Direct Shipping Research Articles

Containership Flag Selection: The Opening of Direct Shipping between Taiwan and China

The signature of the cross-strait sea transport (CST) Agreement in 2008 has not only established the cross-strait direct shipping link, but also lifted the ban on the involvement of Taiwanese flagged ships to call at China’s ports. This paper focuses on the flag selection for Taiwanese container shipping companies under the provisions of the CST Agreement, and embraces the empirical investigation based on the Analytic Hierarchy Process (AHP) and Grey Relation Analysis (GRA) with the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). The results show Hong Kong is the optimal choice rather than China and Taiwan. Although cross-strait shipping is highly controlled by both sides of the strait, economic factors are still taken seriously in commercial activities. Further, to assist shipping companies to get direct shipping approvals from China and revising a package of financial measures under current shipping policies are recommended for the Taiwanese government.

The Pacific's Connectivity and Its Trade Implications

Pacific economies are confronted with several structural constraints that limit their economic growth, most importantly their small size and remoteness from major world markets. In this paper we study the importance of transport connectivity for Pacific economies when participating in the world economy. The paper first describes the evolution of trade flows of the Pacific economies over the last decade, in terms of both trade in goods and services. It then introduces two new datasets. One contains all shipping connections within the Pacific and with the rest of the world; the second all flight connections within the Pacific and with the rest of the world. Combining both datasets with the corresponding trade flows allows us to assess the importance of connectivity for the Pacific's trade performance. Using a gravity model approach, we find that a direct shipping connection more than doubles trade in goods. Similarly, countries with direct flight connections to the sending country welcome twice as many tourists. The frequency of transport connections is similarly important. Using an instrumental variables approach we are able to confirm the robustness of our results.

Percolation of interdependent networks with intersimilarity

Real data show that interdependent networks usually involve intersimilarity. Intersimilarity means that a pair of interdependent nodes have neighbors in both networks that are also interdependent [Parshani et al. Europhys. Lett. 92, 68002 (2010)]. For example, the coupled worldwide port network and the global airport network are intersimilar since many pairs of linked nodes (neighboring cities), by direct flights and direct shipping lines, exist in both networks. Nodes in both networks in the same city are regarded as interdependent. If two neighboring nodes in one network depend on neighboring nodes in the other network, we call these links common links. The fraction of common links in the system is a measure of intersimilarity. Previous simulation results of Parshani et al. suggest that intersimilarity has considerable effects on reducing the cascading failures; however, a theoretical understanding of this effect on the cascading process is currently missing. Here we map the cascading process with intersimilarity to a percolation of networks composed of components of common links and noncommon links. This transforms the percolation of intersimilar system to a regular percolation on a series of subnetworks, which can be solved analytically. We apply our analysis to the case where the network of common links is an Erdős-Rényi (ER) network with the average degree K, and the two networks of noncommon links are also ER networks. We show for a fully coupled pair of ER networks, that for any K≥0, although the cascade is reduced with increasing K, the phase transition is still discontinuous. Our analysis can be generalized to any kind of interdependent random network systems.

Direct shipping across the Taiwan Strait: flag selections and policy issues

The restriction on direct shipping across the Taiwan Strait under which ships registered in Taiwan were banned from calling at China’s ports might have restricted the expansion of the Taiwanese flagged fleet. The cross-strait direct shipping link was established since the Cross-strait Sea Transport (CST) Agreement was signed in 2008. According to the Agreement, only ships owned and registered on either side of the Taiwan Strait or registered in Hong Kong may, with due approval, engage in direct cross-strait carriage of cargos and passengers. The aim of this study is to find the optimal flag selection for Taiwanese shipping companies under the provisions of the CST Agreement. The Fuzzy Analytic Hierarchy Process (FAHP) method is applied to find the preferred registry location among Taiwan, Hong Kong, and China. Sensitivity Analysis is also applied to test how criteria weights influence three alternative hierarchies. The results show Taiwan is the lowest priority with an unchangeable position in flag selection because Taiwanese national fleets mainly suffered higher operational costs. A lower tax rate and appropriate financial systems are therefore recommended in revising relevant shipping policies. Furthermore, to assist shipping companies to obtain China’s approval is also helpful to inspire ships flag back.

A methodology for modelling comprehensive international procurement costs

As the economy becomes more globalised and competitive, firms are manufacturing goods in a wider variety of locations. This may be to reduce costs by moving to a low cost country or to place production closer to potential customers. What is often lacking in these facility location decisions is a holistic assessment of the costs associated with production location decisions. Too often the assessment is focused only on a limited set of cost factors (e.g. direct manufacturing and shipping) and does not take into account the dynamic nature of some costs. To address these limitations a comprehensive cost model to assess the cost of procuring goods from alternative locations is presented. A methodology is detailed for monetising many costs associated with international procurement. An illustrative case study analysing the procurement of goods from two locations in Mexico and one in the US is detailed. Results of the case show that the non-direct manufacturing costs associated with procurement (e.g. inventory holding costs and shipping) can be greater than direct manufacturing costs. The effects of fuel and labour cost sensitivity on the alternative locations are also detailed.

Inventory routing problems: an introduction

In this tutorial paper, we introduce the inventory routing problems (IRPs) with examples, we classify the characteristics of an IRP and present different models and policies for the class of problems where the crucial decision is when to serve customers. We call this class the problems with decisions over time only. The contributions are on the single link case, i.e., the problem where products are shipped from a supplier to a customer with capacitated vehicles, and on the IRPs with direct shipping. We overview the pioneering papers that appeared in the eighties, the literature on the single link and direct shipping problems, and cite the surveys and the tutorials available.

Public Finance, Special Interests, and Direct Wine Shipping Laws in the United States

AbstractThis study develops thirteen criteria to detail diverging direct shipping laws of the U.S. states. It also investigates why some states have prohibitive laws by utilizing a logit regression model. Regression results provide strong support for public finance and special interest arguments: It appears that states concerned about incurring losses in tax revenues, that is, that are heavily dependent on federal aid and have low state revenues, and protecting the wholesalers and retailers that benefit from the three-tier system (at the expense of wineries and wine drinkers) are most likely to have a prohibitive law. (JEL Classification: D72, H71, Q18)

Implementing a Vendor Managed Inventory Policy in a Two-Stage Supply Chain with Stochastic Demands

In a two-stage supply chain, implementing Vendor Managed Inventory policies (VMI), the supplier assumes, in addition to his own inbound inventory, the responsibility of maintaining inventory at its retailers and ensuring that they will not run out of stock at any moment. This paper discusses an optimization approach, considering the impact of demand uncertainty on the inbound as well as the outbound inventory, for a two-stage supply chain implementing VMI. In the proposed approach, retailers are first clustered to minimize the within-cluster travel costs and/or distances and are then replenished using an optimal direct shipping strategy satisfying some additional restrictions.

The influence of direct cross-straits shipping on the smooth transition dynamics of stock volatilities of shipping companies

This article use the smooth transition Generalized Autoregressive Conditional Heteroscedastic (GARCH) model to examine the impacts of direct cross-strait shipping on the dynamic structure of the stocks of shipping companies in Taiwan. We inferred the fact that the structural changes affect the volatility process for all stocks of shipping companies. In addition, we obtain the transition function for all related stock volatilities of shipping companies and find that their structural adjustment processes launch prior to the introduction of direct cross-strait shipping. Meanwhile, the estimated transition functions show that the stock return volatilities of shipping companies have U-shaped patterns of structural changes. This article also caught the corresponding calendar dates of structural change about volatility pattern.

Evolution Of Direct Shipping Of Wine In The United States -- Economic, Legal And Political Considerations

The study examines the effort of wine producers and others in the United States to permit direct shipping of wine to consumers bypassing the traditional three-tier system, where product typically flows from the supplier, to the wholesaler, to the retailer, and ultimately the consumer. The case study places an emphasis on the economic, legal and political issues that have been faced by state legislatures when considering proposals to permit direct shipping. The analysis will discuss the history and evolution of public policies and state laws in the past three decades and will focus on the Maryland experience.

The multi-echelon vehicle routing problem with cross docking in supply chain management

Multi-echelon distribution networks are quite common in supply chain and logistics. Deliveries of multiple items from factories to customers are managed by routing and consolidating shipments in warehouses carrying on long-term inventories. On the other hand, cross-docking is a logistics technique that differs from warehousing because products are no longer stored at intermediate depots. Instead, cross-dock facilities consolidate incoming shipments based on customer demands and immediately deliver them to their destinations. Hybrid strategies combining direct shipping, warehousing and cross-docking are usually applied in real-world distribution systems. This work deals with the operational management of hybrid multi-echelon multi-item distribution networks. The goal of the N-echelon vehicle routing problem with cross-docking in supply chain management (the VRPCD-SCM problem) consists of satisfying customer demands at minimum total transportation cost. A monolithic optimization framework for the VRPCD-SCM based on a mixed-integer linear mathematical formulation is presented. Computational results for several problem instances are reported.

Coordination of split deliveries in one-warehouse multi-retailer distribution systems

In this paper, we consider a distribution system where a warehouse is responsible for replenishing the inventories at multiple retailers by a fleet of vehicles of limited capacity. If a distribution policy of the system involves split deliveries, that is, the inventory of at least one retailer is replenished by using multiple vehicle routes, the coordination of the deliveries can further reduce the inventory cost of the retailer. We consider the coordination where two split deliveries are realized by direct shipping and multiple-stop shipping, respectively. To the best of our knowledge, this kind of coordination was never studied in the literature but can find its application in inventory routing problems. This paper proposes and analyses a class of coordination policies for the split deliveries which can reduce the inventory costs of the retailers without increasing transportation costs. A non-linear programming model is established for formulating the class of polices. Because the optimal coordination policy corresponding to an optimal solution of the model may be hard to find and/or implement, two simple but effective coordination policies are proposed. The inventory cost savings realized by the two policies are evaluated analytically and algorithmically. Our theoretical analysis and computational experiments show that both policies are effective. Under certain conditions, they can save 50% of the inventory costs at the retailers without increasing transportation costs.

An Evaluation of Container Development Strategies in the Port of Taichung

The objective of this study is to examine the container development strategies in the port of Taichung from the viewpoints of carriers, port authorities and shipping academics. The six most important strategic attributes from the all respondents perceptions are Enhancing the services of direct shipping with Mainland China, simplified customs procedures, simplified administrative procedures, developing service routes with Hong Kong and Mainland China, improving port information systems, and flexible rate to response market change. Based on a factor analysis, the findings reflect that price and incentive strategic dimension was the most import strategic dimension, followed by marketing and direct shipping with Mainland China as well as reorganization and information service strategic dimensions. In addition, the perceived implemented period for container development strategic attributes for the Taichung Port was also investigated in this study. Results indicated that four development strategies stood out as being short-term need to perform to all respondents were providing one-stop shopping services for carriers, flexible rate to response market change, enhancing employee training and knowledge, and strengthening port marketing and promotion. Theoretical and managerial implications of the research findings are discussed.

Performance evaluation of distribution strategies for the inventory routing problem

Direct shipping strategy is an easy-to-implement distribution strategy frequently used in industrial distribution systems. In this paper, an analytic method is developed for performance evaluation of the strategy for the infinite horizon inventory routing problem with delivery frequency constraint. With the method, the effectiveness of direct shipping strategy can be represented as a function of some system parameters. We demonstrate that the effectiveness of direct shipping is at least the square root of the smallest utilization ratio of vehicle capacity. This implies that the effectiveness of the strategy can reach 100% (respectively, 94.86%) whenever the demand rate of each retailer is 100% (respectively, 90%) of the vehicle capacity multiplied by the upper bound of the delivery frequency. This insight can help a firm answer questions such as: under what conditions direct shipping strategy is effective and why, and how effective the strategy is under a specific condition? In case direct shipping strategy is proven ineffective, a more general Fixed Partition Policy (FPP) that combines direct shipping strategy and multiple-stop shipping strategy must be used. An analytic method is also developed for performance evaluation of general FPPs. We demonstrate that the effectiveness of an FPP depends on the total demand rate of the retailers in each partition (each retailer set) and their closeness level. This insight provides a useful guideline to the design of effective FPPs. The analytic methods make the performance improvement of a distribution system possible through adjusting its system parameters.

On the (Mis)Measurement of Transport Costs in Econometric Modelling

Several world institutions and researchers use import cif/fob ratios to measure a country’s international transport costs. The purpose of this paper is to investigate the (mis)measurement of transport costs in econometric modelling. The paper discusses the econometric assumptions that are used to justify the (mis)use of country cif/fob ratios to measure international transport costs. Several econometric studies use a country’s cif/fob ratios as exogenous explanatory variables, whereas this study shows that the ratio may indeed be an endogenous variable, hence generating spurious empirical results. In this paper, the relationship between annual cif/fob ratios and compositions of imports are examined via correlation analysis. The findings show that where the quality of the data is reliable, a country’s composition of imports has a significant effect on that country’s cif/fob ratios; hence researchers cannot use the ratio as a dependable measure of direct shipping costs. Researchers should be wary of substituting country cif/fob ratios for direct measures of transport costs. JEL Code: F10

Supply chain design: A holistic approach

Local considerations are one of the major pitfalls in designing, operating and managing systems. As such are the “Supply Chain design decisions”, hence we have tried to incorporate systems thinking approach, and in particular the “Theory of Constraints”, into the problem of “Locating a new Distribution Center” among a producer and a set of existing retailers. While customers face known random demand, we look for the least cost location candidate in a plane with direct shipping. Usefulness of an equity function to balance the inventory levels at retail shops is also discussed. The model is finally reduced to a single nonlinear objective and for a hypothetical numerical example it is solved by Particle Swarm Optimization method.

ON THE (MIS)MEASUREMENT OF INTERNATIONAL TRANSPORT COSTS

AbstractSeveral world institutions and researchers use import cif/fob ratios to measure a country's international transport costs. In this paper, the relationship between annual cif/fob ratios and compositions of imports are examined via correlation analysis. The findings show that where the quality of the data is reliable, a country's composition of imports has a significant effect on that country's cif/fob ratios; hence researchers cannot use the ratio as a reliable measure of direct shipping costs. Researchers should be wary of substituting country cif/fob ratios for direct measures of transport costs.

Taiwan in 2008: My Kingdom for a Horse

The opposition Kuomintang (KMT) won overwhelming victories in the Legislative Yuan and presidential elections, leaving the Democratic Progressive Party (DPP) demoralized and in disarray. Former President Chen Shui-bian was indicted on corruption charges and jailed pending trial. New President Ma Yingjeou moved quickly to improve relations across the Taiwan Strait, and the long-delayed Three Links (direct air, shipping, and postal service) began in December. Taiwan's economy fared badly along with much of the rest of the world.

Analysis of Direct Shipping Policies in an Inventory-Routing Problem with Discrete Shipping Times

We consider the problem in which several products have to be shipped from a supplier to a set of retailers over an infinite time horizon. Each product is made available at the supplier and absorbed by each retailer at given constant production and consumption rates. For each product, the unit inventory cost at the supplier is equal to the unit inventory cost at the retailers. Shipments can be performed in each discrete time instant by a fleet of vehicles of given transportation capacity, and routing is allowed. The aim is to determine shipping policies that minimize the sum of transportation cost and inventory cost both at the supplier and at the retailers. We study direct shipping policies, i.e., policies in which each retailer is served independently. We show the worst-case performance of the best single, best double, best triple, best frequency-based, and optimal direct shipping policies. In each of these policies each link is optimized independently. We prove that, in the worst case, the ratio between the cost of the optimal direct shipping policy and the optimal cost of the problem in which routing is allowed—i.e., the worst-case performance bound of this policy—is not greater than two whenever the unit volume on each link is not lower than 1/4 of the vehicle capacity. Moreover, if the unit volume is not lower than the capacity, the bound is about 1.21. These bounds are tight and obtained by applying frequency-based policies that make use of at most three different shipping frequencies and cannot be improved by allowing more frequencies or using time-based policies on each link. Computational results show that the best among the frequency-based direct shipping policies used to obtain the worst-case results gives an average percent increase error, with respect to a lower bound on the optimal cost of the problem in which routing is allowed, of 6.44% on a large set of randomly generated problem instances.

Integrated production and allocation policies with one direct shipping option

We consider a single period inventory problem in which a supplier faces stochastic demands and customer specific waiting costs from multiple customers. The objective is to develop integrated production, allocation, and distribution policies so that the total production and customer waiting costs are minimized. We present an optimal policy for the two customer problem and derive a heuristic for a general problem based on the structural results of the two customer case. We show, numerically, that the heuristic performs very well with error bounds of less than 2% on average, while typical approximations may lead to significant sub-optimality.