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Optimizing Transportation Infrastructure and Global-Supply-Chain

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Optimizing Transportation Infrastructure and Global-Supply-Chain OPTIMIZING TRANSPORTATION INFRASTRUCTURE AND GLOBAL-SUPPLY-CHAIN INTEGRATION FOR NICARAGUA’S AUTONOMOUS CARIBBEAN REGIONS THROUGH NETWORK MODERNIZATION A Dissertation Submitted to the Graduate Faculty of the North Dakota State University of Agriculture and Applied Science By James Kevin Leiman In Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY Major Program: Transportation and Logistics March 2019 Fargo, North Dakota North Dakota State University Graduate School Title Optimizing Transportation Infrastructure and Global-Supply-Chain Integration for Nicaragua’s Autonomous Caribbean Regions Through Network Modernization By James Kevin Leiman The Supervisory Committee certifies that this disquisition complies with North Dakota State University’s regulations and meets the accepted standards for the degree of DOCTOR OF PHILOSOPHY SUPERVISORY COMMITTEE: Dr. Robert Hearne Chair Dr. Joseph Szmerekovsky Dr. Pan Lu Dr. William Wilson Approved: April 3, 2019 Dr. Joseph Szmerekovsky Date Department Chair ABSTRACT The autonomous regions of the Nicaraguan Caribbean Coast are resource rich, yet they are among the poorest regions of Latin America. To realize economic growth and potential, this research examined Nicaragua’s primary-sector economic activities and developed a transportation network that would enable the creation of a functional logistics network, therefore enabling integration into the global supply chain for timber, beef, seafood, and light manufactured goods. The main goal of this research is to determine the minimum cost of developing a multimodal transportation network in the region by using roads, rail, intracoastal waterways, and Caribbean Sea transport. In addition to the initial construction costs, a 50-year horizon was evaluated, including operation and maintenance expenses for all possible modes as well as the cost to move all goods from point to point within the network using various options per Ton- kilometer. Several sensitivities were also run using Excel Solver in order to determine what triggers would alter the network’s construction and operation plan for each transportation arc. In the aggregate, the least-expensive option, to include deployment of rail, road, and intracoastal waterway use, costs $861,419,624.87 over a 50-year period. This cost captured the initial construction expenses, operation and maintenance estimates, and the rate to move goods across the network; the best-case scenario enabled construction over a 5-year period. More expensive options for the network’s construction and operation/movement of goods are more likely given the region’s inefficiencies. This research will be given to the Nicaraguan Department of Transportation with the hope that the findings may be used to orchestrate economic and community development in the region. iii ACKNOWLEDGMENTS I would like to acknowledge the dissertation committee, Dr. Robert Hearne, Dr. Joseph Szmerekovsky, Dr. Pan Lu, and Dr. William Wilson, for assisting me with this work. I am deeply grateful for your time, expertise, and willingness to work with me on this research. I would also like to acknowledge Dr. Chrysafis Vogiatzis for his patience as he went above and beyond to ensure that I made it through my qualifying exams. All five of you are consummate professionals, and I am blessed to have benefited from your knowledge and mentorship. iv DEDICATION I would like to dedicate this dissertation to the most important people in my life! Thank you, Mom (Dona Betts), for always pushing me to do better and to achieve the very best! To my wife, Alison; son, Miles; and daughter, Siena, thank you for being patient with me and supporting me through this research. Without these four-amazing people, I would never have been able to get here. I am truly grateful to have a wonderful and enduring family! v TABLE OF CONTENTS ABSTRACT ................................................................................................................................... iii ACKNOWLEDGMENTS ............................................................................................................. iv DEDICATION ................................................................................................................................ v LIST OF TABLES .......................................................................................................................... x LIST OF FIGURES ....................................................................................................................... xi LIST OF EQUATIONS .............................................................................................................. xiii LIST OF PARAMETERS ......................................................................................................... ..xiv CHAPTER 1. INTRODUCTION ................................................................................................... 1 1.1. The Importance of Transportation for Economic Development .......................................... 1 1.2. Background of the Problem .................................................................................................. 6 1.3. Statement of the Problem ................................................................................................... 10 1.4. Purpose of the Study .......................................................................................................... 11 1.5. Research Objectives ........................................................................................................... 12 1.6. Significance of the Study ................................................................................................... 13 1.7. Assumptions, Limitations, and Delimitations .................................................................... 14 CHAPTER 2. LITERATURE REVIEW ...................................................................................... 16 2.1. Introduction ........................................................................................................................ 16 2.2. Overview ............................................................................................................................ 16 2.3. Previous Research .............................................................................................................. 17 2.3.1. Transportation-Network Inequality and an Impoverished East ................................... 17 2.3.2. With Logistics Capability, what Type of Economic Activity is Possible? ................. 21 2.3.3. Latin American Transportation Investment Effect on Land Use ................................ 25 2.3.4. Transportation Network Design .................................................................................. 29 2.3.5. Nicaragua Canal and the Associated Infrastructure .................................................... 33 vi 2.3.6. Supply Chain Improvements ....................................................................................... 38 CHAPTER 3. METHODOLOGY ................................................................................................ 45 3.1. Introduction ........................................................................................................................ 45 3.2. Research Questions ............................................................................................................ 46 3.3. Study Area .......................................................................................................................... 49 3.3.1. Land-Use Change ........................................................................................................ 49 3.3.2. Economic Activity ....................................................................................................... 51 3.3.3. Unintended Consequences........................................................................................... 56 3.4. Model ................................................................................................................................. 66 3.5. Overall Costs May Not Be Captured in the Model .......................................................... 126 3.5.1. Economic Benefits and Costs to RAAN and RAAS Regions with Transportation Infrastructure ............................................................................................... 126 3.5.2. Societal Costs as a Result of Land Use Adjustments ................................................ 126 3.5.3. Energy........................................................................................................................ 131 CHAPTER 4. FINDINGS AND DISCUSSION ........................................................................ 132 4.1. Data Analysis ................................................................................................................... 132 4.1.1. La Cruz De Rio Grande to Kukrahill Via Pearl Lagoon ........................................... 137 4.1.2. El Torugero to Kukrahill Via Camp II Road ............................................................. 138 4.1.3. Pearl Lagoon to the Nicaraguan Road System .......................................................... 138 4.1.4. Bluefields to Punta Aguila......................................................................................... 139 4.1.5. Prinzapolka to Puerto Cabeza .................................................................................... 140 4.2. Sensitivity Analysis .........................................................................................................
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