The Demand for Import Services at US Container Ports

Abstract

As global trade increases the interdependence of major world economies, the leading container ports of the United States are growing in importance as gateways from overseas production to domestic consumption markets. With this increased economic importance comes increased dependence of domestic and foreign economies on port practices and procedures, policy actions governing ports, and disasters (natural and otherwise) affecting port operations. Port practices, policy actions and events can affect the time it takes a ship to be serviced at a port, the price of using a port and interject schedule uncertainty at a port. These factors, in turn, affect cargo routers’ choice of port, and the economic benefit (welfare) they receive from their chosen port. In this paper, we estimate a nested logit model, using over 470 000 import shipment routing choices to determine how cost, time and schedule reliability at the top 10 US ports affect cargo routers’ port choices. From the estimated demand function, we calculate demand elasticities for actions and events affecting all ports, as well as each port individually, and ‘willingness to pay’ welfare measures to avoid increases in cost or time and decreases in reliability at top ports.