Benchmarking of Russian ports Case study from ports of Vladivostok and Nakhodka Candidate name: Oksana Kharchenko Vestfold University College Faculty of Technology and Maritime Sciences MASTER THESIS November 2013 1 Table of Contents Table of figures .......................................................................................................................... 4 List of tables ............................................................................................................................... 5 Abstract ...................................................................................................................................... 7 Acknowledgements .................................................................................................................... 9 List of Abbreviations ............................................................................................................... 10 Background .............................................................................................................................. 11 Purposes ................................................................................................................................... 12 Research issues ........................................................................................................................ 13 Theoretical Aspects .................................................................................................................. 15 Benchmarking .......................................................................................................................... 15 Type of benchmarking used in thesis analysis ............................................................19 Benchmarking of the container ports ..........................................................................20 Applied methods in measuring the effectiveness ..................................................................... 21 Data envelopment analysis (DEA)........................................................................................... 21 Varieties of DEA models and approaches to measure efficiency ...............................22 Benefits and drawbacks of DEA approach: ................................................................26 Review of previous research and analysis using DEA approach:...............................27 Partial productivity measures (PPM) method in use ................................................................ 29 Benefits and drawback applying PPM analysis ..........................................................30 Stochastic frontier approach (SFA) as the efficiency method ................................................. 32 Benefits and drawbacks of SFA method .....................................................................33 Background of product portfolio analysis................................................................................ 33 Financial analysis theory.......................................................................................................... 43 Analysis of financial stability .....................................................................................43 Profitability analysis operating margin .......................................................................44 Liquidity analysis ........................................................................................................45 Activity analysis..........................................................................................................46 Appropriateness of the use of methods and measurements for research questions ................. 47 Conclusion on theoretical aspects ............................................................................................ 49 RESEARCH METHODOLOGY............................................................................................. 51 Research design of the thesis issues......................................................................................... 52 Method description .................................................................................................................. 54 Reliability and validity of the method used ............................................................................. 54 Evaluation of sea ports effectiveness ....................................................................................... 55 Gathering relevant data ............................................................................................................ 57 Conclusion on research methodology ...................................................................................... 59 Case Russian sea ports ............................................................................................................. 61 Description of Russian sea ports and their container terminals ............................................... 61 Nakhodka sea port.................................................................................................................... 62 Vladivostok Sea port ...................................................................................................70 2 Financial analysis of Russian sea ports .................................................................................... 75 Statement.....................................................................................................................75 Financial stability analysis on Russian sea ports. .......................................................75 Profitability analysis of Russian sea ports ..................................................................77 Liquidity analysis of Russian sea ports .......................................................................80 Activity analysis of Russian sea ports ........................................................................81 Conclusion on the financial analysis: .........................................................................83 Comparative analysis of Russian sea ports .............................................................................. 83 Conclusion on case study of Russian sea ports ........................................................................ 89 DISCUSSION .......................................................................................................................... 90 The purpose of the analysis of the efficiency of seaports ........................................................ 90 Conducting BCG Matrix as an analysis of effectiveness ........................................................ 90 PPM approach in thesis analysis .............................................................................................. 95 Selection of the indicators in PPM approach ..............................................................98 Conclusion on product portfolio analysis and PPM approach ............................................... 106 CONCLUSION AND PRACTICAL AND THEORETICAL IMPLICATIONS ................. 107 Suggestion for further research .............................................................................................. 109 3 Table of figures Figure 1: Principal scheme of benchmarking (Global Benchmarking, 2013) ....................................... 17 Figure 2 Classification of the main DEA models (Charnes and Cooper , 1994) ..................................... .............................................................................................................................................................. 23 Figure 3 The frontier of the effectiveness of the models CCR and BCC using DEA-analysis (Cooper W. W., Seiford L., Tone K., 1999) ....................................................................................................... 24 Figure 4 BCG Growth-Share Matrix (Vector Study, 2013) .................................................................. 35 Figure 5 . Strategies and cash flows in BGG Growth-Share Matrix (Stern and Stalk, 1998) .............. 36 Figure 6 Experience Curve Effect in theory (Henderson, B.D., 1984) ................................................. 37 Figure 7 Cycle on investment cash flows in SWOT-analysis on SBU’s (Drawn by author based on Tang and Zhong, 2013) ......................................................................................................................... 42 Figure 8 The process of competitiveness of sea ports and their container terminals (Source: made by author) ................................................................................................................................................... 53 Figure 9 Methods for assessing the efficiency of seaports and container terminals (Source: made by author) ................................................................................................................................................... 56 Figure 10 Scheme of Nakhodka sea port in 2011 (Unified state system of information on the world's oceans, 2012) ........................................................................................................................................ 65 Figure 11. The structure of cargo throughput of Nakhodka sea port 2009-2011 years (in %) ............. 69 Figure 12 The structure of cargo throughput by type of Nakhodka sea port 2009-2011 years (in %).. 69 Figure 13 Scheme of berths’ locations in Vladivostok sea port in 2011 (Vladivostok Commercial Sea Port, 2012) ...........................................................................................................................................