Railway freight subsidy mechanism based on multimodal transportation

Abstract

ABSTRACT To improve the market competitiveness of railway transportation in a multimodal transport system, China’s local governments have adopted their own freight subsidy policies. This has resulted in a disorderly competition for the China Railway (CR) Express. To address this problem, this study aims to determine a suitable freight subsidy mechanism that considers various influencing factors, such as operating costs, external costs, and transshipment costs of various modes of transportation. A bi-level programming model was developed. The upper-level model aimed to maximize the freight carried by the CR Express through unit subsidy. In contrast, the objective of the lower-level model was to minimize the OD transport cost. The solution to the bi-level model was based on Dijkstra’s algorithm and the pattern search algorithm. Taking the freight transport in the Yangtze River Delta and its surrounding areas as an example, we found that when the unit subsidy was increased from 0% to 30%, the proportion of the freight carried by the CR Express increased from 0% to 20% (in terms of the total cargo). When the subsidy was 14.28%, the cargo volume’s rate of increase was at its highest, with the proportion of the CR Express being 13.33%. We infer that goods of different time value should have different subsidy values. Furthermore, we also conclude that with an increase in the loading coefficient, the subsidy could be eliminated in a phased manner.