Determinants of cargo and eco-efficiencies of global container shipping companies

Date17 August 2020
DOIhttps://doi.org/10.1108/IJLM-01-2020-0016
Published date17 August 2020
Pages753-775
AuthorKuo-Cheng Kuo,Wen-Min Lu,Qian Long Kweh,Minh-Hieu Le
Subject MatterManagement science & operations,Logistics
Determinants of cargo and
eco-efficiencies of global container
shipping companies
Kuo-Cheng Kuo
Program of Global Business, Chinese Culture University, Taipei, Taiwan
Wen-Min Lu
Department of International Business Administration, Chinese Culture University,
Taipei, Taiwan
Qian Long Kweh
Faculty of Management, Canadian University of Dubai, Dubai,
United Arab Emirates, and
Minh-Hieu Le
Department of International Business Administration, Chinese Culture University,
Taipei, Taiwan
Abstract
Purpose This study aims to evaluate cargo and eco-efficiency of global container shipping companies (CSCs)
and explore the determinants of the CSCsefficiencies. While the former is derived from the CSCsoperational
perspective, the latter highlights environmental issue related to carbon emission reduction.
Design/methodology/approach In the first stage, a two-stage double bootstrap approach of data
envelopment analysis (DEA) is applied to derive bias-corrected cargo and eco-efficiency of the top ten global
CSCs under the variable returns to scale assumption. In the second stage, ordinary least squaresand truncated
regression are applied to examine determinants of the CSCsefficiencies.
Findings The DEA results reveal that the cargo efficiency of the CSCs is higher than their eco-efficiency by
about 2.6% under variable returns to scale in DEA. However, the bias-corrected results show that the difference
is 2.9%. The overall average efficiencies suggest that the CSCs can improve their cargo (eco) efficiency by 6.9%
(10.8%). In the second stage, the regression results show that the numbers of ship, return on assets and asset
turnover ratio are significantly related to both cargo and eco-efficiencies, whereas the total fleet capacity
positively affects cargo efficiency.
Research limitations/implications The results of this study can help the inefficient CSCs make strategic
decisions to improve their performance. For example, their business experience and capacity may be
contributing to their efficiencies. However, this study only focuses on the container market among the three
main markets, namely, dry bulk, wet bulk and container.
Originality/value This study highlights an environmental issue in the shipping industry. While CSCs are
operating their cargo efficiently in general, they should also put green initiatives into their business operations
for the long-term sustainability.
Keywords Data envelopment analysis, Cargo efficiency, Eco-efficiency, Double bootstrap, Environmental
issue, Shipping industry
Paper type Research paper
1. Introduction
In the past decades, globalization has increased the importance of maritime transportation
through the growth of global trade (Guti
errez et al., 2014). As an important part of ocean
transportation, the international container shipping sector has progressed impressively
Global
container
shipping
companies
753
This paper forms part of a special section Impacts of the Belt and Road Initiative on Global
Supply Chain and International Logistics, guest edited by Paul Tae-Woo Lee, Kamonchanok
Suthiwartnarueput, Kevin X. Li, and Ying-En Ge.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0957-4093.htm
Received 13 October 2019
Revised 17 June 2020
Accepted 27 July 2020
The International Journal of
Logistics Management
Vol. 31 No. 4, 2020
pp. 753-775
© Emerald Publishing Limited
0957-4093
DOI 10.1108/IJLM-01-2020-0016
(Chen et al., 2018). Standard containers in liner shipping are remarkably used to move cargo
between different transportation modes conveniently (Chao et al., 2018). Shipping carriers
have invested considerable capital and worked hard to operate their institutions efficiently
(Chao, 2017). However, shipping demand is limited due to the fluctuations in the international
cargo volume (Huang et al., 2017).
In recent years, container shipping companies (CSCs) have grown rapidly with high
capacities; the demand for shipping transportation from the world trade is less than the
supply of shipping fleet capacity (Fan et al., 2018;Guti
errez et al., 2014). Hence, expertise and
strategies are of vital importancefor CSCs to survive and perform efficiently (Chao et al., 2018).
Measuring efficiency is required for shipping companies to enhance the prospects for their
efficiency (Panayideset al., 2011). Many studies have employed the data envelopment analysis
(DEA) methodology to evaluate and examine the performance of shipping companies
with different proposedmodels (Chao, 2017;Chao et al., 2018;Guti
errez et al., 2014;Huanget al.,
2017;Panayides et al., 2011). Chao et al. (2018) proposed a research structure of dynamic
network DEA with shared inputs to measure the performances of 13 major global CSCs.
However, studies considering eco-efficiency, which is one of the vital matters for sustainable
development, are limited (Chiu et al., 2009;Fanet al., 2017). Recent studies have indicated that
eco-efficiency is preferred in variousfields (Fan et al., 2017) and listed as top popular research
for future trends (Emrouznejad and Yang, 2018). The eco-efficiency concept has been
improved by establishinga guideline for assessing eco-efficiency (ISO, 2012). Eco-efficiency is
fundamentally a combined performance of economy and environment (Fan et al., 2017).
The International Maritime Organization (IMO) has issued important regulations on
maritime transport and logistics since 1997 (Lee et al., 2019). The impact of shipping activities
in particular and the supply chain in general on environmental pollution is highlighted in
various discussions (Kim and Lee, 2012;von der Gracht Heiko and Darkow, 2016). The IMO
adopted a strategy that focuses on the decrease in emissions from vessels. By 2050, the
minimum requirement in lowering the total annual greenhouse gas emissions will be 50%,
compared with that in 2008. This environmental issue gives additional pressure on global
container carriers to increase sustainability performance (Chen et al., 2018;Kim and Lee,
2012). In the future, the container shipping sector may consider green shipping that saves
energy and reduces emissions (Chen et al., 2018).
Although environmental efficiency is one of the common topics in existing DEA-related
articles(Emrouznejad and Yang, 2018),limited studies (Chen et al.,2018;Gonget al.,2019)have
been conducted to evaluate the efficiency of international CSCs by considering the
environmental issue. Gong et al. (2019) considered environmental efficiency, which is also
calledeco-efficiency in their study,of shipping companies. The authorsevaluated the economic
and cargo efficienciesof the shipping firms with and withoutexamining the undesirable effect
of emissions and compared this with their eco-efficiency. Gong et al. (2019) pointed out the
relationships between economic and cargo efficiencies, environmentally adjusted efficiency
and environmentalefficiency. Chen et al. (2018)also considered the environmentalefficiency of
the shipping company. However, they only used a Taiwanese shipping firm to examine the
existing resource allocation model, and the number of decision-making units (DMUs) were
insufficient to takecare of the constraints required by the DEA model (Dyson et al.,2001).
Previously mentioned studies cannot divulge the current situation because of the earlier
study duration. Moreover, previous empirical studies applying deterministic DEA methods
involve feasible shortcomings. In the existing literature, no study has utilized the two-stage
double bootstrap method applying to the existing shipping industry literature with
environmental consideration. The method applied in this study allowed us to yield valid
inference because it considers the bias and serial correlations of efficiency estimates (Simar
and Wilson, 2007). Our study contributes to the existing literature by applying a two-stage
double bootstrap approach considering the environmental issue in the shipping industry.
IJLM
31,4
754

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