The Construction and Implication of Group Scale Efficiency Evaluation Model for Bulk Shipping Corporations

Abstract

The shipping industry pursues high efficiency and low cost of chartering operations for bulk shipping market depression. Each type of ship's operational efficiency in bulk shipping corporations is more important than the corporation's overall efficiency. In order to evaluate the efficiency gap between various ship types' efficiency and overall efficiency, the research first assessed the performance by a decision making unit (DMU), and evaluated voyage charter (V/C) performance by the time charter equivalent (TCE). It also measured the distance between group scale efficiency (GSE) and average group scale efficiency (AGSE) by the data envelopment analysis (DEA). DEA is able to compare the difference between the group efficiency and overall efficiency, the AGSE value, to explore the direction and extent of the overall efficiency improvement. In the research, the V/C service of Panamax, Supramax, and Handymax is considered as the DMU, to calculate the efficiency of different ship types separately. Then, it employs TCE to measure and the DEA method to compare AGSE. The larger the AGSE value, the better the efficiency. Based on the results, in order to improve the overall operating efficiency of bulk shipping corporations, AGSE should be more emphasized than TCE and GSE. The results can provide professional managers of bulk shipping corporations with the basis for a strategic decision of chartering operations.