Impact of privatization on port efficiency and effectiveness: results from Panama and US ports

Panama has five main ports: Balboa and PSA Panama International on the Pacific, and Cristobal, Manzanillo and Colon Container Terminal (CCT) on the Caribbean side. The government of Panama originally operated the ports of Balboa and Cristobal. After being transferred from the United States government, most of these ports were privatized in the late 1990s. During this period, some ports in the United States have moved away from operating to non-operating. There are more private sector involvements and publicprivate partnerships. However, in the US there are few full asset privatizations as was done in Panama. This range of privatizations provides the opportunity to study the effects of various types of privatization on port production. We use financial econometric techniques to assess port performance during government operation and private sector operation. The results of the study provide an estimate of the savings and effectiveness gains from privatizations. Few studies examine effectiveness, beyond questionnaires of users. However, especially for transshipment ports as are the case in Panama, service variables, along with price, are very important in determining demand for service. This study compares the effectiveness of Panama privatized ports with US ports in which there are degrees of privatization.