How efficient are ferries in providing public transport services? the case of Norway
place - europe
The Norwegian trunk road system is supplemented by ferries due to long coastline with numerous islands and fjords. Ferries in the network operate very much like public transport; they provide scheduled transportation services. The services provided include transporting passengers, passenger vehicles and heavy vehicles across fjords, and there are costs associated with the provision of those services e.g. fuel and crew costs. Further, like all other forms of public transport, most of the ferries are run by private companies, but at a loss. The deficits are subsidised by the government and have risen rapidly in the recent years. Thus, the Norwegian government is constantly looking for ways to improve the efficiency of ferries as units of production. One of the options currently being explored by the government to improve the efficiency of ferry services is a change of the subsidy regime from cost norms to tendering. The expectations are that the change probably will lead to improved performances. However, to implement any new subsidy regime, an initial assessment of performance is needed. Such an assessment will aid in determining the potential for efficiency improvement in the sector that could be gained as well as factors that determine those potentials. In this paper we provide a yardstick for measuring the performance of ferries involved in the Norwegian trunk road system. We establish a best practice frontier from which individual ferries are measured against. The potentials for efficiency improvements can then be derived giving the decision makers knowledge of the magnitude of efficiency gains that can be achieved if the current subsidy regime is changed. The approach we use for establishing the frontier is the Data Envelopment Analysis (DEA) which is known to tackle problems of this type appropriately and which is now popular in assessing the efficiency of public transport services as is evident in the numerous transportation journals. Further, we use a rich data set comprising about 80 ferries operating throughout the country. The data are from the account years 2001 – 2005 and include as inputs fuel, labour, capital and maintenance costs, and as output ferry kilometres per year. Our tentative results indicate that there is a large potential for efficiency improvements in the sector as whole and that a change of the subsidy regime from cost norms probably could be a worthwhile endeavor. Further, we find that area of operation e.g. whether open sea or not has a significant impact on efficiency thus we warn the decision makers not to be indifferent concerning the area where services are provided when assessing the performances.
Sandvik, E., & Odeck, J. (2007). How efficient are ferries in providing public transport services? the case of Norway. Paper from The Association for European Transport Conference held in Leeuwenhorst Conference Centre, The Netherlands on 17-19 October 2007.