Efficiency Evaluation of Pakistan Railways Using Data Envelopment Analysis

Abstract

Rails are one of the safe, reliable and profitable transportation system for any country. The Pakistan Railways carried only 47 million passengers and 1.6 million tonne freight in 2013-14, compared to 113 million passengers and 11 million tonnes freight in 1985-86. There is greater need for efficiency evaluation of Pakistan Railways.  In this report we are using Data Envelopment Analysis (DEA) method to evaluate and compare the efficiency of Pakistan Railways from the year 1950 to 2014. We have used super efficiency model to rank the efficient years and reference units were introduced for every inefficient year and determine the amount of input decrease and output increase to make them efficient. We found that the minimum and maximum efficiency is 0.518 and 1.151, respectively and only six years were identified as efficient years. The results show that the efficiency of railway in the year after 1980 are inefficient years, except 2006-07 and 2008-09 which represents the declining trend of railways. Taken together, these results suggest that the mismanagement and lack of professional expertise plague the railways as a fast shrinking public sector organization.

Keywords: Data Envelopment Analysis, Railways, Efficiency