Impacts of Trade and Transport Policy
on International Cargo Shipping
and Economic Activities
(final draft report)
Ryuichi SHIBASAKI, Dr. Eng.
Senior Researcher
National Institute for Land and
Infrastructure Management (NILIM),
MLIT JAPAN
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Steps Forward
 30th TPT-WG (April 2008, Philippines): approval of the proposal
 31st TPT-WG (August 2008, Peru):
intermediate reports and discussion [1]
 32nd TPT-WG (July 2009, Singapore):
intermediate reports and discussion [2]
 33rd TPT-WG (October 2010, Japan):
final presentation and discussion for final report submission
Japan 2010
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Contents of Today’s Presentation
1) Introduction (Background, Objective, Methodology)
2) Examples of policies to be simulated by this system
A. Trade Policy
B. Transport Infrastructure Investment
and Cost Reduction Policy
C. Risk Management on International Shipping
3) Discussion
Japan 2010
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
1) Introduction
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Introduction
- Trade liberalization and efficient transport are the most important
key issues for regional development of APEC economies.
- For further discussion in order to realize trade liberalization and
efficient transport, if we can know the quantitative effects of these
policies, the discussion would be very effective and fruitful.
Ex) - What economic growths are expected by trade liberalization
and facilitation?
- To what degree transport cost is reduced by constructing
transport infrastructure and removing cross-border barriers?
Japan 2010
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Introduction
Excerpt from 5th APEC Transportation Ministerial Meeting,
Joint Ministerial Statement:
2. Transportation plays a key role in the APEC agenda for trade facilitation
and economic integration in the Asia-Pacific region. The movement of
people and goods underpins economic and social development in the
region. Transport sector activity itself accounts for a significant portion
of regional economies. It is therefore necessary that the transport
systems are efficient, convenient and secure.
Japan 2010
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Objectives of the Project
-To develop “Trade and Logistics Forecasting System for the APEC
region”, a successive prediction system of trade amount and
international cargo flow, in order to support a quantitative
discussion for realization of trade liberalization and efficient
transport among APEC economies as well as for each economy
- This system can be shared for each member economy for some
analyses on the APEC region and its own economy, by collaborating
with a development group of the system and preparing some
additional data if needed
7
Trade and Logistics Forecasting System for the APEC Region
Economic Growth
INPUTS
A. Trade Policy
1. Trade Forecasting Model
(chapter 2)
Trade Amount
2. Cargo Shipping Demand Transforming
(chapter 3)
Cargo Shipping Demand
(OD cargo flow)
3. International Cargo Flow Model
(chapter 4)
Maritime / Land Transport
Cargo Flow by Route
OUTPUTS
- Values per unit weight
- Modal Share
- Containerized Ratio, etc.
INPUTS
B. Transport Infrastructure
Investment
C. Risk Scenario on
International Shipping
Reduced Shipping Cost
OUTPUTS
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
2) Examples of policies to be simulated
by this system
A. Trade Policy
B. Transport Infrastructure Investment
and Cost Reduction Policy
C. Risk Management on International Shipping
Japan 2010
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
A. Trade Policy
What impacts on international cargo volumes and economic
activities of the APEC region are expected by trade
liberalization and facilitation towards?
including bilateral and multilateral negotiation for
concluding Free Trade and Economic Partnership Agreement
(FTA, EPA)
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Model
Global Trade Analysis Project (GTAP) Model
- Most popular model package among the world for trade forecast
- CGE (Computable General Equilibrium) framework based on
Microeconomic theory
- Many applications in practical field
e.g. GATT [1994] … Economic Analysis at Uruguay Round
APEC [1997] … Economic Impact of Trade Liberalization
based on Manila Action Plan
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Four Future Economic Scenarios prepared
Scenario Description
High case the growth rate of economic indices (i.e. population, capital stock,
natural resource output, technological advancement) and the
reduction rate of tariffs (both in average and bilateral) are large
including elimination of tariff within the APEC regions
Middle
the growth rate of economic indices and the reduction rate of tariffs
case
are moderate
Low case the growth rate of economic indices and the reduction rate of tariffs
are small
Baseline
the growth rate of economic indices based on the past trend and no
additional tariff reduction are assumed
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Example of Forecasting Results (1)
Increase rate of trade amount (year 2008 = 100)
the APEC region (21 economies)
WORLD
300
300
250
250
200
200
150
150
100
100
50
2000
2005
2010
2015
2020
2025
50
2000
2005
2010
2015
2020
2025
33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Example of Forecasting Results (2)
Increase rate of international cargo shipping demand (year 2008 = 100)
the APEC region (21 economies)
WORLD
450
450
400
400
350
350
300
300
250
250
200
200
150
150
100
2000
100
2000
2005
2010
2015
2020
2025
2005
2010
2015
2020
2025
33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
B. Transport Infrastructure Investment and
Cost Reduction Policy
What impacts on international cargo flow patterns, transport
costs and economic activities of the APEC region are expected
when transport policies are implemented? such as
- constructing new terminal and berth in port
- smoothing transaction and shortening lead-time at terminal
- discounting charges and fares, and
- removing cross-border barrier
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Model for International Cargo Simulation (MICS)
Shipper Submodel
Carrier Submodel
Minimizing “perceived” cost
by individual shipper
1st level Maximizing profit by alliance (carrier group)
(equilibrium under a condition
that other groups’ behavior are given)
(stochastic assignment model) Demand
2nd level
by
routes
Upper model: Choosing
Income maximization model: deciding
import/export ports and
freights of each route under transport cost
land transport routes
given as well as considering shipper’s
behavior of carrier choice
Stochastic network assignment
including
Price competition model
Composition cost
under differentiated
3rd level goods
of lower model
Lower Model: Choosing carriers
Logit Model
freights
by routes
and
carriers
Cost minimization model: minimizing
total transport cost of their own group
under their demand by routes given
System optimum network
equilibrium assignment model
33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Container Ports dealt in the Model (total: 143 ports)
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Land Transport Network
for International Cargo Shipping
Northeast Asia, Central Asia and Russia
zone representative
(origin/destination)
zone representative
(origin/destination)
Southeast Asia
20
Oceania
zone representative
(origin/destination)
21
zone representative
(origin/destination)
North America
22
South America
zone representative
(origin/destination)
23
35
30
25
20
15
10
5
0
35
30
25
20
15
10
5
0
(million TEU)
2008model estimated
2015estimation
Estimated Results of Container Throughput
(loaded/unloaded/transshipped container)
in 2015
(million TEU)
2008model estimated
2015estimation
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Calculated reduced cost of international cargo shipping
by container berth investment
world total
USA
Canada
Japan
China
East Asia
ASEAN
South Asia
Russia and C. Asia
Latian America
Middle East
Europe
Africa
Oceania
Cost reduction Amount of Cost reduction
rate
(trillion USD)
0.31%
11.03
0.39%
2.43
0.10%
0.20
0.41%
0.73
0.61%
5.28
0.34%
1.04
0.24%
1.56
0.52%
0.73
0.08%
2.19
0.43%
1.67
0.64%
1.74
0.66%
3.21
0.55%
1.13
0.22%
0.15
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
C. Risk Management on International Shipping
What impacts on international shipping market and
economic activities of the APEC region are expected
when some sea routes such as Straits of Malacca are
blocked due to some security reasons?
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Risk Simulation
Blockade of Malacca Strait and detouring to Lombok Strait
Klang
TJ Pelepas
Malacca Strait
Singapore
TJ Priok (Jakarta)
Sunda Strait (shallow)
TJ Perark (Surabaya)
Lombok Strait
27
20
18
16
14
12
10
8
6
4
2
0
20
18
16
14
12
10
8
6
4
2
0
(million TEU)
2008 model estimated
Estimated Change of Container Throughput
due to Blockade of Malacca Strait in 2008
2008 detouring due to a blockade of the Malacca Strait
(million TEU)
2008 model estimated
2008 detouring due to a blockade of the Malacca Strait
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Calculated increased cost of international cargo shipping
due to the blockade of the Malacca Strait
world total
USA
Canada
Japan
China
East Asia
ASEAN
South Asia
Russia and C. Asia
Latian America
Middle East
Europe
Africa
Oceania
Cost increasing Amount of Cost increase
rate
(trillion USD)
0.87%
20.9
0.66%
3.4
0.11%
0.2
1.30%
1.8
1.56%
8.3
1.38%
2.7
1.74%
6.7
2.14%
1.5
0.22%
4.1
0.16%
0.4
1.58%
2.8
2.66%
8.2
0.76%
1.0
1.49%
0.7
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Implication from Trade Policy Simulation
(example)
 Trade liberalization and facilitation can accelerate
economic and trade growth as well as
international shipping demand increase
 In particular, increasing rate of international maritime
container shipping demand will surpass
trade growth rate
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32nd APEC Transportation Working Group
Meeting, Singapore, 27-30 July 2009
Expected Implication of Transport
Infrastructure Investment Simulation (example)
 Logistics infrastructure investment (e.g. maritime
container berth construction and deepening)
will reduce international shipping cost
 The benefits will spread not only the economies
that policies implemented, but also all of other
economies as well as the entire world
SINGAPORE 2009
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Expected Implication from Risk Simulation
(example)
 Detouring due to blockade the strait will increase
international shipping cost
 Negative impact will broadly spread to the region
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Conclusion
 “Trade and Logistics Forecasting System for the APEC region”
is developed
 This system will contribute to measuring impacts of trade and
transport policy on international cargo shipping and
economic activities of each economy as well as
a mutual development of the APEC region
 By collaborating with a development group of the system and
preparing some additional data if needed, each member economy
can use this system to meet its own economy’s interest as well as
consider the impact of the entire APEC region
Japan 2010
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Thank you for your attention!
for contact:
Ryuichi SHIBASAKI, Ph.D
National Research Institute for Land and Infrastructure Management
Ministry of Land, Infrastructure, Transport and Tourism, Japan
shibasaki-r92y2@ysk.nilim.go.jp
tel:+81-46-844-5028, fax:+81-46-844-6029
3-1-1 Nagase, Yokosuka, Kanagawa, 239-0826, Japan
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data conversion process from bilateral trade amount into
international cargo shipping demand
Bilateral Trade Amount bet. APEC Economies/other Regions (Estimated by Trade Forecasting Model)
1. Bilateral Trade Amount in other region countries
(from GTA Database, etc.)
Trade Amount bet. APEC Economies/other Countries
2. Modal Share (from GI Database)
Trade Amount by Transport Mode bet. APEC Economies/other Countries
Air
(excluded)
Land
Maritime
3. Unit Price per Metric Tonnage
(from GI Database)
Cargo Volume bet. APEC Economies/other Countries (in tonnage basis)
4. Containerized Ratio (from GI Database)
6. 1 unit = 10t
(assuming)
Maritime Container Cargo Volume bet. APEC Economies/
other Countries (non-containerized cargo are excluded)
5. TEU Conversion Ratio (from GI Database)
Cargo Volume bet. APEC Economies/
other Countries (in unit basis)
Maritime Container Cargo Volume bet. APEC Economies/
other Countries (in TEU basis)
7. 1 unit = 1 TEU (assuming)
Various Economic Database of each Economy
Cargo Volume bet. Multiple Zones of each APEC Economy/other Country
(International Cargo Shipping Demand by OD pair)
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
International Logistics Flow Model
Model for International Cargo Simulation (MICS)
- Developed by NILIM, Japan
- Predicting international logistics flow (mainly maritime container cargo)
by inputting cargo transport demand (from a region to other region)
- Calculated based on a Nash Equilibrium between oceangoing
carrier and shipper, as well as between major carriers
- Mainly focusing maritime shipping, but also including international
and hinterland land transport (only East Asia presently)
Japan 2010
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33rd APEC Transportation Working Group
Meeting, Japan, 11-14 October 2010
Prediction of Port Cargo Throughput
(in East Asian ports, in 2003, tentative)
Export/Import Container
Estimated
Transshipped Container
Estimated
(mil. TEU)
8.0
(mil. TEU)
16
Busan
Guangzhou
7.0
(China)
6.0
14
R² = 0.667
12
R² = 0.795
Shanghai
5.0
Singapore
10
4.0
Kaohsiung
3.0
(Chinese Taipei)
2.0
Shenzhen (China)
1.0
Hong Kong
8
Shenzhen (China)
TJ Pelepas (Malaysia)
6
Shanghai
Klang (Malaysia)
4
Busan
2
0.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Actual Throughput
7.0
8.0
(mil. TEU)
Kaohsiung (Chinese Taipei)
0
0
2
4
6
8
10
12
Actual Throughput
14
16
(mil. TEU)
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32nd APEC Transportation Working Group
Meeting,TEU
Singapore,
27-30 July 2009
converted
Predicted Land Cargo
Flow in East Asia
(in 2003, tentative)
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Methodology of Risk Scenario Simulation
 Blockade of Malacca Strait
Increasing Length of Links that were passed through
Malacca Strait (assuming pass through Lombok Strait)
South Asia
Middle East
Malacca Strait
Europe
75º
60º
45º
30º
15º
0º
15º
30º
East Asia
Southeast Asia
West Coast of North America
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