PRODUCTIVITY AND EFFICIENCY IN NIGERIA’S SEAPORTS: A PRODUCTION FRONTIER ANALYSIS

ABSTRACT

Majority of studies in the port sector have linked productivity growth with port reforms. On determinants of efficiency in the sector; while some empirical research works found significant relationship between ‘type of ownership structure’ (public vs. private terminal operators) among other factors, others found no significant relationship. The majority of such studies featured Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) models as analytical framework. This is in spite of limitations associated with DEA and SFA models. In this research we fill the gaps in existing research by ascertaining the effect of port ownership structure involving foreign private and indigenous private terminal operators on seaport efficiency. This is carried out simultaneously with productivity assessment of Nigeria seaport using a relatively novel modelling framework: Translog Output-Oriented Distance Function model. Using a panel data set covering a period of twenty three years (1991-2013), we calibrated a Translog-output distance function model which incorporates the best features of the traditional models: DEA and SFA. Based on the error structure of the Translog model, we also calibrated an efficiency model. The Two models: Translog distance function and efficiency models were applied in assessing the effects of the spate of port reforms embarked by the Federal government of Nigeria. Results indicate that the port concession policy has induced a productivity growth in the ports;with the index averaging about 1.02per annum in the last twenty three (23) years. This growth is linked to two main sources: efficiency change and technical change. In addition, it was also found that proximity to economic activity, size of terminal and type of port operators are significant factors that affect efficiency of our seaports. Assessment of relative efficiencies of the ports also indicates that only sixtythree (63%) of ports concessioned to private terminal operators and which are located in the Western part of Nigeria attained optimal efficiency levels. The study recommends among othersthat port regulator should be appointed by the government to monitor activities of the terminal operators, ensure they fulfil their contractual obligations in the area of investments in cargo handling facilities and provision of quality ports services. The government should also improve ports’ landside infrastructure. The latter is expected to strengthen the competitive position of ports that face barriers of distance to markets or industrial centres.

Key Words: Nigerian ports, development, production, regulation and efficiency

TABLE OF CONTENTS

PAGE

• Certification                                                                                                 ii
• Dedication                                                                                        iii
• Acknowledgement s                                                                         iv
• Abstract                                                                                                 vi
• List of Tables                                                                                     xii-xiii
• List of Figures                                                                                            xiv
• List of Appendices                                                                         xv

 

CHAPTER ONE

• INTRODUCTION                                                                                     1
• The Background of the Study                                                                         1
• The Research Problem                                                                                     10
• Aim of Research                                                                                          13
• Objectives of the Study                                                                              13
• Hypotheses of the Study                                                                            14
• Significance of the Study                                                                           14
• Justification of the Study                                                                            16
• Scope of the Study                                                                                     19 1.9             Limitations of the Study                                                                              19

CHAPTER TWO

• REVIEW OF RELATED LITERATURE                                         20
• Conceptual Framework of the Study                                                 20

2.1.1 The Concept of Seaports                                                                                 20

• Types of Services Provided at the Ports                                                 21
• Strategic Role of Seaports’ Institutional Structure and

Implications on Terminal Efficiency                                                           22

• Theoretical Framework of the Study                                                         25
• Port Performance Theories: Implicationson Seaport Efficiency

And Productivity                                                                       29

• Contextual and Relational Theory of Port Development                        29
• Spatial Distribution Theory of Port Development                                   33
• Regionalization Theory of Port Development                                     34
• The Conceptual Theory of Port Production                                            36
• Port Governance Theory                                                                             47

• Private Terminal Operations in Public Ports                                            49
• Concession Agreements as Port Governance Tools                                54
• Using Concession to Stimulate and Sustain Competition                      56
• Port Governance Structure/Models andImplication on Port

Efficiency                                                                                                        60

• The Evolution of Port Reform Policies                                                 61
• Port Governance Structures acrossMediterranean,European

and African Countries                                                                                   64

• The State of Port Reform                                                                            65
• Port Regulation and Efficiency                                                                  66
• Classification of Terminal Operators in Seaports                                     69
• The Measurement of Efficiency in Nigeria Ports: Relevance and

Challenges                                                                                                       72

• Measurement of Port Efficiency: Conceptual Issues                         74
• The Concept of Productivity: An Introduction                                     79
  • MeasuringTotal Factor Productivity (TFP): Models

And Assumptions                                                                                            82

• Assumptions ofProductivityModelling                                                 85
• Partial Measures of Productivity                                                             86
• Non Parametric Methods for Measuring Productivity                         90
• Parametric Frontier Models                                                                         93

2.18 Review of Empirical Studies on Port Productivity and Efficiency    99

CHAPTER THREE

RESEARCH METHODOLOGY                                                    130

3.0      Introduction                                                                                          130

3.1      Research Design                                                                                   131

3.2      Description of the Study Area/Population                                        133

3.3      Sampling Procedure                                                                             134

3.4      Sample Size                                                                                          135

3.5      Types and Sources of Data                                                                 137

3.5.1  Primary Sources of Data                                                                     137

3.5.2  Secondary Sources of Data                                                                 138

3.6      Methods of Data Analysis                                                                   139

3.6.1.  Summary of Descriptive Statistics                                                    139

3.6.2.  Pearson’s Pairwise Correlation                                                         140

3.6.3.  Multiple Regression Analysis                                                            141

3.6.4.  Measuring Total Factor Productivity Changes and Decomposition

Into Sources                                                                               149

3.7 Modelling the Determinants of Efficiency inthe Ports

(Describing the (In)efficiency Model)                                   154

3.7.1 Description of Data and Variables for Analyses inthe Study           156

 

CHAPTER FOUR

4.0        DATA PRESENTATION AND ANALYSIS                                159

4.1      Profile of Terminal Operators and Nigeria Ports                             159

4.2      Descriptive Summary of Nigeria Port’s Indicators of Output,

Utilisationand Service160

4.3 Descriptive Summary of Other Port Attributes: Size of Ports               162

4.3.1   Description of Proximity of Port Locations                                           165

4.3.2 Distribution of Foreign Terminal Operators vs. Indigenous

Terminal Operators in the Ports                                                          166

4.3.3 Distribution of Liner Shipping Connectivity Indices by Some

Selected Countries                                                                             167

4.4   Analysis of Seaport Total Factor Productivity                                  169

4.5   Analysis of Sources of Productivity Changes in Nigeria Seaports    176

4.6   Analysis of the Factors Affecting the Efficiency in Nigeria Ports      179

4.7   Analysis of Relative efficiencies of Nigeria Seaports                         182

4.8   Discussion of Findings                                                                          185

CHAPTER FIVE

5.0   SUMMARY, CONCLUSION AND RECOMMENDATION189

5.1   Summary of Major Findings                                                             189

5.2   Conclusion                                                                                        192

5.3   Recommendations193

REFERENCES 198

 

CHAPTER ONE

INTRODUCTION

1.1 The Background of The Study

Trade and transport are inextricably linked; efficient transport services are prerequisites to facilitated international trade between nations. While some recent research demonstrate how transport inefficiencies affect trade success, foreign investment and development, examples include: Hummel (1999),

Henderson et al. (2001), Hoffmann and Kumar (2002), Matthee and Naudé (2007), Tanaka (2010), Limao and Venables (2000) (for precise impact of high transport costs); other studies notably Asher et al. (1998), Sanchez et al. (2003),Clark et al. (2004), and Wilson et al. (2003), however link effect of transportation on trade directly to ports and border crossings.

 

USAID (2004) posits that port inefficiencies have been identified as a major weakness in trade-related transport and logistics particularly in developing countries, which impose costs on producers and erode the intended benefits of trade preferences in major markets such as the United States and the European Union. Improving port efficiency can lower total transaction costs and boost the competitiveness of a country’s exports (USAID, 2004).Therefore, in order to maintain a competitive position in major seaborne trading markets, countries need to work on the factors that affect the efficiency of their ports and draw continuous comparisons on the degree of efficiency among them and with the ports of other regions (Gonzalez and Trujillo, 2007).Over the years, international seaborne trades have been on the increase and national economies have benefited from the multiplier effects of this expansion. For developed countries, it is safe to say that transport is not a barrier to trade. Thus, from the aspects of efficiency, availability, quality, logistics and costs; shippers or traders in those nations are well served by efficient transport provisions. The success of their government’s strategies on economic growth through trade facilitation and expansion has been to a large extent made possible by considerable and properly focused investment in port infrastructure and equipment. This is arguably not the case in developing countries like Nigeria where shippers are faced with a number of transport and other logistical problems in ports and hinterland while making shipments (Onwuegbuchunam, 2013). These

constraints are attributable to inadequate and dilapidated port facilities alongside growingincapacity of the Federal government to continue to fund port investment programmes.

 

Generally, infrastructure funding challenges in ports can be linked to three key global developments namely: technological progress in shipping, wave of fiscal reforms arising (among other reasons) from government’s inability to continue to finance publicly owned ports and competition among ports. One aspect of technological change was the advent of containerization for moving cargo.

Technological changes came with major changes in cargo handling methods using equipment such as cranes, rolling stocks and specialized trucks which have to accommodate the demands of containerization. Ships also grew in size and speed; thus imposing greater demands on port infrastructure and services. Most of these changes have necessitated major port sector restructuring and in particular the unbundling of competitive segments of port services from public monopolies to private operators.

 

The second was the fiscal crisis of the 1980s to the mid-1990s in most developing and transition economies (Estache et al, 2002).Owing to high and lumpy nature of transport investments, government had traditionally been the sole provider of transport infrastructure in most developing and transition economies. The fiscal crises made it increasingly difficult for national governments to continue to provide finance for public monopolies like ports and railways which had hitherto become inefficient. This led to decay in transport facilities and hence poor service delivery in seaports.

 

Thirdly, the technical changes in cargo handling and ship handling methods generated a highly competitive environment in the seaport industry, especially between those large ports with the facilities to serve regular deep-sea traffic from liners. Thisscenario coupled with the development of integrated transport chains has reduced transport costs to such an extent that it is now often preferable for a shipper to use a distant port instead of a closer one, provided that the former has better facilities and connections than the latter. Hence, modern ports must be extremely competitive to be able to offer optimal combinations of time/price for those shipping firms demanding their services. The pressure on port management to attract ships and cargo necessitated large scale investments in ports which must have modern and efficient terminal facilities and sound management to remain in business. These developments however, posed major funding challenges especially to developing countries like Nigeria where the federal government hitherto, shouldered the responsibility for port super and infrastructure investment. Thus while port  sector funding challenges could not be met in the face of other sectors competing for resources, the Nigerian government was left with the choice of involvingthe private sector in infrastructure investment which was needed in order to raise productivity and efficiency levels in port terminals.

 

As a way of introducing private investment in the port sector, the Nigerian government privatized the ports (albeit partially); adopting the “Landlord” approach; whereby the Nigeria  Port Authority ( the custodian of Nigeria ports) is responsible for port planning and regulatory tasks (related to safety, security and environment), and maintains ownership of port-related land and basic infrastructure. Under this arrangement, the private sector would be responsible for terminal operations, construction, purchase, and ownership of superstructure and equipment. Under this model, the public sector provides port infrastructure in the strict sense (lighthouses, quays, loading and unloading areas, etc.) while private companies supply the superstructure required to provide port services (office buildings, machinery, etc.).Within the Nigeria’s port system for example, it is the responsibility of the custodian authority (i.e. NPA)to determine the conditions for the private sector to operate by fixing tariff caps, number and type of terminals, concession terms and features, among others. In order for the NPA to ensure adherence to these conditions it should maintain efficiency, economy, productivity and security standards in ports, which calls for a wide knowledge of terminal productivity and efficiency.Thus, to provide a framework for assessing the effect of deregulation on terminal efficiency and factors that affect productive efficiency given the new environment of port deregulation, this research is imperative. In the following paragraph the specific background to the research problem is presented.

 

The Port’s Authority in Nigeria lacked substantial capital (in foreign currency) required to upgrade port infrastructure and invest in new ones. Specifically, funding challenges led to the following problems: inadequate port storage capacity and navigational aids, bunching of vessels, limited cargo handling facilities, high down time of equipment, low labour productivity and shortage of storage space. Specifically, the effects of the problem associated with limited infrastructure funding in Nigerian ports  by 1990’smanifested inlow levels of efficiency, increased turnround times of ships and increased container dwell times (Leigland and Palsson, 2007). Akinwale and Aremo (2010) for example,find that it took weeks to discharge and load a ship instead of the fourty-eight(48) hours standard time in Asian ports. In 2001, the port of Lagos was only clearing 100 containers per day, compared to the expected 500 to 600, while port users and the Nigeria’s Port Authority (NPA) were increasingly diverting cargo to other ports in Nigeria as well as to ports in the neighbouring countries (UNCTAD, 2011).

 

The ageing infrastructure in Nigerian ports required substantial rehabilitation and replacement involving substantial foreign currency which the Federal Government could not afford. The decay in port services in the pre-reform era was a culmination of the following(Igbokwe, 2001):

(a)         Terminal Facility Constraints:

1. Berthing constraints; arising from congested berths.
2. Lack of cargo storage spaces; congestion of storage spaces at the terminals led to double stacking of containers and hence container identification (manually done) became a time consuming activity.

• Shallow draughts of the portsdue to poor dredging made port visits by large vessels impossible and this led to high frequency of ship diversion to neighbouring ports.

1. Lack of total mechanization of cargo handling operations: stevedoring labour productivity and crane efficiency were low. Besides, strike actions and poor weather often exacerbatedthe problem.
2. Absence of Integrated Management and Port Community Information

System: Absence of integrated Information and Communication Technology (ICT) in port operations resulted in lengthy documentation processes thereby causing delays. Thus, manual processing, multiple physical interfaces and redundancy characterized the export-import processes at Nigerian ports. Hence, bottlenecks and limited use of information technology in the processes hampered the seamless transfer of cargo at the ports. In addition, the presence of physical interfaces in the import/export process hindered the smooth flow of information transfer, thus leading to lower productivity.

 

(b)        Managerial Problems (operational in nature)

1. Absence of priority in assigning vessels to berths.
2. Security Problems: Security breaches in the terminalsand the introduction of too many agencies in ports which encouraged piracy and touting.

• Sub-optimal port services were provided to port users who consequently resorted to using neighbouring ports where tariffs and costs were competitive.

1. Funding Constraints: This encouraged foreign domination: Nigerian Government lacked capacity to properly fund port investment. Neighbouring ports with proper port investment competed away port services from Nigeria.
2. Corrupt Practices: There were too many agencies in the ports some of which activities overlap and there was large scale extortion of money by each of these agencies.

The above problems manifested in high turnround times of ships visiting ports, high cargo dwell times, uncompetitive cargo handling operation and exorbitant terminal handling charges.Thus, the port stakeholders complained about uncompetitive port services and increasing transaction costs at the ports. Significant pressure was mounted on the federal government of Nigeria to reform the port system. In an attempt to address and provide solutions to problems in the national ports and hence improve port services, the federal government engaged the services of a Dutch maritime advisory firm. The firm initiated a study of the port sector known as the Royal Haskoning B.V(Leigland and Palsson (2007)). The ‘Haskoning’ study found that the administration of the

Nigerian ports was characterised by an unusually high degree of centralization. The management of Nigeria Ports Authority(NPA) for example, usually sought the permission of the president or the minister of transport before certain decisions were made. Hence, key decisions affecting both policy and operation in port sector were not taken with dispatch. The ports were also operated as public corporations without commercial focus. Internal budget deficits arising from inefficient services were dealt with through imposition of uncompetitive tariffs. According to the study, although the Nigerian Ports Authority operated a ‘Tool port’ at the time, it did not restrict its services to this function. The authority participated in service delivery alongside with the private operators. This duplicity led to excessive shipping and freight handling costs. As Leigland and Passion (2007) records, by the end of 1990’s repeated tariff increases along with unchecked inefficiencies and poor management, had made Nigerian ports among the slowest and most expensive in the world.

 

Based on the assessment of best practices, the ‘Haskoning’ study recommended the adoption of the ‘Landlord’ model whereby the public sector (NPA) would be responsible for port planning and regulatory tasks (related to safety, security and environment) and maintains ownership of port related land and basic infrastructure. The private sector would however, be responsible for marine and terminal operations, construction, purchase and ownership of superstructure and equipment. Based on the recommendations of the Haskoning study, the Federal Government of Nigeria, embarked on terminal infrastructure concession as a way of attracting private capital to the port sector.By July 2006, about 25 long term port concession contracts had been awarded to private companies

(Akinwale and Aremo, 2010).

1.2 THE RESEARCH PROBLEM

The specific port productivity and efficiency issues which the reforms are expected to address could be summed thus; based on Gidado (2008): (i)

Increasing port efficiency through concession of terminals to private operators, (ii) Decreasing the cost of services to the port users by administering price competitive services and (ii) Decreasing government expenditure (public costs) for supporting a viable port sector. It is envisaged that addressing these issues through reforms would lead to reduced transaction costs in ports, trade facilitation/expansion and economic growth in the long run. However, the port modernization policy of the federal government has so far; based on UNCTAD (2011) assessments yielded the following positive outcomes:

1. Substantial investments in physical capital in line with the development plans have been made. ii. Injection of managerial expertise and investments leading to productivity improvements.

iii. Throughput expansion. iv. Reduction in cargo clearance delays.

1. Improved connectivity to international shipping networks, facilitating international trade and opportunities to develop a logistics hub.
2. Knowledge transfers to local operators and employees.

• Further capacity developments like the 1000 TEU container terminal at

Lekki are on underway.

More specifically, investments in facilities and handling equipment have led to reduction in average waiting time of vessel in Nigerian ports form 2.17 days in 2003 to 1.6 in 2010 (UNCTAD, 2011). In spite of the achievements made so far, the following constraints according to UNCTAD (2011), still persists in the port sector:

• Shipping tariffs are higher than pre-reform levels.
• Slow response by NPA to port infrastructure and maintenance needs.
• Failure of certain operators to fully implement investment and development plans or fulfil financial obligations to the government.
• Problems with the state of assets and property handed over by the NPA.
• Persistent anti-competitive behaviour.
• Industrial actions over implementation of new labour regimes.
• Continued cargo clearance delays and issues with customs and cargo

inspection.

• Failure of some investors to fully implement investment and development plans or fulfil financial obligations to the government.

Thus, while it appears from the foregoing that port reform undertaken has not completely addressed port terminal performance questions; there is need to investigate in details, drivers of productivity changes and efficiency in Nigeria’s seaports. The quest for optimal port modernization policy has provided the context and impetus for this study. This study seeks to evaluate seaport productivity and drivers of its efficiency. The assessment of efficiency of seaports is of extreme importance because of theincreasing competition they face (Cullinane et al., 2006) which in turn creates the need for better utilization of the available resources (Halkos and Tzeremes, 2012). Specifically this study would provide an analytical framework for evaluating the outcomes of the ongoing port reforms and ascertain imperatives of future port modernization policies. Empirical findings on variables which drive port productivity and efficiency are relevant to the port regulator for reviewing and setting new benchmarks for the terminal operators. Following the transfer of port terminal management from public to private sector; this study seeks to ascertain the following:

1. Have there been significant changes in port production frontier in the post concession era and what are the sources if changes have occurred?
2. What factors drive efficiency in the port sector?

• How has the type of port concession policy adopted affected port efficiency?

1. What are the relative efficiencies of Nigeria’s seaports?
2. What are the imperatives of terminal concession policy on the efficiency of

Nigerian ports?

The answers to the above specific questions form the basis of the research problem which is the analysis of productivity and efficiency in Nigeria’s seaports.

• AIM OF STUDY

The main aim of this research is to evaluate the productivity and efficiency of Nigeria’s seaport terminals and hence ascertain the determinants of seaports’ technical efficiency.

• OBJECTIVES OF THE STUDY

The objectives of this study are as stated below:

1. To determine the productivity changes (or frontier shifts) in Nigeria’s ports.
2. To identify the sources ofproductivity changes in Nigeria’s ports.
3. To evaluate the significant factors that affect seaport efficiency.
4. To assess the relative efficiencies of Nigeria’s seaports in post concession reform regime.
5. To test for the effect of ownership structure on port efficiency.

 

 

 

 

 

1.5 HYPOTHESES OF THE STUDY

To realise the objectives of this study, the following null hypotheses are postulated and tested.

1. There are no significant changes in level of productivity in Nigeria’s seaports.
2. The sources productivity changes in Nigeria’s seaports are not significantly different from zero.
3. The factors affecting seaport efficiency are not significantly different from zero
4. The relative efficiencies of Nigeria’s seaports in the post concession era are not significantly different from zero.
5. There is no significant effect of ownership structure on the efficiency of seaports.

(All hypotheses are tested at α = 0.05 level of significance).

 

• SIGNIFICANCE OF THE STUDY

The ability to quantify efficiency and productivity variables provides the port management with a control mechanism with which to monitor the performance of production units under its control. The research aims at providing critical port productivity and efficiency assessment metrics. The outcome will be relevant to port stakeholders given the new emphasis on reduction in transaction costs along transportation chains and facilitation of international seaborne trade through removal of tariff and non-tariff barriers. Specifically, the government, which is the regulator in the ‘Landlord’ model type of port governance adopted in Nigeria ports, may wishto assess the effects of the reform policy initiatives on port infrastructure performance (i.e. its productivity and efficiency).

 

Empirical estimates of port efficiency variables could be used by the port regulator to assess policy scenarios (sensitivity analysis) and hence avert costs associated with outright policy introductions. For the port investors, the terminal operators; they will be interested in knowing the feasibility for recouping their investments at the ports. The study would provide them with immediate tool for knowing specific areas (capital, labour and other environmental inputs) to concentrate their focus on. The study would provide information on factors that drive seaport infrastructure productivity and efficiency and hence identify areas for strategic planning and investment. It would also provide them with basis for providing competitive services. For instance, factors that attract shippers, logistic service providers, carriers and shipping companies to ports (grouped under environmental factors in model) would help in designing port services that meet the strategic interest of the port users. To the academia, the contribution of this research would fill research gaps in port production frontier modelling in the context of a developing country like Nigeria which merits closer investigation.

 

• JUSTIFICATION OF THE STUDY

Many research studies have addressed gaps in literature on port terminal productivity and efficiency modelling using the traditional parametric and nonparametric productivity models. Examples of non-parametric models include: Data Envelopment Analysis (DEA), and Free Disposal Hull, etc.; notable applications include: Martinez et al. (1999), Tongzon (2001), Turner, Windle, and Dresner (2004), Barros et al (2006),Cheon(2007), Al-Eraqi et al. (2008), Liu et al. (2008), Barros et al. (2010), Caldeirinha (2011), Munisamy and Singh

(2011), Demirel et al. (2012) and Lu and Wang (2012).

 

The parametric models include: Stochastic Production Frontier (SPF) based on Cobb Douglas, Constant Elasticity of Substitution (CES) or the more flexible specification Translogarithmic function and notable applications include: Liu

(1995), Notteboom et al. (2000), Coto-Millan et al. (2000), Cullinane et al. (2002, 2003, 2006), Di-Vaio et al. (2011) and Kennedy et al. (2011). Single output stochastic frontier models have been found inadequate in cases where the multi-output characteristics of port technology are to be considered. Although deterministic based frontier models like the Data Envelopment (DEA) technique overcomes this limitation, it is rather inefficient in the presence of outliers in sample data. Besides DEA approach ignores the functional forms of the frontier involved and hence cannot account for any noise (error term) arising from measurement in data set. The limitations in the use of stochastic frontier models and DEA techniques have been taken care of in the few recent empirical applications using parametric Distance Function models. These models combine the excellent features of stochastic frontier and DEA models; examples include: Sarriera et al. (2013) and Gonzalez and Trujillo (2008) who assessed the effects of reforms on technological change of ports. In this study we extend the application of parametric Distance function model in examining among others, the determinants of efficiency, the technological changes and the sources of such changes in Nigeria’s ports. In terms of focus, most researches in port efficiency have concentrated on post port reform evaluation and have tested the impact of port ownership type on terminal infrastructure efficiency; i.e. whether public or private ownership contributed to terminal efficiency. The existing studies assume homogeneity in private terminal operators, but this is not the case in the Nigeria’s reforms. This study will extend existing research frontier further by examining the effect of ownership structure (peculiar to Nigeria’s reform context) on port terminal infrastructure efficiency.

 

Thus, there is appreciable degree of heterogeneity in private ownership structure in the Nigeria’s case; hence we want to determine empirically for example, whether being an indigenous private operator or foreign based private operator had any effect on capacity to invest and manage port terminals and hence achieve efficiency in terminal operations. This study is critical in the light of anecdotal evidence that the indigenous private terminal operators lack expertise and face significant barriers in accessing foreign credits than their foreign counterparts. In other words, the relevant question is; does type of terminal operator matter in terminal infrastructure provision, management and efficiency. This differentiation (in financial capability and expertise) has implications on port efficiency and competition and therefore merits empirical investigation.

 

There seems to be contrasts in findings on relationship between port efficiency and ownership structure; for example Liu (1995), Notteboom, Coeck and Van den Broeck (2000), Tongzon (2001), Cullinane, Ji, and Wang (2005) and Kennedy et al. (2011) suggest that there is no link between ownership structure and estimates of port efficiency. However, studies by Valentine and Gray

(2001), Cullinane, Song and Gray (2002); Gonzalez and Trujillo (2002), Barros

(2003), Tongzon and Heng (2005), Cullinane, Wang, Song, and Ji (2006), Manzano et al. (2008) and Sarriera et al. (2013)find that positive relationships exist between port efficiency and ownership structure. The point to note is that these authors tested for ownership vs. efficiency effects between public and private terminals and not between indigenous and foreign private terminals as prevalent in the Nigeria’s context.

 

 

 

1.8 SCOPE OF THE STUDY

The heterogeneity of activities developed at ports hinders the analysis of ports as a whole and, on the contrary,calls for an analysis focused on a specific activity (Nombela and Trujillo, 1999) and a limited number of ports (Tongzon, 1995a, b, 2001). In this study the performance of terminals in eight (8) coastal ports in Nigeria covering the period from years 1991 to 2013 will be assessed. Economic activities within a port have multiple dimensions. They encompass administrative services, ancillary services to ships like pilotage, towage, supply of utilities, ship repairs and cargo handling etc. Among these services, cargo handling requires special attention as it constitutes more than 80% of the bill on vessels ‘visits’ to a port (Trujillo and Nombela, 2000) and (Tovar et al., 2007). Therefore analysis in this research will focus on terminal operations covering cargo handling and infrastructure utilization. The study period covers the pre and post port reform regimes and is intended to capture effects of the reform policies: effects of investments in cargo handling facilities and infrastructure on terminal productivity improvements and efficiency.

 

1.9 LIMITATIONS OF THE STUDY

The study will be limited to assessment of port productivity changes and evaluation of factors that determine port infrastructure productivity and efficiency based on production frontier analysis.

 

PRODUCTIVITY AND EFFICIENCY IN NIGERIA’S SEAPORTS: A PRODUCTION FRONTIER ANALYSIS

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