Freight Price Research Articles

Transportation Costs and Time Impact of the China-Pakistan Economic Corridor

The China-Pakistan Economic Corridor (CPEC), which is part of China's Belt and Road plan, is a network of infrastructure, commerce, and investment projects, as well as energy and technology projects, now under construction in Pakistan and China's Western Xinjiang province. The China-Pakistan Economic Corridor (CPEC), which Pakistani officials have labelled as a "game changer," is the most recent manifestation of the two countries' increasing ties. Because they help to reduce freight prices and transit times, transportation and infrastructure are referred to as major trade levers. This research is primarily concerned with the concept of logistics shipping prices and travel times. China supplies Europe and the Middle East with a reliable, low-cost supply line. The study analyses data in a qualitative and descriptive manner. The study investigates how the CPEC will impact trade in terms of shipping costs and trip time. Transportation and infrastructure are considered critical trade issues since they help to reduce shipping costs and transit times. In order to generate revenues and assure timely product delivery, modern organizations strive to reduce shipping costs and transit times. The goal of this research is to examine the CPEC's significance and its impact on import and export costs as well as transit durations. This study also compares the current path to the suggested itinerary. The study takes a qualitative and descriptive approach to its investigation. The study's starting point was the dry port of Kashgar in western China, with three ports in each European and Middle Eastern countries serving as destinations. The three European ports of Hamburg, Le Havre, and Rotterdam, like the selected Middle Eastern ports of Jeddah, Kuwait, and Oman, which meet China's energy demands, share a considerable trading volume with China. When a 40-foot container is delivered using the current route, the variables time of travel and shipping cost are estimated in the first phase. In the third step, both current and potential CPEC routes are analysed. Because predicting the exact future road transportation cost of CPEC is difficult, the average value of current road transportation costs is used in this analysis. The findings show that shipping costs will be greatly lowered if the proposed CPEC route is implemented. Shipping costs between Kashgar and destination ports can be reduced by 36% for European ports, 50% for Jeddah and Kuwait, and 68 percent for Oman. Furthermore, the transit time from European ports to Jeddah will be reduced by 10-11 days, 15-18 days for Kuwait, and 10 days for Oman.

Customs duties due to COVID-19 extra shipping costs. A force majeure?

Sea freight prices have risen sharply due to the COVID-19 crisis, global shortages of ships, declining competition in the field, and containers of contagious demand. In Israel, the value for customs purposes includes the transportation costs, as in Singapore and the majority of the states. On the contrary, the United States, Australia and New Zealand, have chosen to exclude transportation costs for customs value purposes. Therefore, the increase in transportation costs leads to the increase in the value of goods for customs purposes. This increase lead to an additional collection of customs duties in Israel. The Israeli Law allows the state to facilitate importers and waive the extra customs duties, and similar and other facilitations have been made in the past, for example, in a war or strike situation. Therefore, all that is required is the flexibility and activation of goodwill on the part of the State when interpreting the Law to relieve the importers from extra duties caused by the COVID-19 crisis.

Comprehensive Evaluation Model and Empirical Research on Railway Freight Rates in a Competitive Environment

This study aims to establish criteria to evaluate performance in railway freight pricing policy and to strengthen the marketing ability of the railway freight enterprise. The evaluation method used in our study is known as the improved grey relation analysis evaluation. Fifteen factors that influence freight pricing strategy are selected in this paper to establish a freight rate evaluation index system and comprehensive evaluation index values for monthly freight rates are calculated. The improved grey relation analysis not only considers the relation between each index and freight rate but also examines the relationship between each index. We find that the comprehensive evaluation state using the improved grey relation analysis evaluation method can better fit the 2015–2017 changes in monthly railroad freight revenue than the traditional grey relation analysis evaluation. Furthermore, an optimal pricing model for freight shipping by train is built and calculated using the bi-level programming model. Finally, the S Railway Bureau’s actual coal transportation in 2017 is taken as an experiment to support the validity of the improved grey relation analysis method. We find that when the monthly results of improved grey evaluation grades are compared with the grade evaluation of the gap between the historical shipping coal rates and the optimal freight shipping rates, the comparison of results matches well. The research work is helpful to policymakers who need to judge the performance of the market price.

Israel: Is COVID-19 Expected More Than a War? (The Increase in Customs Value in Israel, Due to the COVID-19 Increase in Transport Prices - The Problem, and the Solution)

Sea freight prices have risen sharply, due to the COVID-19 crisis, global shortages of ships, declining competition in the field, and containers of contagious demand. The increase in transportation costs leads to the increase in the value of goods for customs purposes, and to a further collection of customs duties. The Israeli law allows the state to facilitate importers and waive the extra customs duties, and similar and other facilitations have been made in the past. Therefore, all that is required is the flexibility and activation of goodwill on the part of the state, when interpreting the law.

Study on Discrete Railway Bulk Transportation Option Based on Game Theory

Railway transportation is an important part of China’s transportation system, and its freight price level has a direct impact on the national economy and social development. In this paper, taking railway freight pricing as the research object, based on pricing theories and theorems, the option theory is introduced into the railway freight pricing problem, a Stackelberg game model of railway freight option is established, and an optimization algorithm is proposed to solve the model. It is helpful for railway transportation enterprises to participate in the market competition of railway freight rate system, which provides the theoretical basis and technical support for the market-oriented reform of railway freight rate.

Research on the Route Pricing Optimization Model of the Car-Free Carrier Platform Based on the BP Neural Network Algorithm

The car-free carrier platform is a product of the rapid development of the modern logistics industry and has a vital strategic value for promoting the construction of a country’s comprehensive transportation. However, due to the unreasonable platform pricing model, the industry is currently in a bottleneck period. In order to solve this problem, we established a gray correlation model to calculate the degree of correlation between each characteristic index and platform pricing based on the massive historical transaction data of a certain platform and performed K-means clustering on the results to discover the main factors affecting platform pricing. Based on the abovementioned results, we created a pricing optimization model based on the BP neural network, with the structure of 8-13-1 to predict the freight pricing of the order and test the prediction results. The test shows that the goodness of fit (R2) of the predicted value is close to 1, and the prediction error range is less than 3.7%, which proves the accuracy and effectiveness of the BP neural network model and provides an effective reference for the optimization of the pricing model of the car-free carrier platform.

A Bi-Level Model for Green Freight Transportation Pricing Strategy Considering Enterprise Profit and Carbon Emissions

Due to the impact of COVID-19, enterprises need effective pricing strategies to improve profits and viability. In order to fill research gaps in the literature relating to market competition among different freight modes and to adjust the freight transportation structure by optimizing transportation prices, we propose a multi-objective bi-level programming pricing model that considers market competition and the carbon emissions of the freight system in China. First, an objective function in upper-level planning was used to improve logistics enterprise profits and reduce the total carbon emissions of the freight system. Then, a generalized cost function for the freight transportation mode was designed to quantify the market competition among different transportation modes, and a user equilibrium assignment model was established to obtain the results of cargo flow assignment in lower-level planning. To solve the model, a sensitivity analysis algorithm was designed, and a logistics network example was used to verify the effectiveness of the model. The experimental results show that reasonable freight price adjustment can effectively increase enterprise profits and reduce the total carbon emissions of the freight system. In this paper, we provide a new method for freight pricing research, considering the market competition of multiple transportation modes, and provide a new idea for adjusting the transportation structure through freight price optimization, which will play a positive role in promoting the development of green freight.

A Theory Approach towards Tradable Rail Freight Option

For railway freight pricing, this paper proposes a new tradable rail freight option (RFO). A multiphase trigeminal tree pricing model is established to analyze the optimal pricing decision of RFO. The main parameters of the model are identified theoretically through nonparametric Ito stochastic approach. The paper expands the theory of railway freight pricing. The aim of this paper is to construct the railway freight option theory to help railway transportation enterprise cope with fierce competition and challenge from other modes of transportation in China. The most significant feature of this method is its simplicity in analyzing the optimal pricing decision using only the algebraic category and Ito’s lemma.

Развитие теоретических подходов к ценообразованию на грузовом железнодорожном транспорте в XIX в.

Развитие теоретических подходов к ценообразованию на грузовом железнодорожном транспорте в XIX в.

The Dynamic Impacts of the Global Shipping Market under the Background of Oil Price Fluctuations and Emergencies

With growing uncertainty about the evolution of the global landscape, it is of great practical significance to explore the nonlinear dynamic adjustment relationship among the world oil market, the global bulk shipping market, the stock market, and economic growth in China. This paper applied the TVP-SV-VAR model and selected quarterly data from 1998 to 2020 to explore the dynamics. The results indicated that the impact intensity of BDI on China’s economy had a “positive” to “negative” change in different lag periods. This was mainly due to the fact that the negative impact of higher freight prices on China’s economy outweighed the positive impact of higher trade volumes on China’s economy. The impact intensity of BDI on GDP had a distinct medium- to long-term effect. A positive BDI shock had a dampening effect on stock prices in the short and medium term, while a positive BDI shock could promote stock market prosperity in the long-term perspective. The impulse responses of SSE and GDP to BDI showed that the external shipping market shocks to China’s stock market and economic growth gradually became smaller over time. For impulse response at three different time points, the impact intensity of the BDI to GDP varied at different time points, with the largest shock during the financial crisis in 2008, followed by the shock during the oil price crash in 2014, and the smallest during the COVID-19 epidemic. This demonstrated that the external shipping market’s influence on Chinese economic growth and stock market has gradually weakened over time, illustrating the enhancement of Chinese risk-resilience capacity.

Strategies for Sustainable Urban Mobility: Analysis of Best Practices

The article is dedicated to the analysis of the approved strategies for sustainable mobility (sustainable transport) in the world’s leading cities. It is shown that most strategic documents contain similar principles and goals that determine the transformation vectors for cities. The fundamental principles include hierarchy of priorities (not only financial, but also in terms of equitable distribution of urban space, starting from pedestrian and bicycle mobility and public transport and ending with parking); increasing ecomobility, involving the “80:20” principle (fixing the goal of bringing the share of sustainable modes of mobility to 80% and decreasing the share of cars to 20% by 2030); “healthy streets, healthy people” and “complete streets” (reformatting car-oriented streets into bicycle and pedestrian spaces, administrative restrictions for cars, internalization of externalities); development of environmentally friendly high-speed rail public transport and the creation of preferential access rights for public transport; Vision Zero (zero tolerance for road accidents); compactness, polycentricity, and transit-oriented development; smart transport and multimodality; consideration of the transport system as one of the integral parts of the city’s stability (holistic view), etc. It is determined that the analyzed mobility strategies organically integrate into the general trajectory of sustainable long-term development and promotion of real human wellbeing. Most strategies focus on personal experience of their beneficiaries, which lies at the heart of any reform (people-centered approach). An additional benefit resulting from the implementation of sustainable mobility strategies is lower density and safer distancing within cities, which is highly relevant in the context of the COVID-19 pandemic, as well as reduced freight prices and development of a more just and secure city environment.

Precificação de fretes rodoviários via modelos paramétricos

O transporte pode representar, dentro da estrutura de custos dos produtos, até 60% do seu valor total. No Brasil o modal rodoviário é o mais utilizado, configurando 61% dos fretes realizados. A precificação do transporte rodoviário, no entanto, não é um processo trivial por envolver variáveis que vão além dos custos básicos da atividade. O objetivo deste trabalho é o desenvolvimento de um modelo de precificação de fretes com maior grau de precisão e tempo de resposta reduzido, utilizando técnicas de regressão linear múltipla. O estudo é aplicado a uma empresa de operação logística cujo modelo de negócios é a conexão entre o transportador e o demandante do frete. O modelo de precificação desenvolvido obteve um coeficiente de determinação de 16R2=0,9966"> . Isto é, um modelo altamente explicativo, visto que explica 99,66% da variabilidade dos valores de fretes observados. As variáveis preditoras que compõem o modelo são: distância, custo do motorista, tipo de cliente, valor da nota fiscal, origem e destino. Com o modelo desenvolvido, as variáveis tiveram seu peso estatisticamente calculado, conferindo automatização ao processo e tornando mais ágil a rotina dos analistas da empresa.

A escolha de não ser discreto: discutindo a utilização de modelos discretos contínuos no transporte de carga

O transporte de carga tem utilizado os modelos herdados do transporte de passageiros e com eles todos seus pressupostos tradicionais. Mas são todos eles válidos? O presente artigo visa discutir sobre um dos pressupostos menos contestados neste processo de modelagem: o da exclusividade mútua das alternativas no contexto do transporte de carga. Para isso, este artigo apresenta uma aplicação de Multiple Discrete Extreme Value Model (MDCEV) para a escolha de modo e porto para os consolidadores de grãos na Argentina. O modelo é desenvolvido a partir de uma pesquisa de Preferência Declarada que permitia a escolha de mais de uma alternativa simultaneamente. A escolha é descrita pelo Tempo de Viagem, Tempo de Espera do Serviço, Preço de venda no porto e Custo do Frete. O MDCEV permitiu obter informação sobre o efeito da saciedade das diferentes alternativas. De esta maneira, o MDCEV pode ser uma ferramenta valiosa para a modelagem de escolhas táticas e estratégicas.

The Effect of Truckload Driver Turnover on Truckload Freight Pricing

High rates of truck driver turnover have long plagued the full truckload (TL) sector. While greater driver turnover raises TL carriers’ costs, no research has examined how changes in industry‐wide TL driver turnover rates affect industry‐wide prices shippers pay for TL transportation. Drawing on economic theory regarding firms’ asymmetric adjustment of prices in response to changing costs, we explain why increases in driver turnover are expected to increase the prices carriers charge for their services, whereas decreases in driver turnover are expected to have limited effect on the prices carriers charge for their services. We further explain why the positive impact of increases in industry‐wide TL driver turnover rates on prices will be more pronounced when industry employment is rising more rapidly. To test our theory, we assemble a time series data set combining proprietary driver turnover data with publicly available data regarding TL pricing, trucking employment, diesel prices, and aggregate industry activity. Results from fitting a set of time series econometric models corroborate our theorized predictions. We explain the implications of these findings for theory and practice.

Reducing CO2 emissions through pricing, planning, and subsidizing rail freight

Modal shift from road to rail is considered a promising way to reduce CO2 emissions from the transportation industry. To promote this modal shift, a profit-maximization model that integrates two dimensions is proposed. Internally, the competitiveness of rail freight is enhanced by dynamic freight pricing, backlog controlling, and flexible dispatching. Externally, a subsidy policy is considered to stimulate rail freight. Based on Lyapunov optimization, this multi-slot global optimization problem is converted into a series of low-complexity problems that only require knowledge of the instantaneous system state. The equivalence of this transformation is proved theoretically. Then Harmony search algorithm is used to solve these low-complexity models. A case study based on the transportation network composed of five central cities in China is conducted. Compared with the application of the actual fixed rail freight rates, a CO2 emission reduction of 3261 t can be achieved with the dynamic pricing strategy. Based on jointly optimizing rail freight price and service plan, an additional subsidy of 0.1–0.6 RMB/TEU-km to rail freight operators can achieve an 23.78–25.38% MS from road to rail, as well as a 24.08–26.12% CO2 emission reduction in this service chain.

Pathways for a sustainable future inland water transport: A case study for the European inland navigation sector

Sustainable transport is an important way of mitigating climate change. Inland navigation still is a sustainable mode of transport which is of great importance for the whole European transport market. However, due to its market structure, it risks losing the battle for volume and market share with the other transportation modes. Opting for inductive research approach, this paper first of all collects data. Next, the paper observes the market of the European inland navigation sector and looks for patterns in order to develop a set of structural pathways. From the data collection, it turns out that the sector is facing challenges, mainly due to overcapacity, uncontrolled costs and volatile freight prices. The classical reaction pattern to overcome these shortcomings (capacity control, cost control, playing with ‘time’ and ‘reliability’ factors) does no longer suffice. By analyzing the patterns, the researchers were able to formulate five pathways: A first path is that of technological/operational innovation or retrofitting for ecological and social sustainability. A second path is that of industrial economics: inland navigation is marked by a lot of fragmentation. A solution might be pooling up, whereby the risk of anti-competitive impacts seems very low. A third path is that of financing: the classical financing through banks clearly provides no incentive for reducing overcapacity, even not through bankruptcies. Actual lay-up of vessels seems a must. For longer-run financing, bonds, credit unions or even crowd-funding can be solutions. A fourth path builds on the second one, with more co-operation needed within the wider sector, also with vertically-related partners: charterers, terminal operators, etc. Fifth and finally, a dynamic regulation is needed, following modern rules, with an eye on the longer-term viability of the sector.

Stackelberg Game Model of Railway Freight Pricing Based on Option Theory

In recent years, although rail transport has contributed significantly to the productivity of the Chinese economy, it has also been faced with the fierce competition and challenge from other modes of transportation, and therefore, freight-pricing issue has received more attention by researchers. In this paper, the rail freight option (RFO) based on option theory is proposed to study the optimal pricing decision of the railway transportation enterprise and contract customers’ optimal purchase decisions. To obtain an effective RFO contract, the railway freight contract transaction process is first analyzed. Then, the theoretical framework for the RFO contract trading is put forward in the railway freight market. Next, a two-stage Stackelberg game theoretic approach is presented based on the principle of utility maximization to achieve the optimal decision of RFO contract. Subsequently, the reverse reasoning method in dynamic programming is used to solve the optimal combination decision of the contract customer. Finally, the optimal pricing decision of RFO is discussed using Kuhn–Tucker conditions and Lagrangian function. The result shows that the railway transportation enterprise should pay more attention to the option strike price w1 in terms of maximizing system utility and achieving Pareto optimal.

An empirical analysis of relationships between cyclical components of oil price and tanker freight rates

Oil prices directly impact its global transportation operation, which is mainly served by ocean tankers. Significant financial risks are observed by tanker transporters, which are attributed to uncertainties rooted in the complex non-linear stochastic relationship of oil and freight prices. The non-linearities in both prices are due to multiple factors inducing unique price sub-cycles of different timescales, which makes direct price co-movement analysis a flawed approach. To better address this problem, we propose an approach where we first extract constituent cycles, inter-relationships of which are then pairwise analyzed on corresponding timescales. We employed the Complete Ensemble Empirical Mode Decomposition (CEEMD) method for extracting the constituent cycles. A cross-correlation study was then performed between pairs of oil and freight price cycles. Using data from four major global tanker routes, we found several known and new shipping-based cycles. In terms of co-movements, we see increasingly strengthening relationships in medium to longer terms – mostly led by oil prices. Our findings highlight dissimilarities in relationships across routes that are attributable to route characteristics and tanker types.

Hedging voyage charter rates on illiquid routes

Freight prices are heterogeneous, and not all the routes have the same liquidity of spot or futures prices; therefore, sometimes there are problems related to one, or more, route hedges. In this paper, we develop a methodology to hedge the price risk of one route using other routes' futures contracts. The main result of this paper is that we can hedge, with a great fit, the price risk of one route using other routes' futures contracts. The hedging results obtained with our methodology outperform those obtained with standard simple regression procedures.

Analysis of the problems in China’s railway freight pricing system

The fundamental changes in China’s market structure have ushered in the development opportunity for the cargo transport market and prompted fierce market competition. In this economic environment, the perfection of railway freight pricing system directly affects the market competitiveness. Through sorting out the change course of China’s railway freight pricing management mechanism, this paper analyzes the current situation of freight pricing management mechanism, expounds the freight pricing system. On this basis, the problems of the pricing system are explored, which provides theoretical basis and technical support for improving the railway freight pricing system and deepening the reform of the freight rate mechanism.