Technical change and bias in the container shipping industry in Taiwan

Abstract

The aim of this paper is to explore the sources of technical change and the associated technical change biases for the container shipping industry. A translog cost function is formatted to measure the magnitude of the rates of technical change (RTCs) for three Taiwanese container shipping lines. On average, the annual RTCs of the three shipping lines are all less than 0.1% over different sample periods and show fairly trivial technological improvements in cost reduction. By decomposing the RTCs into their sources, the results further suggest that the technical change should focus on improving the operational efficiency with respect to reducing the cost of marketing, organisational and managerial activities, and to efficiently organise the service network for the transshipment of containers. In the meantime, the existence of significantly negative scale economies strongly implies that the deployment of too much slot capacity and the transportation of too few cargo shipments transported by the shipping lines have resulted in considerable cost inefficiency. As to the technical change bias, the results indicate that the bias has shifted the utilisation of factor inputs toward labour, fuel-saving and intermediate material-using patterns.