Modelling Efficiency for a Caribbean Trans-Shipment Terminal: The Case of the Kingston Container Terminal, Jamaica

Abstract

This paper presents a model for measuring the efficiency of the berth-side operations of the Kingston Trans-shipment Terminal, Jamaica (KCT). The earliest models focused on traditional production functions that do not account for the impact of multiple factors, while later models employed Stochastic Frontier Analysis (SFA) and Data Envelope Analysis (DEA). The model employed here is a Vector Error Correction Model (VECM), which takes into account the long-run and short-run relationships among several variables: monthly container moves, gross labour hours, crane and straddle carrier operating hours and container yard storage capacity. Impulse response analyses find that a one standard deviation in monthly container moves has a significant effect on equipment efficiency usage and yard storage capacity, important factors that shipping lines are likely to give serious consideration when choosing a trans-shipment terminal. The findings of this model suggest that in order to improve efficiency the time containers remain in-transit on the terminal has to be contained because this affects storage capacity utilization and significantly impacts other variables such as machine hours and labour hours.