The application of the ARCH model for the assessment of transport routes in Northern Europe and Southeast Asia

Abstract

The article proposes the method of comparison of future transport routes to connect North Europe and Southeast Asia. Two transport routes can pass through the expanses of the Arctic Ocean, along the shores of Russia and Canada. The Southern Sea Route on the Suez Canal and the Trans-Siberian Railway are the alternative transport routes. The Northern Sea Route is the shortest waterway between Northern Europe and Southeast Asia and has many advantages of goods transportation in the future. Compared to the Northwest Route along the Canadian coast, the Northern Sea Route has a greater number of competitive advantages. The authors outline the stages of transport routes comparison method. At the first stage, the goal of the analysis is set and the mathematical model is chosen. The second stage determines the resulting and influential indicators. The third stage involves collecting the information on selected indicators with each indicator being a time series. At the fourth stage, time invariance of each time series is analyzed. At the fifth stage, model is selected that displays the transport corridor. The sixth and seventh stages deal with autocorrelation and multicollinear analysis. At the eighth stage the coefficients of the equations are calculated. At the ninth stage, the conditional variance of the series of the resulting indicator is estimated and the decision is made whether to use the model of autoregressive conditional heteroscedasticity (Arch – Auto Regressive Conditional Heteroscedasticit) for prediction. The paper describes the results of comparison of various international transport routes.