Measuring global logistics efficiency using PCA-DEA approach

Abstract

In situation of increasing global trade, concentration of production and economic crisis cause the increasing importance of freight transport and logistics. In that manner, economic performances of a country are very affected by logistics performances. Measuring efficiency of logistics activities on global level is important for all participants in international trade. This paper proposes the new methodology for measuring global logistics efficiency that integrates international and domestic indicators into single measure. The Principal Component Analysis - Data Envelopment Analysis (PCA-DEA) approach is used in this paper. Proposed approach is tested on a numerical example which consists of eight countries. According obtained efficiency scores observed countries are ranked. The paper also identifies the most important factors affecting the global efficiency. Several hypotheses are tested in this paper. The results show that the proposed approach can be used for evaluation of logistics activities at the global level.

Keywords

• efficiency
• logistics performance index
• PCA-DEA approach