Multi-Output Analysis of the Costs and Productivity of Cargo Handling in Spanish Ports

Resum

In this research, we have carried out an economic study of cargo handling operations in Spain for the period from 1990 to 1998. This period was characterised by major reforms to cargo handling regulation. The final objective was to improve the competitive position of Spanish ports in such a way as to reduce the cost of cargoes passing through ports. The general goal of this research is to evaluate the aforementioned reform process. To do it, a multi-output cost function of the cargo handling operation has been estimated, which has made it possible to completely characterise the productive process. From the estimated parameters, the measures have been obtained that have made it possible to calculate total factor productivity variation and its decomposition into the contributions to technical change and economies of scale. Technical change has then been decomposed and the contribution of each of its component parts evaluated. The main conclusions of this work are as follows: At the sample mean, there is increasing returns to scale, indicating that the minimum efficient size is larger than that of the average company. One immediate consequence of the fact that the degree of economies of scale is larger than the unit, is that a first order pricing policy, that is with prices equal to marginal costs, would cause stevedore companies to make losses. Economy of scope analysis shows that, for the operation of cargo handling, there are joint production economies, i.e., that port specialisation is not a positive element. In summary, ports should be equipped with specialist terminals for different cargos, but the port itself should not specialise in one particular kind of cargo traffic. Productivity analysis suggests that there was a 37.7% growth for the whole period, at an average annual rate of 4.08%. The contribution of technical change is the most important component of TFP variation, although gradually diminishing over the years. The contribution of economies of scale followed the characteristic fluctuations of the international economic cycle. An analysis of the decomposition of technical change shows that the effect of pure technical change is the main component, with an average annual rate of growth of 3.63%. Pure technical change could be attributed to the general organizational change promoted by the structural reform of the operation of cargo handling that has induced an improvement that affects cargo handling services, regardless of factor prices and the composition of the products vector. © 2007 Physica-Verlag Heidelberg.