Seaport investments in capacity and natural disaster prevention

Most seaports face constraints in financial resources to some degree, and thus need to balance the investments in capacity and natural disaster prevention. On the one hand, due to budget constraint, limited resources need to be allocated between the two tasks. On the other hand, the benefit of natural disaster prevention investment is likely to be higher for ports with larger capacity. This study builds a stylized analytical model to examine the managerial and policy implications of such interactions between the two counteracting mechanisms. We find that the port managers would always prioritize capacity investment over natural disaster prevention investment. Social welfare maximizing ports invest more in both capacity and disaster prevention than those chosen by profit maximizing operators. However, compared with profit maximizing ports, welfare maximizing ports also require a larger budget to justify the investment in disaster prevention. Moreover, with increasing intensity of natural disaster, a port’s capacity investment decreases and its disaster prevention investment increases, irrespective of its objective. The magnitudes of both changes are larger for welfare maximizing ports than for profit maximizing ports.     

An Analysis of the Dynamics of Ownership,Capacity Investments and Pricing Structure of Ports

With more than 80% of the world's cargoes being transported by sea, effective port management is critical to the well-being of the global economy. This study models the effects of port ownership and governance on capacity investment and pricing structure, and these changes' implications on port service level and social welfare. The study argues that capacity investment and pricing are significantly influenced by a port's ownership form, and the different levels of government involved. Inter-port competition leads to increased capacity investments by private investors and local authorities, which can be either higher or lower than social optimal level. Therefore, it is important for policymakers to consider the effects of institutional and competition factors in port reform initiatives.     

Estimating traffic demand risk – A multiscale analysis

This paper proposes a novel method for estimating the traffic demand risk associated with transportation. Using mathematical properties of wavelets, we develop a statistical measure of traffic demand sensitivity with respect to GDP. This measure can be adapted in a flexible way to capture risk levels relevant for different investment horizons. We demonstrate the timescale decomposition of risk with Swedish traffic demand data for 1950–2005. In general, rail transport shows a stronger co-movement with GDP than road transport. Moreover, we examine the volatility exhibited by traffic demand. Our findings suggest that rail investments are more risky than road investments. Since the findings can be used for optimal investment timing and for choice between public investment alternatives, they are deemed important for public policy in general.     

Timing rules for major transportation investments

The timing decision for major transportation investments – when to build – typically is made without an objective approach for considering the economic value of implementation at different times. This paper uses a model of benefit-cost analysis and derives rules for timing major transportation investments. Three sets of conditions are considered, depending on whether annual benefits of an investment are uncertain and whether the objective is to maximize net present value or simply to achieve positive net present value. The timing rules under each set of conditions are stated in three forms: benefit-cost ratio, annual benefits, and implementation time. The paper compares these timing rules analytically, discusses potential applications, and illustrates them with a numerical example. Consequences of incorrectly using the timing rules are also examined with the example. This revised version was published online in June 2006 with corrections to the Cover Date.     

Towards improved port capacity investment decisions under uncertainty: a real options approach

ABSTRACT

Port activity plays an important role in facilitating international trade. Sufficient capacity is indispensable for a port to attract flows to a region and retain them. The capacity decision is the result of a trade-off between investment and waiting costs. Traditional methods to value expansion projects do not deal adequately with managerial flexibility in the face of uncertainty from different sources in the complex port environment. In this paper, real options (RO) models are identified as an alternative method to making project valuations and investment decisions, as they attribute the correct value to managerial flexibility under uncertainty. In order to be able to build and use such RO models for port capacity investment decisions, the sources and implications of uncertainty in the port and the different RO model specifications need to be understood. To this end, both the literature about uncertainty in the port context and the literature about real options models are reviewed in order to provide researchers who want to build their own decision-making models, with the necessary knowledge of both fields. The review makes clear that the complex interactions in and competition between the logistics chains and their actors coming together in ports have significant impacts on port capacity. Uncertainty is also caused by uncertain international trade flows and changes in legislation following new technologies and environmental impacts. An analysis of the components of some general RO models shows how the options of flexible output, investment size and timing are valued by RO models in a setting with demand uncertainty. Moreover, the review presents researchers with insights in how to deal with cooperative and competitive interactions in the chain, time to build, cyclical markets and legislation changes. It also shows how to value the expansion and the phased investment options. The new insights resulting from this review are subsequently combined in a framework that serves as a guideline to build RO models for port capacity investments. Finally, an exemplifying application of the framework is used to build an actual port capacity investment decision model.     

Exploring active transportation investments and associated benefits for municipal budgets: a scoping review

Municipalities play an important role in the planning and development of communities that support active transportation (AT), which refers to human-powered modes of travel, such as walking and cycling. Municipal-level stakeholders involved in land-use and transportation infrastructure planning consider multiple social, environmental and economic considerations to inform decision-making and investments in AT. Evidence around the fiscal benefits of AT investment for local governments has not been systematically identified. This scoping review sought to explore the existing evidence regarding investments in AT and opportunities for savings on municipal expenditures and revenue generation. In total, 7060 records were located and screened; of which 162 full-text articles were reviewed. Ultimately, 23 articles met our inclusion criteria and were included in this review. The available evidence focuses on potential economic benefits of AT in the areas of tax revenues, property values, consumer spending and employment, all of which are relevant sources of revenue generation in municipal operating budgets. An evidence gap was identified regarding AT infrastructure investments and benefits corresponding to municipal expenditures (e.g. maintenance cost savings). Notably, a large portion of literature was published after 2009, suggesting that municipal-level evidence on the fiscal benefits of AT investments may just be emerging.     

A review of port devolution and governance models with compound eyes approach

Port devolution and port governance are focal issues in port studies. This paper argues that the previous typology of port devolution and port governance, including port function matrix models, might have to be modified, in particular for Asian port cases, because they have not considered socio, economic, and political systems and historical aspects behind the port devolution continuum. This paper uses the “compound eyes” approach comprising of many similar, closely-packed facets called ommatidia, with a multiple angle view, to revisit and review previous port devolution and governance models. The paper aims to identify the limitations and rectify fallacies in previous port studies by conducting a critical review and taking a couple of Asian container port cases as examples. This paper contributes to the literature of port devolution and governance, illuminating crucial gaps that the previous studies have not addressed.     

Heavy-duty trucking and the energy efficiency paradox: Evidence from focus groups and interviews

Theory suggests that profit maximizing firms have an incentive to incorporate cost-effective technologies into their products. However, simple net present value calculations comparing upfront costs of fuel-saving technologies to future savings suggest this is not always the case. This puzzle is commonly referred to as the “energy efficiency paradox.” A growing number of empirical studies examine why households may under-invest in energy efficiency. Fewer studies examine similar undervaluation by businesses. We explore investment decisions within the heavy-duty trucking sector for fuel-saving technologies via focus groups and interviews to gain insight into what factors might explain apparent underinvestment in fuel-saving technologies. We find some evidence that market failures related to lack of information about technology performance and network externalities contribute to slow adoption of some technologies. However, information about new technologies for tractors seems to generate limited spillovers. There is also some evidence of split incentives between owners and drivers, though companies have invested in a variety of technologies and approaches in an attempt to address these effects. Other factors important in trucking investment decisions that are not classic market failures include tradeoffs between fuel economy and other valued truck attributes, as well as uncertainty and risk associated with new technologies if decision-makers are loss averse.     

Should ports expand their facilities under congestion and uncertainty?

This paper investigates simultaneous facility investments of risk-averse ports under congestion and uncertain market demand. We set up a two-period game, allowing two ports first choose their facility investment levels, and then decide their cargo-handling amounts and service prices. When investment costs of the two ports are large, the unique equilibrium is no investment. If investment costs of at least one port are small, then one or two ports will invest at equilibria. If both ports invest at equilibrium, they may become worse off than at non-equilibrium of no investment. This means that the ports may face a tradeoff between stability and efficiency. Moreover, we compare the behaviors of risk-averse and risk-neutral ports, as well as risk-averse ports’ behaviors under uncertainty and no-uncertainty. It is found that ports’ risk-averse degrees are the major factor determining their behaviors in different scenarios.     

Logistics as a driving force for development under the Belt and Road Initiative – the Chinese model for developing countries

ABSTRACT

An important objective of “the Belt and Road Initiative” is to promote the economic growth of countries in the region. China’s successful development experience, proposed in the initial stage of reform, can be summarised as “Looking for development, building the highway first”. This study is the first to evaluate whether logistics infrastructure has indeed contributed to economic growth by employing an error correction model with panel data from 2003 to 2014. In addition, we compare the influence levels of different sectors of logistics infrastructure in different regions, i.e. developed and developing regions. We focus on developing regions as they represent good development experiences for developing countries in the Silk Road Economic Belt. For developing regions, we find that the most influential factors are telecommunication and airway transportation, which should be the foci of attention in order to promote economic growth and reduce inter-region economic inequalities. The research confirms that logistics is indeed a driving force for economic growth in China, and that the contributions of specific sectors can be a useful reference for developing countries to determine prioritisation of investment in different logistics sectors across regions.     

The effects of non-optimal pricing and investment policies for transportation facilities

A simulation model was used to show the impacts of non-optimal pricing and investment timing policies for a major airport and an urban expressway. It was found that: the losses of economic surplus due to non-optimal pricing and investment policies were relatively small (less than 1% of the net present value of economic surplus for optimal pricing and investment), that marginal cost pricing covers the capital cost of all but the first increment of capacity, that higher user fees will permit the facilities to break even with relatively small losses of economic surplus, that marginal cost pricing has some effect relative to existing pricing policies in delaying the dates new capacity is required and achieving better capacity utilization, and that the shape of the cost function has a substantial impact on the amount of capacity required.     

Empirical analysis of transportation investment and economic development at state, county and municipality levels

Numerous studies have found positive correlation between transportation infrastructure investment and economic development. Basically these studies use a conventional production function model augmented by a public capital input, mainly highways, rail and other transportation facilities. While the range of the measured economic growth effects varies widely among studies, the positive elasticity between transportation investment and economic development is now commonly accepted. Still a major puzzling issue is that the magnitude of the measured effect seems to decline significantly as the econometric model is further refined, mainly with regard to space and time lags. That is, the use of national or state data produces elasticity results, which are much larger than when using county or municipality data. Similarly, when we introduce into the econometric model a lag between the times when the transportation investments are made and when the economic benefits transpire, the measured elasticities decline with the size of the lag. Thus, the main objective of this paper is to investigate these issues analytically and empirically and provide a plausible explanation. We do so by using alternative econometric models, applying them to a database, which is composed of longitudinal state, county and municipality observations from 1990 to 2000. The key result is that transportation investments produce strong spillover effects relative to space and time. Unless these factors are properly accounted for many reported empirical results are likely to be overly biased, with important policy implications.     

Methods to reduce dimensionality and identify candidate solutions in multi-objective signal timing problems

Adjusting traffic signal timings is a practical way for agencies to manage urban traffic without the need for significant infrastructure investments. Signal timings are generally selected to minimize the total control delay vehicles experience at an intersection, particularly when the intersection is isolated or undersaturated. However, in practice, there are many other potential objectives that might be considered in signal timing design, including: total passenger delay, pedestrian delays, delay inequity among competing movements, total number of stopping maneuvers, among others. These objectives do not tend to share the same relationships with signal timing plans and some of these objectives may be in direct conflict. The research proposes the use of a new multi-objective optimization (MOO) visualization technique—the mosaic plot—to easily quantify and identify significant tradeoffs between competing objectives using the set of Pareto optimal solutions that are normally provided by MOO algorithms. Using this tool, methods are also proposed to identify and remove potentially redundant or unnecessary objectives that do not have any significant tradeoffs with others in an effort to reduce problem dimensionality. Since MOO procedures will still be needed if more than one objective remains and MOO algorithms generally provide a set of candidate solutions instead of a single final solution, two methods are proposed to rank the set of Pareto optimal solutions based on how well they balance between the competing objectives to provide a final recommendation. These methods rely on converting the objectives to dimensionless values based on the optimal value for each specific objectives, which allows for direct comparison between and weighting of each. The proposed methods are demonstrated using a simple numerical example of an undersaturated intersection where all objectives can be analytically obtained. However, they can be readily applied to other signal timing problems where objectives can be obtained using simulation outputs to help identify the signal timing plan that provides the most reasonable tradeoff between competing objectives.     

Strategic beliefs of port authorities

Over the last decade, insights from the strategic management discipline have increasingly been applied to ports. A review of literature shows that in the analysis of port authority strategy, mainly outside-in approaches are applied. This paper adds to the emerging understanding of the port authority’s strategy by applying a cognitive perspective. Specifically, the strategic cognition of firms’ executives is one of the explanatory variables behind firms’ strategic decisions. Furthermore, cognitions are influenced by the organisational contexts in which port authority executives have worked. As a result, managerial “mental maps’ may vary across industry contexts and over time. This research investigates the strategic cognition of a global set of port authority executives through a survey-based instrument. The results show that, to a large extent, PAs resemble “regular” for-profit companies, but that they possess some specific beliefs that distinguish them from “regular” companies.     

Model aided policy development for the market penetration of natural gas vehicles in Switzerland

Introduction of alternative fuels in the passenger car fleet is widely discussed in the light of emission reductions. Worldwide experiences show that the market introduction depends on the actions of many stakeholders, like car industry, fuel companies and consumers. The process demands well-timed actions and investments, whilst economic chances and risks are distributed highly unequally. Policy makers set the framework conditions, although the influence of the height and timing of subsidies, tax reductions and other stimulation policies are not well understood yet.The market introduction of alternative fuel vehicles was studied with the example of natural gas cars in Switzerland. Stakeholder analysis and system dynamics modeling techniques were used to characterize the system. Analyses identify difficulties and chances in the market penetration process of natural gas cars. For example, a critical balance between fueling station upgrade investments and natural gas car sales is needed. Further, it is found that large time delays exist between strategic policy actions and frequently used market penetration indicators (e.g. car sales and infrastructure expansion), limiting the ability of policy makers to assess the performance of their strategy. Referring to elements of the Balanced Scorecard approach, a set of five alternative indicators is proposed to better measure the performance of the implemented strategy.     

Development of control models for the planning of sustainable transportation systems

Planning of sustainable transportation systems requires integration of multiple systems while considering a holistic approach. A limited amount of research has been conducted that simultaneously considers all the transportation, economic activity, environmental and social effects. The proposed research envisages incorporating considerations related to sustainability and providing solutions to stakeholders in policy making. In this paper, a dynamic model for planning and development of sustainable transportation systems is presented. This is given by a system of three nonlinear differential equations representing the dynamics of the three independent states, namely, transportation, activity, and environmental systems. A policy scenario considering investment in energy efficient technologies and its effects on the states is discussed to assist making investment decisions. Optimal control techniques are used to design the controls. The results show that it is possible to formulate an optimal control to achieve the desired target. Numerical results, based on actual parameters, are presented to illustrate the long-term trends of the states. The methodology discussed in this paper will be helpful to decision makers in making optimal decisions. The contribution of this research work is the introduction of a systems and controls methodology to develop optimal policies for the design of sustainable systems.     

广西公路典型地质灾害特征与易发性评价

文章通过调查分析广西干线公路地质灾害的类型、发育特征与形成机制,采用定性、半定量的方法,对崩塌、滑坡、不稳定斜坡等典型灾种的易发性开展分段评价,为做好典型地质灾害防治决策、保障公路安全提供参考。     

A control scheme for high traffic density sectors

The development and testing of a traffic control scheme for the high density sectors of the Manhattan Central Business District (CBD) is described. The proposed control scheme is based on “spillback avoidance” approach rather than the conventional “progressive movement” approach. This plan is characterized by signal splits which reflect the need to service the growing east-west cross street demands in the direction of travel, yet provide near optimal offsets and splits to the north-south arterial traffic. Under this scheme, the signal offsets for the cross streets exhibit a “backward progression” which is optimal (or near optimal) for streets with long queues and slow discharge headways. Netsim was executed to simulate traffic operations with the existing and proposed signal timing patterns on one of the test networks. Comparison of the results indicated that the number and duration of spillback blockages were markedly decreased, with a concommitant reduction in vehicle travel time and number of stops, coupled with an increase in vehicle trips serviced. A before-and-after field study yielded similar results, with the new control scheme providing a 20% reduction in overall travel time.     

Designing a supply chain resilient to major disruptions and supply/demand interruptions

Global supply chains are more than ever under threat of major disruptions caused by devastating natural and man-made disasters as well as recurrent interruptions caused by variations in supply and demand. This paper presents a hybrid robust-stochastic optimization model and a Lagrangian relaxation solution method for designing a supply chain resilient to (1) supply/demand interruptions and (2) facility disruptions whose risk of occurrence and magnitude of impact can be mitigated through fortification investments. We study a realistic problem where a disruption can cause either a complete facility shutdown or a reduced supply capacity. The probability of disruption occurrence is expressed as a function of facility fortification investment for hedging against potential disruptions in the presence of certain budgetary constraints. Computational experiments and thorough sensitivity analyses are completed using some of the existing widely-used datasets. The performance of the proposed model is also examined using a Monte Carlo simulation method. To explore the practical application of the proposed model and methodology, a real world case example is discussed which addresses mitigating the risk of facility fires in an actual oil production company. Our analysis and investigation focuses on exploring the extent to which supply chain design decisions are influenced by factors such as facility fortification strategies, a decision maker's conservatism degree, demand fluctuations, supply capacity variations, and budgetary constraints.     

Quasi-landlord port financing in China: Features,practice and a contract theory analysis

Since the 1970s and 80s, landlord port has been the dominant port financing model in western large and medium-sized container ports. In China, many prospective port projects have also explored a landlord port financing model. However, some evidence suggests that landlord port financing in China is a variant of the international mainstream landlord port financing model. Based on an explanation of their unique features and practices, this paper analyzes the Chinese quasi-landlord port financing model from a contract theory perspective, in which it can be viewed as a double-level principal–agent relationship and two-layer profit distribution contract with three participants: the state-owned assets administration department, the port investment company and the operators. Furthermore, the results show that in the Chinese quasi-landlord port financing model, whether in the case of both joint venture and port land lease (fixed rent), or in the case of both joint venture and port land transfer, the optimal incentive scheme is the same as in the international landlord port financing model with profit sharing rent or mixed rent.