Transportation in this study is divided into inland transportation and ocean transportation.
Inland transportation modes used in this study are rail and truck. Barges are used as an inland transportation mode between barge access points and the US Gulf ports. Container vessels are used as an ocean transportation mode in shipping container shipments from ports in exporting countries to ports in importing countries.
4.3.1. Ocean Transportation Costs
Ocean freight rates are specified as a function of the size of vessel, the ocean distance between ports, oil price, and characteristics of the destination and origin as the function
developed by Park and Koo (2004). The ocean freight rate function for this study is re-specified as follows:
𝑂𝑅𝑝𝑞𝑡 = 𝑓(𝑆𝑝𝑞𝑡, 𝑀𝑝𝑞𝑡) (4.1)
where 𝑂𝑅𝑝𝑞𝑡 is the ocean freight rate per TEU in shipping containers from export port p to import port q in a time period t, 𝑆𝑝𝑞𝑡 is the size of the vessel shipping containers from export port p to import port q in a time period t, 𝑀𝑝𝑞𝑡 is the ocean distance from export port p to import port q in a time period t. It is expected that a variable for the size of the vessel has a negative
relationship with the ocean freight rates function, which means that ocean freight costs decrease as the size of the vessel increases. The coefficient of the ocean distance variable is expected to be positive, which means that ocean freight costs per TEU per nautical mile increases as the
distance between origin and destination increases.
Monthly average ocean freight rates per TEU from December 2009 to October 2013 are used to estimate ocean freight and they were collected from the Shipping Intelligence Network at Clarkson Research. Container vessel size on a route is measured by maximum size port the container vessel can access and smaller vessel size between importing and exporting port facilities was chosen as maximum vessel size. These were found using research from Port Authority on each of its ports in the US and its trading partners. Ocean distance used for this study is measured by using an ocean distance calculator, which is available on a website as an open source, http://www.sea-distances.org. Since ocean distance from the ocean distance calculator is based on nautical miles, ocean distances used for this study were converted from nautical miles to standard miles.
4.3.2. Barge Transportation Costs
Barge freight rates are estimated with diesel oil prices. The barge freight rate function is specified as follows:
𝐵𝑅𝑡= 𝑓(𝑂𝑡) (4.2)
where 𝐵𝑅𝑡 is an average barge freight rate per ton-mile in time period t and 𝑂𝑡 is an average diesel oil price per gallon at time period t. The coefficient of the diesel oil price is expected to be positive, which means that the barge rate per ton-mile increases as the diesel oil price increases.
An annual average of real revenue of barge per ton-mile from 1995 to 2004 is used to estimate barge rates and they were found on Table 3-21 at the Bureau of Transportation Statistics
published by the US Department of Transportation. Annual average diesel retail prices per gallon from 1995 to 2012 are used to estimate barge rates and they were found at US Energy
Information Administration’s main website.
4.3.3. Rail Transportation Costs
Rail freight rates are estimated with diesel oil prices and fixed distance ranges. The rail freight rate function is specified as follows:
𝑅𝑅𝑡 = 𝑓(𝑂𝑡, 𝐷𝑡) (4.3)
where 𝑅𝑅𝑡 is an average rail freight rate per ton-mile in time period t, 𝑂𝑡 is an average diesel oil price per gallon, and 𝐷𝑡 is the fixed distance range. It is expected that a variable for the diesel oil price has a positive relationship with the rail freight rate function, which means that rail freight costs decrease as diesel oil prices increase. The coefficient of the fixed rail distance variable is expected to be positive, which means that rail freight costs increase as the fixed distance range increases. Fixed distance ranges have four different distance ranges, as follows: (1) rail distance less than 500 miles, (2) rail distance between 501 and 1,000 miles, (3) rail distance between 1,001 and 1,500 miles, (4) distance longer than 1,501 miles. The longest distance in each range is used for this study.
An annual average of real revenue of class I rail per ton-mile from 1995 to 2007 is used
US Department of Transportation. Annual average diesel retail price per gallon from 1995 to 2012 is used to estimate barge rates and they were found at the US Energy Information
Administration. Distance for rail is calculated by PC Miler Rail 19 BatchPro and it is measured based on Standard Point Location Code (SPLC). In addition, if there is more than one class I railroad operations on the same route, the shortest distance was chosen. If there is more than one shortest distance, then the distance with the fewer number of transfers or railroad operations was chosen for this study.
4.3.4. Truck Transportation Costs
Truck freight rates are estimated with diesel oil prices. The truck freight rate function is specified as follows:
𝑇𝑅𝑡 = 𝑓(𝑂𝑡) (4.2)
where 𝑇𝑅𝑡 is an average truck freight rate per ton-mile in time period t, and 𝑂𝑡 is an average diesel oil price per gallon at time period t. The coefficient of the diesel oil price is expected to be positive, which means that the truck rate per ton-mile increases as the diesel oil price increases.
An annual average of real revenue of truck per ton-mile from 1995 to 2007 is used to estimate truck rates and they were found on Table 3-21 at the Bureau of Transportation Statistics
published by the US Department of Transportation. An annual average of diesel retail price per gallon from 1995 to 2012 is used to estimate barge rates and they were found at the US Energy Information Administration.
4.3.5. Summary
In this study, railroad, truck, and barge operations for containerized shipments are considered inland transportation modes in the United States and container vessel operation is a mode of ocean transportation. Railroad is an inland transportation mode in shipping container
shipments from shipping origins to export ports in the US for US exports and it operates its service from the import ports to shipping destinations in the US for US imports. This study assumed that railroads operate their services for transiting containerized shipments longer than 250 miles of the total travel distance, while trucks operate their services for containers no longer than 250 miles of the total travel distance. Also, trucks are the only inland transportation mode to transit containers between barge access points and shipping origins/destinations in the United States and then barges are the only inland transportation mode between river access points to US Gulf ports, called truck-barge combination hereafter. Under the assumption of a fully loaded container, rate per TEU for this study was calculated by multiplying with 24 tons of inland transportation rates per ton-mile which is maximum weight of a single container.