Evaluating the efficiency and productivity of Malaysian logistics companies using epsilon-based measure and Malmquist index during the Covid-19 pandemic

Abstract

Purpose: The impact of the Covid-19 outbreak since March 2020 has put Malaysia’s logistics sector in a contrasting reality to other sectors, as during the implementation of the movement control order (MCO), this sector was declared as providing essential service and allowed to operate in order to fulfil customers’ needs. This study aims to assess the efficiency and productivity of the logistics industry in Malaysia before and during the pandemic so that the performance of this industry can be observed.Design/methodology/approach: This study uses secondary data. Yearly records from the annual reports for the period of 2010–2020 were gathered pertaining to 15 Malaysian logistics companies treated as decision making units (DMUs) in this study. The efficiency and productivity of the Malaysian logistics industry during the Covid-19 pandemic have been assessed by using a hybrid DEA model consisting of a combination of epsilon-based measure (EBM) and Malmquist index.Findings: Findings showed that Lingkaran Trans Kota Holdings Berhad was the most efficient and productive logistics company with an average efficiency score of 1 and 12.7% growth in the average productivity index during the study period. In contrast, MISC Berhad obtained the lowest average efficiency score of 0.285. Nevertheless, the average productivity index for MISC Berhad showed an increase by 25.7%. During the early outbreak of Covid-19, Complete Logistics Services Berhad achieved full efficiency and also attained the highest positive growth of 76.2%. Harbour-Link Group Berhad was the least efficient company, scoring an efficiency score of only 0.254 and a decline in productivity growth by 40.8%.Research limitations/implications: The data used in this study may not be sufficient to represent the performance of the entire logistics industry as the pandemic is still not completely over. More useful insights can be obtained if the data can be extended until 2022 to assess the performance of logistics companies after the outbreak of Covid-19 in Malaysia. Many resources that have not been explored in this study and past research may provide an avenue for further research on the performance measurement of logistics companies, particularly in the Malaysian context.Practical implications: This study’s discovery may be used to facilitate the evaluation of resource utilisation and help inefficient logistics companies maximise their efficiency. Also, the findings may be used to help policymakers evaluate the existing policy in order to ensure that logistics companies have sufficient resources to offer reliable and efficient courier services.Originality/value: Although numerous studies have been conducted on the efficiency measurement of logistics companies, so far, scarce research in Malaysia has deployed a quantitative approach to measure the performance of Malaysia’s logistics industry, especially during the Covid-19 pandemic. Therefore, this study fills this gap by assessing the efficiency and productivity of the logistics industry in Malaysia before and during the pandemic of Covid-19.

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“…A quantitative method was used by Rusli et al to evaluate the logistics sector in Malaysia before and after the COVID-19 pandemic by comparing the sector's effectiveness and efficacy using the EBM and Malmquist index approaches. [23]. Data envelopment analysis is used to analyze the energy efficiency of China's coastal regions in terms of air emissions between 2000 and 2012 (Qin et al, 2017) [24].…”