Sensitivity Analysis of Imported Container Volumes to Surcharge Fees Via a User-Equilibrium Model
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Sensitivity Analysis of Imported Container Volumes to Surcharge Fees via a User-Equilibrium Model Thesis Presented to the Faculty of the Graduate School of Cornell University in Partial Fulfillment of the Requirements for the Degree of Master of Science by Yuchen Yan February 2016 COPYRIGHT PAGE ABSTRACT Inspired by rapidly escalating congestion at the Ports of Los Angles and Long Beach as well as other West Coast container ports (Mongelluzzo, 2014), this study analyzes the impact of user fees on the flow of containerized imports into the United States from Asia. This analysis makes use of an equilibrium model where the link impedances include all the logistic fees as well other relevant modal charges. This analysis illustrates an Origin-Destination network that includes four origin-countries, six Ports of Discharge (PODs) and three U.S. areas as destinations. A user-equilibrium model is established for estimating the container flow. Sensitivity analysis of the imported container volume to surcharge fees will then be presented via the equilibrium model. BIOGRAPHICAL SKETCH Yuchen Yan is currently pursuing an M.S. in Civil and Environmental Engineering department at Cornell, specializing in Transportation Systems Engineering. She is originally from Beijing China. She did her undergraduate studies at Hong Kong Polytechnic University, where she graduated with a B.Eng. in Electrical Engineering in 2013. She had a summer internship in Madison NJ in 2014 in a freight forwarding and supply chain management services company. In her free time, she enjoys traveling and playing tennis. ii i ACKNOWLEDGEMENTS First and foremost, I would like to express my gratitude to my advisor, Prof. Linda K. Nozick, a responsible and resourceful mentor and scholar, who has provided me with valuable guidance in every stage of proceeding with this thesis. I shall extend my thanks to Prof. H. Oliver Gao, who is my minor area advisor, for all his kindness and help on providing useful information. My sincere appreciation also goes to Hao Wang, who helps me clarify the thinking at the beginning of my thesis. Last but not least, I would like to thank my friends and parents, for their constant encouragement and support. iv TABLE OF CONTENTS TITLE PAGE................................................................................................................... (i) COPYRIGHT PAGE...................................................................................................... (ii) ABSTRACT......................................................................................................................... BIOGRAPHICAL SKETCH........................................................................................... iii ACKNOWLEDGEMENTS............................................................................................. iv TABLE OF CONTENTS.................................................................................................. v LIST OF FIGURES AND TABLES .............................................................................. vi 1. INTRODUCTION....................................................................................................... 1 2. LITERATURE REVIEW........................................................................................... 3 3. METHODOLOGY ..................................................................................................... 5 3.1 Origins, Destinations and Ports............................................................................. 5 3.2 The Equilibrium Model......................................................................................... 8 3.3 Model Calibration .............................................................................................. 11 4. RESULTS AND DISCUSSION............................................................................... 13 4.1 Experiment: Port Surcharge Fee......................................................................... 13 5. CONCLUSION......................................................................................................... 16 6. REFERENCES.......................................................................................................... 17 v LIST OF FIGURES AND TABLES Figure 1 - Container Port Traffic TEUs - Global and U.S................................................ 1 Figure 2 - The Origin-Destination Network of the User-Equilibrium Model with Number on the Link......................................................................................................... 8 Figure 3 - The Sensitivity of Container Flow (Penetration) to Port Surcharge Fee at LALB............................................................................................................................... 16 Figure 4 - The Container Volumes at PODs as Port Surcharge Increasing................ 18 Table 1 - Top Ten Container Importers by TEU.............................................................. 6 Table 2 - Selected Origin Nodes for the Network............................................................ 6 Table 3 - Selected Ports for the Network...................................................................... 7 Table 4 - Ocean Rates from Origins to PODs................................................................... 9 Table 5 - Unit Costs of Using Truck and Rail............................................................. 10 Table 6 - In-land Move Costs from PODs to Destinations........................................... 11 Table 7 - Observed and Estimated Penetrations of Each Port..................................... 12 Table 8 - The List of Port Surcharge Fees at LALB and Subsequent Penetrations of LALB.......................................................................................................................... 14 vi 1 INTRODUCTION Containerized maritime transportation is the leading method for the import of manufactured goods into the United States. A key advantage of containerization is their standardized dimensions. Hence they can be loaded, unloaded, stacked and transported very efficiently. It also simplifies the counting, recording and tracking processes. Moreover, containers can also be easily transported by rail flatcars and trailer trucks. This is a significant advantage in the system of intermodal freight transport. According to the World Bank (Figure 1), global container flows have steadily increased with a slight dip associated with the Recession of 2009. In 2013, global container flow exceeded 650 million TEUs (Twenty-foot Equivalent Units), which about 40% larger than those same flow in 2009. Figure 1: Container Port Traffic TEUs - Global and U.S. (The World Bank, 2015) 700,000,000 80,000,000 75,000,000 600,000,000 70,000,000 65,000,000 500,000,000 60,000,000 400,000,000 55,000,000 50,000,000 300,000,000 45,000,000 40,000,000 200,000,000 35,000,000 U.S. Container Flow (TEUs) U.S. Container GlobalContainer Flow (TEUs) Flow GlobalContainer 100,000,000 30,000,000 2004 2006 2008 2010 2012 2014 Year World United States Unfortunately, spending on marine ports has not kept pace with rising demands for these facilities. ASCE estimates that there is on the order of a $10 billion shortfall in 1 funding of these facilities through 2020 and additional $17 billion shortfall through 2040 (ASCE, 2012). While not explicitly addressed in this report, this rapid escalation in volumes at these ports also leads to substantial congestion of the road and other infrastructure that lead to and from these facilities. It is this mismatch between supply and demand that suggests that it is important to price these facilities so as to recover funds for investment as well as to encourage volumes at each of the ports that are more consistent with their capacities. The next section discusses relevant literature. The third section describes the user-equilibrium model developed. The following section gives results and some discussion. The last section raises conclusions and opportunities for future research. 2 2 LITERATURE REVIEW There are several studies focused on estimating container flow. Leachman (2008, p.313-331) studied the import of containers from Asia to the United States via San Pedro Bay, which is the site of the Port of Los Angeles and the Port of Long Beach. The study concluded that large and small importers have different sensitivities to the container fee per FEU (Forty-foot Equivalent Units). The study is sophisticated and a little restrictive on the categories of the imports. Luo and Grigalunas (2003, p.158-178) develop a multi-modal container flow model. The model is used to estimate the U.S. container ports flows as the port fees change. The model minimizes total generalized costs, including transportation costs and time costs. To solve this model, a shortest path algorithm is iteratively applied. However, the model does not include port travel times as a function of port volumes. Thus, port congestion is not taken into account in this paper. Rowinski et al. (2000) describes a generalized cost user-equilibrium assignment model to understand the impacts of tolls on route selection for truck traffic. Shibasaki et al. (2005, p.299–336) applies this same concept to international container shipping in the East Asia. The model is built on an inter-region O-D network, which covers all Japanese and major East Asian containers ports. It also discussed the impacts of the “global shipping lines alliances” to the traffic flow and ports. 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