed the subject of port
efficiency relied primarily on the DEA-CCR and DEA-BCC models, so this study also
used them as its base models.
In terms of model orientation, the input-oriented model is closely related to
operational and managerial issues, while the output-oriented model is more associated
MD with planning and strategies (Cullinane et al., 2005b). With the rapid expansion of
46,10 globalization and international trade, many container ports must frequently review
their capacity in order to ensure that they can provide satisfactory services to port
users and maintain their competitive edge. Based on that perspective, this study used
output-oriented-model CCR and output-oriented-model BCC to evaluate the efficiency
of container port operations.
1488 The CCR model assumes that the production process yields constant returns to scale
(Charnes et al., 1978). When returns to scale increase or decrease, production
combinations will be scaled up or down proportionally, with the result that
inefficiencies can be attributed to operations with different returns to scale. The
constant return was expanded later to scale model by proposing variable returns to
scale (Banker et al., 1984). When the CCR and BCC models assign a value of one to the
efficiency of decision-making units (DMU), it is impossible to rank the efficiency of
container ports in India, the G7, the BRICS and the N-11 or differentiate their relative
strengths and weaknesses. To address the issue, an A&P model was proposed to
differentiate the relative efficiency levels of decision-making units with efficiency
ratings of one (Anderson and Petersen, 1993).
3.2.1. Input and output variables. The productivity of container port/terminal
depends on the efficient use of land, labor and capital (Dowd and Leschine, 1990). In
earlier studies, these variables are also mainly classified into three major categories as
follows.
3.2.2. Input variables.
(1) Labor input. Broadly speaking, labor inputs may include stevedore laborers,
port authority employees, container terminal laborers and labor expenditures.
The number of port authority employees was adopted in place of the number of
stevedore laborers due to lack of information (Tongzon, 2001; González and
Trujillo, 2008). The number of container terminal workers was suggested by
others as the labor input (Itoh, 2002). Unlike Martinez-Burdia et al. (1999), who
used labor expenditures, total wages and salaries paid to employees was
preferred by Cullinane and Song (2003). While the number of laborers was also
favored by Barros and Athanassiou (2004), it is unclear which variable among
stevedore laborers, port authority employees or container terminal laborers is
preferable.
(2) Land/capital/equipment input. Ports often require a significant amount of
investment in land, equipment, and infrastructure improvement. In terms of
land, the terminal area variable is often used in existing literature. As for
equipment, the number of quayside gantries, the number of yard gantries and
the number of straddle carriers are often selected while the number of berths
and the total length of terminals are frequently used as the infrastructure
variable. For capital, the net value of fixed capital, including land, buildings,
docks, berths, roads, storage and equipment was used as the capital input
variable (Liu, 1995)while the net book value of fixed equipment, building and
land and the net book value of mobile and cargo handling equipment was
chosen by others as the input variable (Cullinane and Song, 2003).
(3) Other input variables. Several other input variables have been proposed by
scholars. The number of tugs and the amount of delay time were proposed as
 inputs for considerations (Tongzon, 2001) while depreciation charges and other National port
expenditures (Martinez-Budria et al., 1999) and uniformity of cargo (Roll and competitiveness
Hayuth, 1993) were also suggested due to their relevance.

3.2.3. Output variables.

(1) Actual throughput. Current research often uses total tonnage throughput,
number of containers, and total cargo moved through docks to assess port 1489
operations performance. A majority of scholars uses the number of containers
or cargo throughput as the output variable.
(2) Service level output. Level of service and user satisfaction were considered
critical output factors (Roll and Hayuth, 1993) while “ship working rate” was
suggested as an indicator of a ship’s operating speed (Tongzon, 2001). “Ship
working rate” measures the number of containers moved per hour per ship and
gives an indication of port service quality.
(3) Other output variables. It was argued that tons of liquid bulk cargo and number
of passengers should be considered when assessing a port’s output performance
(González and Trujillo, 2008). The ownership, size and location of the port and
capital intensity were also suggested as dummy variables for the purpose of
performance assessment (Liu, 1995).

Many different variables have been proposed to date by scholars as indicators of port
efficiency. The authors of this study compiled relevant variables recommended in the
DEA articles between 2003 and 2006 and summarized the input variables in Figure 1
and the output variables in Figure 2.
As can be seen in Figure 1 and Figure 2, terminal area, the total quay length, the
number of quayside gantries, the number of yard gantries and the number of straddle
carriers are often mentioned while the number of containers is often used as an output.
In addition, these variables can also be identified in the Containerization International
Yearbook (2000-2007). As a result, these six variables serve as the input and output
variables for our DEA model. As for inputs, the study adopted Cullinane and Wang
(2006) combined three variables (the number of quayside gantries, the number of yard
gantries, and the number of straddle carriers) into a single composite variable for later
analysis.
The decision-making units (DMU) for our DEA model are the largest container ports
over the period of 2000-2005 in each of 22 countries. They are classified into three
groups: the advanced economies (G7 – USA, France, Italy, Canada, Germany, Japan,
and the UK), the BRICs (Brazil, Russian, India, China) and the Next Eleven
(Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines
Turkey, and Vietnam).

4. Results
This section analyzes India’s logistics competitiveness and the operational
performance of its container ports. Line graphs and quadrantal diagrams are used
to evaluate India’s competitiveness and its competitive position.
MD
46,10

1490

Figure 1.
Key input variables for
DEA analysis
 National port
competitiveness

1491

Figure 2.
Key output variables for
DEA analysis
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1492

Figure 2.
4.1 RCA – transportation service sector National port
Figure 3 illustrates that India’s transportation service sector was in decline between competitiveness
2000 and 2001 and then rebounded in 2002 and 2003. Thus, India’s competitiveness
went from strong to weak and then back to strong in the space of a few short years,
although during that time, the overall situation was relatively stable as the fluctuations
were not severe. Compared to the competitiveness of the BRICs’ transportation
services, India surpassed that of Brazil and China between 2000 and 2002 but still 1493
lagged behind Russia in 2002. By 2003, however, India’s transportation services had
sped past Russia as well.
As shown in Table I, from 2000 to 2005, Egypt, Korea, Japan and France all had
RCA coefficients that exceeded one, a favorable indication of the competitiveness of
their transportation services sectors. The four countries, therefore, could all be
considered very competitive countries. Mexico, Iran, Bangladesh, Nigeria, China and
the Philippines, on the other hand, were all among lower-ranked countries. As for India,
its transportation services sector is the most competitive of any of the BRICs and trails
only France and Japan among the G7 and Egypt and Korea among the N-11 countries.
India’s transportation services sector has thus clearly attained a standard on a par with
that of developed G7 nations.

4.2 RCA – freight service sector

Figure 4 illustrates that the competitiveness of India’s freight service sector has
followed the same trend as that of its transportation services sector. The chart tells us
that between 2000 and 2003, India’s freight service competitiveness had a coefficient
exceeding one and was superior to that of the other BRICs – Brazil, China and Russia.
As presented in Table II, Korea, Japan, Turkey, India and Iran all have competitive
advantages in terms of freight service competitiveness. In other words, the four
countries and India all are relatively competitive. Bangladesh, Nigeria, Pakistan, Brazil
and Mexico, on the other hand, all fared poorly in the freight service competitiveness
rankings.
Looking at India specifically, its freight service sector interestingly was more
competitive than that of any of the other BRIC countries and trailed only Japan among
the G7 countries and Korea and Turkey among the N-11. This indicates that India’s
freight service standards are also on a par with those of G7 nations.

4.3 DEA-CCR, BCC and A&P

Table III shows the CCR model rankings for ports in 22 countries between 2000 and
2005. Shanghai, China and Chittagong, Bangladesh proved to have particularly
efficient container port operations, while India’s biggest port, the Jawaharlal Nehru
port located near Mumbai, was found to be relatively inefficient. Comparing the Indian
port’s efficiency (0.6524) with that of others in G7, BRIC, and N-11 countries, it did well
against ports in G7 countries, trailing only Los Angeles, USA (0.8247). But India’s port
is less competitive than the port of Shanghai in China (1) and the port of Santos in
Brazil (0.7217) within the BRICs group and less efficient than the port of Chittagong in
Bangladesh (1) and the port of Busan in South Korea (0.8819) among the N-11 group.
Table IV shows the BCC model rankings for the same 22 ports between 2000 and
2005, which yielded similar conclusions. The port operations of Shanghai and
Chittagong were again rated as being efficient over the six-year period while the port of
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1494

Figure 3.
G7, BRICS and the N-11
transportation service –
RCA (2000-2005)
 National port
Country 2000 2001 2002 2003 2004 2005 Mean Rank
competitiveness
USA 0.8508 0.8370 0.8925 0.9221 0.9260 0.9553 0.8973 8
France 1.1154 1.0734 1.0650 1.0978 N/A N/A 1.0879 4
Italy 0.8315 0.7047 0.7606 0.7426 0.8090 0.7914 0.7733 11
Canada 0.5089 0.4577 0.4097 0.4507 0.4683 0.6473 0.4904 14
Germany 0.6646 0.6592 0.6839 0.6849 0.6991 0.7371 0.6881 12 1495
Japan 1.3296 1.4237 1.3858 1.3471 1.3010 1.3881 1.3626 3
UK 0.8261 0.8348 0.8305 0.9057 1.0941 1.1649 0.9427 5
China 0.2825 0.3379 0.3559 0.4048 0.4366 0.4438 0.3769 16
Russia N/A 0.9134 1.0417 0.9264 0.8484 0.7718 0.9003 7
Brazil 0.5916 0.5732 0.5934 0.5794 0.6008 0.6176 0.5927 13
India 0.8778 0.8335 0.8858 1.0136 N/A N/A 0.9027 6
Bangladesh N/A N/A 0.3859 0.2589 0.2123 0.2875 0.2861 18
Egypt 4.2287 4.4529 4.4021 4.7109 4.0968 4.1219 4.3355 1
Indonesia N/A N/A 0.2472 1.8606 0.6368 0.6607 0.8513 9
Iran 0.1758 N/A N/A N/A N/A N/A 0.1758 19
Korea 1.7732 1.9077 1.7917 2.0054 1.9373 1.8450 1.8767 2
Mexico 0.0901 0.0850 0.0779 0.0699 0.0774 0.0945 0.0825 20
Nigeria 0.1968 0.1837 0.3073 0.3606 0.4823 0.3875 0.3197 17
Pakistan 1.1177 1.0417 0.7948 0.6772 0.6285 0.6505 0.8184 10
Philippines 0.2147 0.2761 0.4884 0.5173 0.4177 0.3555 0.3783 15
Turkey N/A N/A N/A N/A N/A N/A N/A N/A Table I.
Vietnam N/A N/A N/A N/A N/A N/A N/A N/A G7, BRICs and the N-11
transportation service –
Notes: N/A ¼ data not available RCA analysis

Jawaharlal Nehru was again rated as being relatively inefficient. Compared to the G7
countries, the port of Jawaharlal Nehru (0.6877) trailed only the US port of Los Angeles
(0.9177) and the port of Tokyo in Japan (0.6972) while it trailed Shanghai (1) and Santos
(0.7760) within the BRICs. Compared to the Next 11, India’s port was less competitive
than Chittagong (1), Busan (0.9633), the port of Shahid Rajaee in Iran (0.8042), the port
of Manzanillo in Mexico (0.8171) and the port of Karachi in Pakistan (0.9760).
Comparing the results shown in Table III and Table IV, the values obtained under
the DEA-BCC model were higher than those yielded by the DEA-CCR model. The main
reason is that the DEA-CCR model is limited by its assumption of constant returns to
scale while the DEA-BCC model is not. Nonetheless, the CCR and BCC models had a
correlation value of 0.877863, indicating that the two models are closely correlated.
Table V used the A&P model to differentiate the ranking of the decision-making
units that have CCR-model efficiency values of one, such as China and Bangladesh, to
separate them in the efficiency rankings. The result is that operations at Bangladesh’s
maritime freight port are more efficient than those at China’s ports. Among DMUs, it is
the country with the highest container operations efficiency.

4.4 Graphical analysis

The overall results on the operational efficiency of transportation service sectors and
maritime cargo ports are shown in Figure 5, with 20 countries divided into four blocks
(note: no transportation data for Turkey and Vietnam).
MD
46,10

1496

Figure 4.
G7, BRICS and the N-11
freight service – RCA
(2000-2005)
 National port
Country 2000 2001 2002 2003 2004 2005 Mean Rank
competitiveness
USA 0.5824 0.5630 0.6117 0.6613 0.6319 0.6282 0.6131 11
France N/A N/A N/A N/A N/A N/A N/A N/A
Italy 0.5068 0.4160 0.449 0.4516 0.4710 0.4832 0.4630 13
Canada 0.4572 0.4053 0.3567 0.5079 0.5424 0.5225 0.4654 12
Germany 0.8280 0.8436 0.8152 0.8055 0.8607 0.9182 0.8452 8 1497
Japan 1.5711 1.6868 1.6606 1.6701 1.6135 1.7463 1.6581 2
UK 0.7242 0.7421 0.7817 0.9041 1.2372 1.3734 0.9604 6
China 0.3245 0.3799 0.4106 0.4887 0.5646 0.5896 0.4596 14
Russia N/A 0.8581 0.9673 0.8367 0.8065 0.7333 0.8404 9
Brazil 0.4500 0.3549 0.4066 0.3776 0.3915 0.3777 0.3931 16
India 1.2717 1.1141 1.1788 1.3213 N/A N/A 1.2215 4
Bangladesh 0.0689 0.0141 0.0928 0.0469 0.0519 0.1081 0.0638 19
Egypt 0.9457 1.0417 0.8883 0.8351 0.6846 0.7851 0.8634 7
Indonesia N/A N/A N/A N/A 0.7094 0.8078 0.7586 10
Iran 1.0782 N/A N/A N/A N/A N/A 1.0782 5
Korea 2.4019 2.5577 2.4812 2.8067 2.6524 2.5356 2.5726 1
Mexico N/A N/A N/A N/A N/A N/A N/A N/A
Nigeria 0.1161 0.1080 0.1792 0.1447 0.0826 0.0610 0.1153 18
Pakistan 0.3781 0.3780 0.3917 0.3935 0.2843 0.2860 0.3519 17
Philippines 0.1403 0.1375 0.6258 0.6711 0.5313 0.4465 0.4254 15
Turkey 1.6347 1.7465 1.6650 0.9142 0.8946 0.9203 1.2959 3 Table II.
Vietnam N/A N/A N/A N/A N/A N/A N/A N/A G7, BRICs and the N-11
freight service – RCA
Note: N/A= data not available analysis

(1) Block I – (RCA index of transportation service . 1, DEA-A&P efficiency scores

of container port . 1): This block is for countries with transportation service
sectors that are competitive and maritime port operations that are efficient, but
no country met the criteria for this block.
(2) Block II – (RCA index of transportation service , 1, DEA-A&P efficiency
scores of container port . 1): This block is for countries with transportation
service sectors that are not competitive but with maritime port operations that
are efficient. Only Bangladesh and China were placed in this category. Their
common characteristic is that they are both emerging countries.
(3) Block III – (RCA index of transportation service , 1, DEA-A&P efficiency
scores of container port , 1): This block is for countries with transportation
service sectors that are not competitive and that have maritime port operations
that are inefficient.
(4) Block IV – (RCA index of transportation service . 1, DEA-A&P efficiency
scores of container port , 1): This block includes countries with competitive
transportation service sectors but inefficient maritime port operations. France
and Japan from the G7 and Egypt and Korea from the N-11 were included in this
block.
The relative efficiency of countries’ freight service sectors and maritime cargo ports are
reflected in Figure 6, with 19 countries from the G7, BRICs and the Next 11 also divided
into four blocks (no freight data for France, Mexico and Vietnam), as follows:
MD
Country 2000 2001 2002 2003 2004 2005 Mean Rank
46,10
USA 0.7486 0.7040 0.7486 0.9828 1 0.7639 0.8247 4
France 0.1818 0.1734 0.1818 0.4087 0.3513 0.3425 0.2733 20
Italy 0.4242 0.3526 0.4242 0.7952 0.5512 0.5326 0.5133 9
Canada 0.4015 0.2288 0.4015 0.5145 0.4334 0.4286 0.4014 16
1498 Germany 0.216 0.2110 0.2160 0.3933 0.3915 0.4715 0.3166 19
Japan 0.4402 0.3534 0.4402 0.8308 0.6921 0.7566 0.5856 7
UK 0.3087 0.2682 0.3087 0.4147 0.3562 0.4290 0.3476 17
China 1 1 1 1 1 1 1 1
Russia 0.1656 0.2371 0.1656 0.3030 0.3555 0.395 0.2703 21
Brazil 0.4213 0.4879 0.4213 1 1 1 0.7217 5
India 0.3777 0.4423 0.3777 0.9133 0.8404 0.9631 0.6524 6
Bangladesh 1 1 1 1 1 1 1 1
Egypt 0.2349 0.2156 0.2349 0.6039 0.4956 0.9645 0.4582 13
Indonesia 0.7137 0.3420 0.7137 0.5842 0.5154 0.5265 0.5659 8
Iran 0.4588 0.5882685 0.4588 0.4407 0.2523 0.8639 0.5105 11
Korea N/A N/A N/A 1 0.8358 0.8101 0.8819 3
Mexico 0.4303 0.3833 0.4303 0.5421 0.6317 0.6107 0.5047 12
Nigeria N/A N/A N/A 0.0674 0.0571 N/A 0.0623 22
Pakistan 0.2651 0.6364 0.2651 0.6202 0.6888 0.5913 0.5111 10
Philippines 0.3565 0.2955 0.3565 0.5156 0.4862 0.5036 0.4190 14
Turkey 0.3205 0.2946 0.3205 0.3367 0.4161 0.3392 0.3379 18
Table III. Vietnam N/A N/A N/A 0.3487 0.4356 0.4518 0.4120 15
National port efficiency Number of efficient ports 2 2 2 4 4 3 2
comparisons – CCR
Model (2000-2005) Notes: N/A= data not available

(1) Block I – (RCA index of freight service . 1, DEA-A&P efficiency scores of

container port . 1): This block is for countries with freight service sectors that
are competitive and maritime port operations that are efficient, but no country
met the criteria for this block.
(2) Block II – (RCA index of freight service , 1, DEA-A&P efficiency scores of
container port . 1): This block is for countries with freight service sectors that
are not competitive but with maritime port operations that are efficient. Only
Bangladesh and China were placed in this category. Their common
characteristic is that they are both emerging countries.
(3) Block III – (RCA index of freight service , 1, DEA-A&P efficiency scores of
container port , 1): This block is for countries with freight service sectors that
are not competitive and that have maritime port operations that are inefficient.
(4) Block IV – (RCA index of transportation service . 1, DEA-A&P efficiency
scores of container port , 1): This block includes countries with competitive
freight service sectors but inefficient maritime port operations.

5. Conclusions
This paper examined the logistics competitiveness and the efficiency of maritime port
operations in emerging countries. Past studies in the field have focused primarily on
the operational efficiency of container ports in developed countries, or of the top 30
 National port
Country 2000 2001 2002 2003 2004 2005 Mean Rank
competitiveness
USA 0.8693 0.8176 0.8693 1 1 0.9498 0.9177 5
France 0.2609 0.2405 0.2610 0.4100 0.3822 0.4093 0.3273 20
Italy 0.4726 0.3925 0.4726 0.8203 0.6785 0.7103 0.5911 13
Canada 0.4449 0.2337 0.4449 0.5164 0.4335 0.4848 0.4264 19
Germany 0.7569 0.7395 0.7569 0.544 0.4811 0.5143 0.6321 11 1499
Japan 0.5166 0.4 0.5166 0.9254 0.8584 0.9664 0.6972 9
UK 0.5082 0.4416 0.5083 0.4171 0.3575 0.474 0.4511 17
China 1 1 1 1 1 1 1 1
Russia 0.1918 0.2582 0.1918 0.3081 0.3574 0.4529 0.2934 21
Brazil 0.5401 0.5761 0.5401 1 1 1 0.7760 8
India 0.4259 0.5012 0.4259 0.9321 0.8457 0.9955 0.6877 10
Bangladesh 1 1 1 1 1 1 1 1
Egypt 0.3054 0.2600 0.3054 0.8102 0.6942 1 0.5625 14
Indonesia 0.7836 0.3506 0.7836 0.6209 0.5418 0.6039 0.6141 12
Iran 1 1 1 0.5608 0.2647 1 0.8042 7
Korea N/A N/A N/A 1 0.8913 0.9986 0.9633 4
Mexico 1 1 1 0.6268 0.6325 0.6430 0.8171 6
Nigeria N/A N/A N/A 6.80E-02 0.0571 N/A 0.0626 22
Pakistan 1 1 1 1 1 0.8562 0.9760 3
Philippines 0.4082 0.3622 0.4083 0.5358 0.5494 0.5905 0.4757 15
Turkey 0.5387 0.5088 0.5387 0.3434 0.4182 0.3918 0.4566 16
Vietnam N/A N/A N/A 0.3506 0.4572 0.4964 0.4348 18 Table IV.
Number of efficient ports 5 5 5 6 5 5 2 National port efficiency
comparisons – BCC
Notes: N/A ¼ data not available model (2000-2005)

container ports in the world, or on regional comparisons of ports. Very few have
explored port operations in emerging economies. Using the DEA-CCR and DEA-BCC
models to measure the efficiency of ports in developing countries, this study found that
the ports of Shanghai in China and Chittagong in Bangladesh had efficiency levels
between 2000 and 2005 that even surpassed those found in advanced countries.
Although our findings suggest that India’s efficiency score is unsatisfactory, with the
country ranking 6th among ports using the CCR model and 10th using the BCC model,
India showed considerable improvement during the 2003-2005 period. Nevertheless,
India needs be aware of its potential weaknesses and should make best use of its
competitive advantages relative to its counterparts.
Looking at India specifically, its transportation service industry was found to
outpace those of the other BRIC countries – Brazil, Russia and China – and will likely
maintain its advantage in the future, although it should continue to upgrade its
transportation service quality. While the RCA index indicated that India’s
transportation sector was not competitive, the average values obtained for the
southern Asian giant’s transportation industry for 1997-2002 by Wu and Lin (2006)
indicated that the sector was competitive. It should be noted, however, that in that
study, India’s transportation sector was found to be competitive between 1997 and
1999 but not between 2000 and 2002. The authors lacked data to evaluate the
competitiveness of the sector in later years.
India’s freight service industry had a competitive advantage between 2000 and 2003
(data was insufficient to evaluate the sector’s performance in 2004 and 2005), which
MD
Country 2000 2001 2002 2003 2004 2005 Mean Rank
46,10
USA 0.7486 0.7040 0.7486 0.9828 1.0030 0.7639 0.8252 4
France 0.1818 0.1734 0.1818 0.4087 0.3513 0.3425 0.2733 20
Italy 0.4242 0.3526 0.4242 0.7952 0.5512 0.5326 0.5133 9
Canada 0.4015 0.2288 0.4015 0.5145 0.4334 0.4286 0.4014 16
1500 Germany 0.2160 0.2110 0.2160 0.3933 0.3915 0.4715 0.3166 19
Japan 0.4402 0.3534 0.4402 0.8308 0.6921 0.7566 0.5856 7
UK 0.3087 0.2682 0.3087 0.4147 0.3562 0.4290 0.3476 17
China 2.3566 2.3083 2.1749 1.4415 1.5345 1.2687 1.8474 2
Russia 0.1656 0.2371 0.1656 0.3030 0.3555 0.3950 0.2703 21
Brazil 0.4213 0.4879 0.4213 1.0605 1.2742 1.2295 0.8158 5
India 0.3777 0.4423 0.3777 0.9133 0.8404 0.9631 0.6524 6
Bangladesh 4.6470 4.3873 4.6470 11.2291 13.3333 6.5279 7.4615 1
Egypt 0.2349 0.2156 0.2349 0.6039 0.4956 0.9645 0.4582 13
Indonesia 0.7137 0.3420 0.7137 0.5842 0.5154 0.5265 0.5659 8
Iran 0.4588 0.5883 0.4588 0.4407 0.2523 0.8639 0.5105 11
Korea N/A N/A N/A 1.2103 0.8358 0.8101 0.9521 3
Mexico 0.4303 0.3833 0.4303 0.5421 0.6317 0.6107 0.5047 12
Nigeria N/A N/A N/A 0.0674 0.0571 N/A 0.0623 22
Pakistan 0.2651 0.6364 0.2651 0.6202 0.6888 0.5913 0.5112 10
Philippines 0.3565 0.2955 0.3565 0.5156 0.4862 0.5036 0.4190 14
Turkey 0.3205 0.2946 0.3205 0.3367 0.4161 0.3392 0.3379 18
Table V. Vietnam N/A N/A N/A 0.3487 0.4356 0.4518 0.4120 15
National port efficiency Number of efficient ports 2 2 2 4 4 3 2
comparison – A&P
Model (2000-2005) Notes: N/A ¼ data not available

demonstrated that India’s cargo services were at a level similar to that found in G7
countries. Consist with the previous findings (Langley et al., 2007), in terms of
container ports, the study found Mumbai’s Jawaharlal Nehru Port to be inefficient
between 2000 and 2005, indicating a need for an overhaul of one of the input variables
– equipment. The port’s management needs to upgrade the facility’s equipment and
machinery if they hope to accommodate the growing volume of imports and exports
expected to be shipped through the port in the future. At the same time, the port must
also rapidly expand its overall capacity to avoid bottlenecks, as exports are growing at
20 percent a year. Private investment should be encouraged in the port’s expansion
plans so that it can keep pace with the country’s booming trade volume. In addition,
infrastructure congestion is another key challenge India needs to deal with (Langley
et al., 2007). The logistics industry in India is hampered due to poor infrastructure such
as roads, communication and ports, and complex regulatory structures (ISCC, 2007).
While India has improved its overall international competitiveness rankings over
the past years, it is essential for India to put into efforts for upgrading its infrastructure
(Pillania, 2008). India faced three major barriers to its economic development: an
underdeveloped base infrastructure, official corruption, and absurd clauses in the
country’s labor laws (Müller, 2006). There is no question that India’s ports need to
upgrade their facilities and capacity urgently or else they will suffer from severe
bottlenecks as trade volume expands. India’s biggest infrastructural deficiency is its
lack of electricity, especially because high economic growth often leads to increases in
electricity demand that far outpace the speed at which new power plants can be built.
 National port
competitiveness

1501

Figure 5.
G7, BRICS and the N-11
transportation service
competitiveness –
RCA vs A&P

Figure 6.
G7, BRICS and the N-11
freight service
competitiveness –
RCA vs A&P
MD India’s bureaucratic system is also a barrier to port operations. For instance, it takes
46,10 three to five days to deal with customs issues and may take up to two weeks to
complete import/export applications, compared to the world standard of 18 hours.
Hence, the laborious bureaucratic system is one of the major factors detrimental to
India’s overall national competitiveness. Comprised of an excessive number of
administrative agencies that do not have clear lines of responsibility, the bureaucracy
1502 spawns bribery and autocratic decision-making. Finally, the labor laws are a major
hindrance to economic vitality because they make it harder to dismiss employees than
in any other country in the world.
With the operational efficiency of India’s ports found to be inadequate, some
scholars have suggested that its ports suffer from a lack of connections to major
highways and industrial clusters, and that its inland transportation network is
inefficient and slow because of the soaring costs of fuel (Chandrasekaran and Kumar,
2004). Transport efficiency enhancement is one tactic that can be used to improve the
potential competitiveness of a port and would provide a genuine opportunity to lower
transportation costs and improve environmental performance to help build a
sustainable logistics/distribution system. If India’s main ports can rapidly improve
their links to external transportation networks and build up in-port railroad
transportation services, they will be able to upgrade their operational efficiency (Kaisar
et al., 2006).

5.1 Recommendations
India’s port sector is less attractive than counterparts in countries such as China,
Brazil, Iran and Mexico. Because of its relatively low productivity and inefficient
processes and procedures. This study’s findings are consistent with previous research
done by Chandrasekaran and Kumar (2004), indicating that India’s port (Jawaharlal
Nehru) is relatively inefficient. Therefore, it is critical for India to strengthen its
container handling operations and make them more efficient and smooth flowing. This
paper makes several recommendations for future action, with each briefly discussed as
follows.
First, in terms of internal port operations, our analysis indicates that the operating
equipment at Jawaharlal Nehru Port is completely insufficient, including the number of
quayside gantries, yard gantries, and straddle carriers. The port’s management must
come up with a long-term plan for equipment improvement and replacement, and
India’s government needs to accelerate its efforts to adjust and upgrade the
infrastructure and facilities at its ports. Building on-dock rail facilities should be one of
the improvements considered because rail yards are correlated with higher port
productivity and attract large carriers (Kaisar et al., 2006).
The second recommendation relates to efficient customs clearance operations.
India’s cargo volume is growing at a 20 percent annual clip and to reduce pre/post
shipment procedures and time, port authorities should provide single window
clearance and single paper clearance to handle pre/post container shipment formalities.
Countries that want to maintain sustainable economic growth rely on the
availability of infrastructure and an efficient transport system (Water, 1999). The final
recommendation is for India to improve its road/IT infrastructure. Specifically, major
ports should be linked with highways to expedite the movement of cargo. The
government should also improve its road infrastructure to effectively accommodate
increasing cargo volume. If India wants to maintain or even increase its competitive National port
growth in cargo volume, it needs to have at least an acceptable, if not robust, competitiveness
infrastructure, as the country’s existing infrastructure is struggling at present to meet
the new demands of growth.

5.2 Research limitations and future research directions 1503

RCA indicators are only able to examine past and present industry conditions based on
export results, and do not provide a detailed explanation of the reasons for changes in
levels of competitiveness. Future studies may want to analyze related logistics sectors.
In terms of DEA, the productivity of container ports and distribution stations was
dependent on their land and equipment and how efficiently workers were used (Dowd
and Leschine, 1990). This study focused only on land and equipment as variables
primarily because of a lack of data on worker efficiency. If information were available
in this area, the operational efficiency of India’s ports could be more thoroughly
explored.

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About the authors

Yen-Chun Jim Wu is Professor at Department of Business Management at National Sun Yat-Sen
University, Taiwan. His papers have appeared in Sloan Management Review, IEEE Transactions
on Engineering Management, International Journal of Operations & Production Management,
International Journal of Supply Chain Management, Journal of the American Society for
Information Science and Technology, International Journal of Physical Distribution & Logistics
Management, International Journal of Logistics Management, European Journal of Operational
Research, Transportation Research Part A, International Journal of Manufacturing Technology
Management, and Journal of Enterprise Information Management. His research interests include
supply chain management, technology management, andlean manufacturing. He holds a PhD in
Industrial & Operations Engineering from the University of Michigan, Ann Arbor, USA.
Yen-Chun Jim Wu is the corresponding author and can be contacted at: ycwu@faculty.
nsysu.edu.tw
Chia-Wen Lin is a graduate student of Logistics Management Department at National
Kaohsiung First University of Science & Technology, Taiwan.

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