A Longitudinal Analysis of Port Systems in Asia Joyce
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A LONGITUDINAL ANALYSIS OF PORT SYSTEMS IN ASIA JOYCE LOW MEI WAN @ PHAN MEI LING JOAN NATIONAL UNIVERSITY OF SINGAPORE 2008 A LONGITUDINAL ANALYSIS OF PORT SYSTEMS IN ASIA JOYCE LOW MEI WAN @ PHAN MEI LING JOAN (B.B.A (Hons), M.Sc. (Mgt), NUS) A THESIS SUBMITTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY DEPARTMENT OF INDUSTRIAL AND SYSTEMS ENGINEERING NATIONAL UNIVERSITY OF SINGAPORE 2008 CONTENTS List of Tables v List of Figures vii Acknowledgments viii Summary ix Chapter 1 Introduction 1 1. Background 1.1 Research Scope and Objectives 1.2 Structure of Dissertation Chapter 2 An Empirical Investigation on the Cargo Traffic 11 Performances in East Asian Ports 2. Introduction 2.1 Model of Analysis 2.2 Empirical Analysis at the Aggregate Port Industry Level 2.2.1 Data Description and Sample 2.2.2 The Variables 2.2.3 The Results 2.2.4 Implications of Findings 2.3 Cluster Analysis at the Disaggregate Individual Port Level 2.3.1 Seaport Clusters 2.3.2 Airport Clusters 2.4 Discussions 2.5 Conclusions i Chapter 3 Assessment of Hub Status among Major Asian Ports 68 from A Network Perspective 3. Introduction 3.1 Literature Review 3.2 Model Components 3.2.1 Port Connectivity Index 3.2.2 Port Cooperation Index 3.3 The Case Studies 3.3.1 Alpha Shipping Lines 3.3.2 Gamma Shipping Lines 3.2.2 Beta Shipping Lines 3.4 Discussions 3.4.1 Qualitative Analysis of Empirical Results 3.4.2 Robustness of Analysis 3.4.3 Key Factors Influencing Port Competitiveness 3.4.4 Importance of Inter-Port Relationship to Port Traffic 3.5 Conclusions Chapter 4 The Changing Landscape of the Airport Industry and its 104 Strategic Impact on Air Hub Development in Asia 4. Introduction 4.1 Literature Review 4.2 The Model 4.2.1 Differentiated Downstream Market 4.2.2 Undifferentiated Downstream Market 4.3 Pricing and Capacity Decisions at an Airport Hub 4.3.1 Differentiated Downstream Market ii 4.3.2 Undifferentiated Downstream Market 4.4 Strategic Directions 4.5 Conclusions Chapter 5 Factor Substitution and Complementarity in the 138 Asia Airport Industry 5. Introduction 5.1 The Model 5.2 Parameters Estimation and Results 5.3 Discussions 5.4 Conclusions Chapter 6 Efficiency Assessments of Asia Pacific Airports 157 6. Introduction 6.1 The Data Envelopment Analysis Method 6.1.1 Models Forms and Efficiency Scores 6.2 Data and Variable Descriptions 6.3 Empirical Analysis 6.3.1 Efficiency Results without Virtual Airport 6.3.2 Efficiency Results with Virtual Airport 6.4 Discussions 6.5 Conclusions Chapter 7 Roles of the Airport and Logistics Services on the 187 Economic Outcomes of an Air Cargo Supply Chain: Evidences from Hong Kong and Singapore 7. Introduction 7.1 Literature Review 7.2 Research Aims and Hypotheses Development iii 7.3 Research Methodology 7.3.1 Air Cargo Supply Chain Operations Reference Model and Performance Measures 7.3.2 Principles of the Accelerator and Multiplier 7.3.3 Data Descriptions 7.4 Results and Discussions 7.4.1 Hypotheses Testing 7.4.2 Quantifying the Accelerator and Multiplier Effects 7.5 Conclusions Chapter 8 Conclusions 215 8. Summary 8.1 Suggestions for Further Research References 223 Appendix A Port Descriptions in Brief 239 Appendix B Review of Existing Methodologies Used in the Port Literature 264 Appendix C Multicollinearity Diagnostics for Port Performance Regressions 280 Appendix D Standard Capital Productivity and Economic Volume Plots 282 Appendix E Translog Production Function 293 Appendix F Selected Port and Logistics Industries Data 295 Appendix G Author’s Publications 311 iv LIST OF TABLES Table 2-1 Regression Results for Seaport Performances, 1994 – 2006 31 Table 2-2 Regression Results for Airport Performances, 1999 – 2005 32 Table 2-3 Results for Reduced Seaport Regression Models, 1994 – 2006 33 Table 2-4 Results for Reduced Airport Regression Models, 1999 – 2005 33 Table 2-5 The Influences of Capital, Labor and Economic Performance on 35 Sea Cargo Traffic, 1994 –2006 Table 2-6 The Influences of Capital, Labor and Economic Performance on 36 Airfreight Traffic, 1999 –2005 Table 3-1 NHPA Framework on Hub Status Assessment 72 Table 3-2 Number of O-D Pairs Served by Selected Ports and Their Connect- 82 ivity indices, Alpha Shipping Lines Table 3-3 Cooperation among Ports and the Aggregate Cooperative Index, 83 Alpha Shipping Lines Table 3-4 Number of O-D Pairs Served by Selected Ports and Their Connect- 85 ivity indices, Gamma Shipping Lines Table 3-5 Cooperation among Ports and the Aggregate Cooperative Index, 86 Gamma Shipping Lines Table 3-6 Number of O-D Pairs Served by Selected Ports and Their Connect- 88 ivity indices, Beta Shipping Lines Table 3-7 Cooperation among Ports and the Aggregate Cooperative Index, 89 Beta Shipping Lines Table 3-8 Port Attributes Data of Major Asian Ports, 2004 96 Table 3-9 Rotated Factor Loadings and Communalities (Varimax Rotation) 97 Table 3-10 Factor Score Coefficients 98 Table 3-11 Factor Scores of Selected Ports 98 Table 3-12 Seaport Specific versus Airport Specific Variables 103 Table 4-1 Major Airport Developments and Expansions in Asia, 1994–2008 108 v Table 5-1 Parameter Estimates for Equations (6.11) and (6.12) 148 Table 5-2 Average Allen Partial Elasticities of Substitution 148 Table 5-3 Average Price Elasticities of Input Demand 149 Table 6-1 Literature on Airport Efficiency using DEA 161 Table 6-2 Asia Airports’ DEA Efficiency Results without Virtual Airport 177 Table 6-3 Asia Airports’ DEA Efficiency Results with Virtual Airport 181 Table 7-1 Traffic Volume at Major Airports in the World, 2006 190 Table 7-3 Cargo Traffic, Capital Outlay and Value-Add at Chek Lap Kok 210 Airport Table 7-4 Cargo Traffic, Capital Outlay and Value-Add at Changi Airport 210 vi LIST OF FIGURES Figure 1-1 Factors Affecting Port Development Examined in the Dissertation 10 Figure 2-1 Seaport Clusters – Waterside Operations 40 Figure 2-2 Seaport Clusters - Quayside Operations 44 Figure 2-3 Airport Clusters – Airside Operations 49 Figure 2-4 Airport Clusters – Landside Operations 53 Figure 3-1 NHPA Modeling Process and Data Requirements 71 Figure 3-2 Representative Network of Port i and Port j 75 Figure 3-3 Example on Network of Perfect Complementary Relationship 78 Figure 3-4 Example on Network of Perfect Competitive Relationship 79 Figure 3-5 Port Classifications in the NHPA Framework, Alpha Shipping 84 Figure 3-6 Port Classifications in the NHPA Framework, Gamma Shipping 87 Figure 3-7 Port Classifications in the NHPA Framework, Beta Shipping 89 Figure 3-7 A Consolidated Partial Liner Network 93 Figure 3-8 Port Classifications in the NHPA Framework (consolidated) 94 Figure 4-1 Optimal Capacity for Cost Function with Different Degrees of 135 Convexity Figure 4-2 Optimal Capacity for Delay Function with Different Degrees of 136 Convexity Figure 6-1 Relationship between Different DEA Model Variants and 165 Efficiency Measures Figure 6-2 Overall Efficiency Trend among Major Airports in Asia Pacific 175 Figure 6-3 Allocative Efficiency Trend among Major Airports in Asia Pacific 176 Figure 6-4 Technical Efficiency Trend among Major Airports in Asia Pacific 176 Figure 7-1 Air Cargo Supply Chain Operations Reference (ACSCOR) Model 201 Figure 7-2 Accelerator Effect of Airport Traffic in Hong Kong and Singapore 211 Figure 7-3 Multiplier Effect of Airport Capacity Investment in Hong Kong 212 and Singapore vii ACKNOWLEDGEMENTS It is a great pleasure to thank the many people whose intellectual, moral and operational support have made this dissertation possible. I am utmost grateful to my main advisor, Associate Professor Tang Loon Ching , for giving me this opportunity to work on a research area of my interest under his supervision. Throughout the arduous course of research, his profound insights, ideas and questionings have simulated in-depth contemplation, which has significantly shaped the thrust and direction of the dissertation. His unfailing forgiveness for my many drastic blunders and the time and attention he has put in to critically comment on my work will always be remembered. I would also like to express my appreciation to my co-supervisor, Dr. Yuan Xue-Ming , who has always been encouraging and supportive. I am particularly thankful for the long hours he has spent with me in busy schedule going through the technical details in this dissertation. I wish to thank my Oral Qualifying and dissertation examiners, Prof. Ang Beng Wah , Dr. Ng Szu Hui , Assoc. Prof. Tan Kay Chuan and the anonymous external examiner for providing me with constructive comments for my research. Not forgetting my fellow classmates in the Quality and Reliability Engineering Laboratory and the many academic and support staffs in the department who have made my five- year studies in the faculty memorable and rewarding. Last but not least, thank you Shao Wei and Boon Chuan for your technical and moral support. Joyce M.W. Low @ Phan Mei Ling Joan (Miss) First submission: 31 st July 2008 Revised submission: 31 st May 2009 viii SUMMARY Competitive seaports and airports are vital for smooth flow of trade and form the backbone of an economy’s prosperity. This dissertation is organized into three distinct but related parts, which together, addresses some of the recent advances in the Asian port systems. Some internal and external factors that favor the developments of hub port are identified in the course of research. Part 1 examines the changing landscape of the port industry in Asia and the associated implications on port competitiveness. An econometric model is applied to investigate the relative contributions of production elements, scale operations and economic conditions to seaport and airport performances over the recent years, followed by a clustering analysis that groups the ports according to their capital intensities and throughputs after adjusting for differences in the economic environment.