MEASURING TECHNICAL EFFICIENCY OF THE CONTAINER TERMINAL AT THE PORT OF MOMBASA USING TIME SERIES STOCHASTIC FRONTIER MODEL
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Abstract
Sea ports have proved to be major economic hubs the world over, with maritime trade necessitating more than 70% of the international trade by the year 2014. Containerization of marine cargo made it easier to transport goods using different modes, i.e. water, road, railway and air, without having to repackage the cargo. However, since the introduction of container trade at the port of Mombasa in 1975, the port’s container terminal has experienced congestion problems, mainly characterized by unprecedented delays in cargo delivery and high demurrage charges. This prompted the study to analyze whether port performance indicators proposed by UNCTAD (1976) are applicable in determining the performance of the Mombasa port container terminal, and if so, then determine the technical efficiency levels of the terminal for the period 1982-2014. The study adopted the Djokoto (2012) time series stochastic frontier model on efficiency, with annual container throughput as the dependent variable and container dwell time, number of ship berths, number workers, and the number gantry cranes within the container terminal as explanatory variables. Following the analysis of secondary time series data obtained from the Kenya Ports Authority (KPA) and Kenya National Bureau of Statistics (KNBS) statistical bulletins, it was found that all the four input variables were significant in explaining the technical efficiency levels of the Mombasa container terminal. It was discovered that even though the port was recording a higher container throughput each subsequent year due to increase in demand, utilization of physical facilities within the terminal was yet to get to 100%. The study therefore concludes that there is much more to be done at the port to improve Technical Efficiency (TE). It suggested several policy measures to be put in place, including reduction of red tapes, to ensure the current facilities are optimized to achieve the high standards of container trade set by major ports such the port of Singapore.
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