A study of the relative efficiency of Chinese ports: a financial ratio‐based data envelopment analysis approach

Abstract

Abstract: This research examines the relative efficiency of 11 major Chinese ports by using an innovative adopted version of Data Envelopment Analysis (DEA). DEA is a non‐parametric approach to weigh the inputs/outputs and measure the relative efficiency of decision‐making units. This paper adopts an output‐oriented version of DEA based on financial ratios in which no inputs are utilized. The new adopted DEA model provides a rounded judgement on port efficiency taking into consideration multiple financial ratios simultaneously and combining them into a single measure of efficiency. The mathematical model is solved for every port, and the relative efficiency of each port is determined. The results of DEA show that the higher a port's efficiency ratio in relation to the corresponding ratio of another port, the higher the efficiency of this port. Finally, suggestions based on the data analysis are provided for managerial decision makers to improve the areas needed for port operating efficiency.