Individual Shippers Research Articles

A descriptive and prescriptive analysis of rail service subsidies in the China–Europe freight transportation market

This study delivers a descriptive and prescriptive analysis of rail service subsidies for China Railway Express (CRE) in the China-Europe freight transportation market. The analysis is conducted by advanced mathematical modeling and programming methods. Specifically, we implemented a multicommodity multimodal freight transportation network equilibrium model that can be used for predicting the commodity-specific mode-route cargo flow pattern and hence for assessing the effectiveness and limitations of the current CRE subsidy scheme. To properly quantify the impact of subsidies on individual shippers’ decision making, the model explicitly characterizes individual shippers’ mode-route choice behavior and takes into account shipping cost, transit time, capacity-induced congestion surcharge, and unobserved transportation impedances as shippers’ disutility. The solution of the network equilibrium model resorts to a disaggregate simplicial decomposition algorithm within the well-known Lagrangian relaxation framework. A bi-level network-based subsidy optimization model is constructed, in which the upper level aims at minimizing the sum of revenue loss and congestion charge, and the lower level is the aforementioned freight transportation network equilibrium model. A tabu search procedure is proposed and implemented to derive the solution of the bi-level model. The above models and algorithms are then applied to the China-Europe containerized freight transportation network, which comprises all China-Europe liner shipping lines, all CRE service lines, and the highway networks in China and Europe. The evaluation and optimization results show that the current subsidy scheme creates an imbalanced capacity utilization pattern across CRE service lines while an optimized line-specific subsidy solution can yield noteworthy improvements in the service utilization and economic efficiency of CRE.

Sustainable supply chain design: A case of collaborative wholesale distribution

We assess the cooperative network design's efficiency outcomes in Morocco's food wholesale distribution. Before joining the collaborative coalition, we provide decision-makers with an initial preference instrument to assess the environmental and financial effects of cooperative freight distribution. We assess the practicality of incorporating decisions from the Facility Location Problem (FLP) and Vehicle Routing Problem (VRP) into partnerships for sustainable freight transportation. The coalition utilizes a 3PL provider's fleet of cars, therefore the Vehicles are exempt from having to go back to the consolidation depot; as a result, the fundamental issue becomes an open location routing problem (OLRP). Although there have been several studies on open location-routing problems, their application to horizontal shipper collaboration is new. For diverse collaboration scenarios, our computational approach is founded on two-echelon OLRP under a multiple objective and periods’ framework. Every shipper involved in the partnership needs to receive gains. Therefore, evaluating the benefits to each individual shipper is essential for an effective and durable collaboration. This study addresses the issue of profit allocation to determine the collective and individual shipper's savings. By considering not just economic variables but also environmental factors, the Open LRP may help firms plan and optimize their collaborative supply chains in a more sustainable manner.

Optimizing Rail Transport Service in a Dry Port System

With the prosperity of global trade and maritime transportation, dry port is playing a significant role in freight transport industry through relieving seaport congestion and facilitating improved logistics solutions. This article studies the rail shuttle service pricing and scheduling problem in a dry port system with one dry port and multiple shippers. Bilevel models are developed to address the interaction between the dry port and shippers, with the dry port as the leader and individual shippers as followers. The optimal properties of the proposed bilevel model are analyzed, and a solution procedure is proposed to obtain the global optimal solution. Numerical studies are carried out to investigate the sensitivity of optimal decisions, and performance of both parties with respect to various system parameters. This study shows that offering a higher storage price could not always bring higher profit for the dry port. An extremely high storage price will reduce shippers’ total costs, especially for shippers with high production rates. If the seaports’ cutoff time is short, shippers with low production rates would have to bear high expenses. It is also found that low setup costs at shippers will bring not only cost savings for shippers, but also profit improvement for the dry port.

A multimodal multicommodity network equilibrium model with service capacity and bottleneck congestion for China-Europe containerized freight flows

As a traditional way for transporting containerized cargoes, international liner shipping has long played a dominant role in the China-Europe freight transportation market. In recent years, China Railway Express has offered a new and competitive freight transportation option, contributing to a significant increase in the trade volume by rail between China and Europe. With the goal of providing a holistic computational tool that can predict and analyze the spatial distribution of containerized freight flows and suggest strategic transportation infrastructure and service expansion options, this paper develops and implements a multimodal multicommodity freight transportation network equilibrium model, based on a newly constructed supernetwork integrating international liner shipping lines, international freight rail services, and international and domestic highway networks in relevant countries. The combined transportation mode-route choice behavior of individual shippers is characterized by the widely used multinomial logit model, where the values of time of different commodity categories are included in its utility functions. The congestion effects arising from bottleneck facilities along liner shipping and freight rail lines (i.e., seaports, water channels, and break-of-gauge stations) are first captured by queueing models and then approximated by polynomial delay functions, while the accommodation capacity of individual service lines is explicitly embedded into the model as hard constraints. This supernetwork equilibrium model is tackled by a subgradient algorithm in the Lagrangian relaxation framework embedding a disaggregate simplicial decomposition algorithm. Computational experiments are conducted with a multi-layer, hetero-structure set of supply and demand data collected from multiple data repositories, government agencies, freight carriers, and research papers and reports. The preliminary results exhibit the computational performance of the solution procedure and reveal the variation of congestion levels of bottleneck facilities, capacity usage profiles of service lines, and competitiveness conditions between liner shipping and freight rail services under different monthly demand patterns.

Optimal subsidy scheme design for promoting intermodal freight transport

Waterborne transport is known to have low environmental impacts compared to other modes. This paper investigates the optimal container subsidies for shippers to promote intermodal shipping involving waterways in a regional transportation network. We consider a linear subsidy scheme consisting of a fixed-rate component and a variable component proportional to the sailing distance. The optimal subsidy design problem is formulated as a bilevel program to maximize the intermodal transport split of demand and minimize the subsidy expenditure. Faster methods are developed to solve the optimization problems of two special subsidy forms, i.e., fixed-rate and distance-based schemes. A case study of the Pearl River Delta region in China suggests that an optimally designed subsidy scheme can increase the intermodal split of container transport by 16%. Many insights are unveiled from the case study regarding the performance comparison between different subsidy schemes, the optimal schemes’ environmental impacts, and their effects on individual shippers and feeder ports. For example, the subsidy is less effective for shippers originating too far from or too close to the hub port and for highly time-sensitive or time-insensitive goods. Moreover, two commonly-used objectives, maximizing the intermodal split and minimizing the CO2 emissions, are well aligned as they yield similar solutions. These insights can assist the local governments in determining the appropriate subsidy schemes and better understanding their overall effects.

Analysis of Quality of a Carrier’s Website to Increase Loyalty of Individual Customers

During the pandemic, the competition for the consumer has moved from the format of live communication to the plane of remote interaction in the global environment. The sphere of cargo transportation makes no exception for that, since a highly competitive market is characterized by the presence of many transport and logistics companies that to struggle for a client actively use remote technologies, the leading place among which belongs to the company’s website. From a marketing standpoint, the website is recognized as one of the leading sales tools. Freight carriers that base their activities on the principles of customer focus give priority attention to quality of their own website, and therefore development of a methodology for its assessment, which is the purpose of this study, is of relevance.The website of a leading company was chosen as the object of the study, while the section of the website dedicated to providing service for transportation of groupage cargo under contracts with individual shippers was its subject.The article proposes the author’s method of assessing quality of the website of freight carriers from the standpoint of customer focus. The methodology is based on the author’s system of general and special criteria describing quality of the website and assessed according to a 100-point scale of values and a tenpoint scale of significance for a respondent. The assessment method is an open survey of consumers in the Global Network. The developed methodology is universal and can be used by any cargo carrier to improve quality of transport services.Within the framework of the methodology suggested in the article, it is possible to diagnose, based on customers’ opinions, the «bottlenecks» of the section of a company’s website devoted to providing the service. Reducing customers’ comments regarding the points awarded allowed the author to identify the reasons for lower ratings and to propose reasonable measures to update corporate website to improve quality of transport services.

Modeling the Efficiency of a Port Community System as an Agent-based Process

Abstract: We present an agent-based method which makes use of reinforcement learning in order to estimate the efficiency of a Port Community System. We have evaluated the method using two weeks of observations of import containers at the Port of Brisbane as a case study. Three scenarios are examined. The first scenario evaluates the observed container delivery by individual shipping lines and estimates the consignments allocated to the various road carriers based on optimizing the individual shipper's total logistics cost. The second scenario implies that, in the optimum case, all agents (shipping lines and road carriers) communicate and cooperate through a single portal. The objective of cooperation is in sharing vehicles and creating tours to deliver shipments to several importers in order to reduce total logistics costs, while physical and time window constraints are also considered. The third scenario allows for some agents to occasionally decide to act based on individual costs instead of total combined logistics costs. The results of this study indicate an increase in the efficiency of the whole logistics process through cooperation, and the study provides a prototype of a Port Community System to support logistics decisions.

New Approaches for Lock and Dam Maintenance Funding

A crisis is developing in the maintenance of lock and dam infrastructure. The U.S. Army Corps of Engineers faces a higher demand for building and maintaining its projects than available federal funding allows. This situation is raising basic questions about how the corps functions, including the effectiveness, efficiency, and equity of project planning and implementation. The objective of this study was to explore the feasibility and potential advantages of transitioning the U.S. lock and dam system from the current approach of build and expand prescribed by the Water Resources Development Act of 2007 to an approach of repair and sustain. A two-part effort took place to fulfill this objective. The first part analyzed the state of the practice in policy, legislation, funding, planning, and project implementation and estimated the impacts of alternative approaches, both at the national level and to the individual shipper. The second part analyzed economic, funding, and financing issues; developed alternative revenue-generating scenarios; and compared case studies of waterway infrastructure projects in the United States and abroad to determine the potential for transitioning from the current funding approach to a bonding style (lump sum up front) approach. The study concluded that it would be possible to maintain, improve, and ensure the long-term viability of the U.S. inland waterway infrastructure through alternative approaches, but significant changes would be required in policies, funding mechanisms, programs, and procedures for project planning and implementation.

Development of a Web-Based Foreign Waterborne Cargo Data System in the United States

As nations forge strategic trade alliances, international marine trade is expected to increase, and the United States is expected to play a prominent role. This situation will require the private sector to play a critical role in identifying and entering new markets; correspondingly, public authorities must continue to provide adequate port services. Achieving this objective means having access to reliable foreign waterborne cargo data in a timely manner. In an effort to improve data access and use for analysis purposes, a web-based foreign waterborne cargo data system for the United States was developed to query the U.S. Army Corps of Engineers' foreign waterborne cargo databases and report on U.S. port cargo movements (exports, imports, and in-transit) to foreign ports, countries, or regions. Query tools have been developed for cargo flows, cargo flow changes, ton-miles, container traffic, and additional reports. Potential system users include government agencies, international organizations, businesses, port authorities, individual shippers or carriers, trade associations, and chambers of commerce. The aim of this paper is to highlight some of the current challenges in U.S. foreign waterborne transportation and present the results of the U.S. data system on foreign waterborne cargo. The main system query and report tools are illustrated through several examples. Also presented is a brief discussion on the benefits of utilizing these flexible tools and future system enhancements, which will focus on integrating foreign and domestic flows into a single system and improving cargo flow mapping by showing port–port routes.

Examining the business case for shipper participation in Canada–USA trade security programmes

Among Canadian shippers involved in Canada–USA trade, uncertainty about costs and benefits has been cited as a possible explanation for the relatively small number of them that have sought approval to participate in Free and Secure Trade (FAST), a central bilateral trade security programme between the two countries. This study addresses this uncertainty with quantitative analysis to examine the business case for an individual Canadian shipper’s participation in FAST. The study shows how a shipper’s operating parameters influence the strength of the business case. A key study finding is that unless the needless costs that carriers incur from serving non-participating shippers are passed back to those shippers, the business case is significantly weakened. The study also finds that, like cost transfers from carriers, the rate of FAST approval of competing shippers is a very powerful economic incentive for an individual shipper to subscribe to the FAST programme.

A framework for a logistics e-commerce community network: the Hong Kong air cargo industry

E-commerce has brought new challenges as well as opportunities to the air cargo industry. With careful planning and cooperation among industry agents and with e-commerce as an enabler the air cargo industry can be transformed into one that can provide customized services to individual shippers at the cost level of mass production. The key component is in the setting up of a third-party e-commerce community network. In this paper, we present a frame work for such a network, which extends the traditional business-to-business e-commerce to e-commerce at the industry level. The proposed infrastructure differs from traditional portals in that it features the online integration of business transactions. It provides a virtual market for agents of the air cargo industry, enabling them to develop and engage in logistics integration. It also facilitates tracking and tracing, and minimizes unnecessary travel and inventory costs, thus achieving supply chain management at the industry level. We provide an implementation scenario for the air cargo industry in Hong Kong.

Comparison of Neural and Conventional Approaches to Mode Choice Analysis

This paper describes a new approach to behavioral mode choice modeling using neuro-fuzzy models. The new approach combines the learning ability of artificial neural networks and the transparent nature of fuzzy logic. The approach is found to be highly adaptive and efficient in investigating nonlinear relationships among different variables. In addition, the approach only selects the variables that significantly influence the mode choice and that display the stored knowledge in terms of fuzzy linguistic rules. This allows the modal decision-making process to be examined and understood in great detail. The neuro-fuzzy model is tested on the U.S. freight transport market using information on individual shipper and individual shipments. Shipments are disaggregated at the five-digit Standard Transportation Commodity Code level. Results obtained form this exercise are compared with similar results obtained from the conventional logit mode choice model and the standard back-propagation artificial neural network. The advantages of using the neurofuzzy approach are described.

FREIGHT MODE CHOICE MODELS USING ARTIFICIAL NEURAL NETWORKS

This paper presents a new approach to behavioral choice modeling using artificial neural networks (ANNs). A feed-forward network trained by a back-propagation learning algorithm is used in this study. As a modeling technique, ANNs are highly adaptive and very efficient in dealing with problems involving complex interrelationships among many variables. The application of ANNs in the development of mode choice models is tested on the U.S. freight transport market using information on individual shippers and individual shipments. Shipments are disaggregated at the 5-digit Standard Transportation Commodity Code (STCC) level, representing the most detailed information publicly available. Results obtained from this exercise are compared with similar results obtained from conventional logit and probit disaggregate mode choice models. ANNs produced slightly better results compared with both logit and probit models. A method for analyzing ANN results based on examining variable link weights is described. The method allows for increasing the efficiency of ANNs by selecting only those input variables which significantly contribute to the network output. ANN mode choice models are expected to behave equally well in the passenger transport market, both in the urban and intercity travel contexts.

Contractual Governance in Trucking: A Comment

In an innovative and cogent article, Smith (1993) analyzes the structure of post-deregula tion contracting in the trucking industry, utiliz ing the transactions-cost framework developed by Williamson (1979) and by Klein, Crawford, and Alchian (1978). In examining the relation ship between trucking firms and final product suppliers, Smith employs Williamson's charac terization of transactions based upon the level of uncertainty, the frequency of recurrence, and the level of specific investment associated with such transactions. Williamson's arguments do add much to the theoretical developments of Coase (1937), Alchian and Demsetz (1972), and Klein et al. (1978) by discussing the market (uncer tainty and ex-post small numbers) and human characteristics (bounded rationality and oppor tunism) that affect many contractual arrange ments (both vertical and horizontal) within industries. Smith makes several valid points in his analysis. First, the degree of transaction-specific investment is a prime determinant of contractual governance structures. However, physical capi tal is not transaction-specific in the trucking industry (Smith, p. 58). The lack of specific capital does not rule out the possibility of the presence of specific investment, where William son emphasizes the importance of specific investment in human capital. As a source of specific investment, Smith points out that by allowing motor carriers to enter into reduced rate agreements with individual shippers, the costs of negotiating the contracts is positive and creates an investment in negotiations that is transaction-specific (Smith, p. 58). Smith's second major point is that uncertainty will increase the benefits of unified governance (vertical integration) or bilateral governance when some degree of specific investment is present (long-term contracting). Without such specific investment, Williamson's analysis points out that short-term contractual gover nance will be an option under uncertainty. Two sources of uncertainty among shippers and trucking firms is fuel prices and the possibility of bankruptcy of carrier firms (Smith, p. 58). Third, Smith correctly points out that ex-post small numbers may lead to opportunism with contractual governance. Opportunism can be expected to arise in situations where recurrent transactions and mixed investment can create

Stand-alone cost: Use and abuse in determining maximum U.S. railroad rates

In response to recent regulatory reform in the United States, the Interstate Commerce Commission has decided to use stand-alone costs (SAC) to determine maximum railroad rates. This paper provides an analytical framework for the proper use of SAC. By drawing from the public utility literature and the game theory concept of a core, two alternative solutions for fair and efficient rail rates are derived: (1) the core with hypothetical rail entry, which elucidates the use of group rather than individual shipper SAC; (2) cost allocation procedures, such as the Moriarity rule and the Shapley value, which use SAC to compute allocation factors.

Impacts on Agriculture of Deregulating the Transportation System: Reply

Koo's concerns over the impacts of transportation deregulation on agriculture are justified, but some rate discrimination is necessary for a healthy transport system. The Staggers Act did tip the scales in favor of railroads over agriculture in many instances. However, some type of rail regulatory reform was necessary because the railroad industry could no longer be regulated as a monopoly industry using public utility theory. Transportation requirements are shipper, commodity, and location specific and, therefore, susceptible to rate discrimination. The impacts of effective rail deregulation will be felt differently in different parts of the country and by different parts of agriculture. Koo rightly points out that rail grain rates in the Northern Plains are now relatively higher than in areas of the country where effective water or rail competition exists, and that such price discrimination could be detrimental to farm income. In fact, however, Northern Plains rates always have been high, and there was nothing in the Staggers Act to cause hope of rate relief in that area. This is rate discrimination applied to a whole region. The ICC could rule that rail market dominance exists for grain in the Northern Plains. This would give the ICC jurisdiction over maximum rates. This is not likely given the current deregulation environment but is a solution that exists if the railroads behave badly or if public sentiment swings back to demand more regulation. We will also see various forms of the seasonal and demand sensitive rates that Koo says are now possible. These are examples of the sort of free market activity that economists argued were needed and which would be encouraged and enhanced by rail deregulation. They should lead to more efficient utilization of rail equipment and improved rail operations. If total transportation costs decrease, farmers as a group should be better off, even though farm price fluctuations might very well increase. Therefore, we should not be particularly concerned about rational price discrimination based on the general concepts of geographic region, modal competition, or demand elasticity. These sorts of price discrimination are necessary for a healthy rail industry. However, we should be very concerned about personal discrimination by the railroads. Contracts with favored shippers can be used to avoid the railroad's common carrier obligation to serve the public generally, as well as the Interstate Commerce Act's provisions which forbid personal discrimination in rates and service and require that all rates be published and strictly observed. Unlike trucks, U.S. railroads historically were not allowed to contract with individual shippers. However, the advent of unit trains and similar concepts in the 1960s and 1970s led to de facto contracts between the railroads and individual shippers as tariffs were designed for a single shipper. Prior to 1980, there was some protection for other shippers against unreasonable discrimination through the use of such tariffs. ICC procedures allowed protests at the time of tariff filing and the ICC could order similar tariffs to be published for competing ship-

Milk-Hauling Rates: A Self-Imposed Constraint with Differential Effects Upon Large and Small Farms

Costs impose restraints upon all activities. Certain costs chargeable to a sector of an industry–as for example, milk assembly and hauling costs–must be broken down from their total into the shares chargeable to individual users. When there is flexibility in this apportionment of cost shares, part of the burden upon the individual shipper becomes an industry-apportioned constraint upon individual firms, in this case dairymen-shippers. An alternative means of apportioning hauling costs is suggested, to retain large shippers in the conventional hauling system, and to sustain that system for the benefit of small dairymen.

Economic Aspects of Motor Transportation in Marketing Livestock

AN IMPORTANT function of marketing livestock is the physical movement of the live animals from the farm to the market and/or to the packing plant. As livestock, in the present time, has to be transported either by railroad or by motor truck, shippers have to choose between these two alternative methods of transportation. Also, as there is no general rule to be relied upon for determining which method could be used to the greater advantage, shippers have to make a decision as to the mode of transport suitable to each set of circumstances the individual shipper is likely to encounter, i.e., the species of animal, the number of animals shipped, the particular destinations, the type of market (terminal vs. auction), etc. In order to reach profitable decisions, shippers have to make their comparison between railroads and trucks on the same basis. In comparing costs, for example, it is important to begin at the farm and to consider all items of expense until the shipment is delivered at the point at which the shipper ceases to be financially concerned with the process of getting the livestock to the receiver. Such costs include the actual money outlay for the transportation and expenses en route, together with losses from death, crippling, bruising, and tissue shrinkage of animals. In addition, service factors, which are not directly measurable in terms of money, such as convenience, should be taken into account. Such factors are largely a matter of individual judgment, and there cannot be any rule for how much they mean to different individuals. Livestock producers, especially the small producers, may find difficulty in reaching good decisions as to which method of transportation is better. They often need guidance in evaluating the various factors involved. Such guidance could be provided by farmers' organizations and experiment stations. In addition, farmers and shippers can benefit from the experience of their neighbors in the livestock industry by knowing the reasons behind the diversion of livestock traffic from rail to truck or vice versa and the advantages that have attracted shippers to use motor trucks instead of railroads.

Legislation Concerning the Railroad Service

I am asked to state how the public regards the controversy that has arisen over methods of settling disputes between the railroad companies and their employes. While I think I can speak without bias or partisanship, I of course recognize it to be impossible for any one individual to represent the views of the general public on a complicated controversial question such as the one under consideration. Indeed, it is probable that the public as a whole has reached no single definite conclusion. Although I shall venture to state what I think is the belief of the public concerning the principles and methods that should be followed in deciding controversies between the men and the managers in the railroad service, it will be understood that in advocating the adoption of remedial measures I can represent the views of only one member of the public. It will at least afford a starting point and may assist in simplifying the problem under discussion to begin with a statement of certain principles upon which there may be presumed to be a general agreement on the part of the public. I am sure the public is of the opinion that for all classes of railroad employes the hours of labor ought to be reasonable, and the wages fair and generous. Organized effort on the part of the employes to secure fair wages and reasonable hours of labor has always met with sympathy on the part of the public. The railroad companies, it is further agreed, should be permitted to make such charges for their services and to earn such revenues as may be needed to enable the carriers to pay good wages for reasonable hours of service. Individual shippers and local communities, under the stress \of competition, will naturally oppose increases in railroad rates and will press for a reduction of transportation charges; and, indeed, the country as a whole, represented by its state and federal railroad commissions, will inquire into the reasonableness of