Mode choice in Freight Transport in New ZealandFindings of a Revealed Preference (RP) Survey of Shippers
Introduction
▪ Demand for Freight transport in NZ(tonne-kilometres)
▪ 92% of total volume of freight movements are made by road Sources: TERNZ, NFDS and Ministry of Transport
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NZ Freight patterns
▪ Changes in the shape of products being
transported and logistics patterns of firm
▪ 67% of NZ manufactures outsourced
logistics services*
▪ The common outsourced services: Outbound
transportation(79%), Warehousing(53%), and
Shipment consolidation(48%)
Sources: *Zhang (2009)
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Background:
▪ The perceptual approach
▪ Discrete Choice Model: Binomial choice models,
Multinomial choice models
𝑷𝒏𝒊 ≡ 𝑷𝒓𝒐𝒃 𝑷𝒆𝒓𝒔𝒐𝒏 𝒏 𝑪𝒉𝒐𝒐𝒔𝒆 𝑨𝒍𝒕𝒆𝒓𝒏𝒂𝒕𝒊𝒗𝒆 𝒊 =
𝑮 𝒙𝒏𝒊, 𝒙𝒏𝒋∀𝒋 ≠ 𝒊, 𝒔𝒏, 𝜷 based on 𝑼𝒏𝒊 = 𝜷𝒛𝒏𝒊 + 𝜺𝒏𝒊(Utility theory)
▪ Gilmour (1976), McGinnis (1990), Murphy
et al. (1994, 1995), Evers et al. (1996),
and Bolis and Maggi (2003)0 10 20 30 40 50
Reliability
Freight rates
Transit time
Carrier considerations
Shipper market considerations
Over, short, and damaged
1990s
1980s
1970s
Percentage (%)
▪ Mode Choice Perceptions 1970s~ 1990s (Murphy et al. 1995)
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Background:
▪ Freight Mode Choice Studies in NZ
▪ the National Freight Demand Study
(NFDS : Richard Paling Consulting, 2008)
▪ Coastal Shipping and Modal Freight
Choice (Rockpoint, 2009)
▪ the Gisborne to Napier Coastal Shipping
Study (Warwick Walbran Consulting, 2010)
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Study Questions
▪ What is the use of road transport fleet and the nature of the relationships with carriers?
▪ What service attributes do shippers use to select transport mode(s) and which attributes are most and least important?
▪ What are the shipper’s perceptions of rail and sea shipping?
▪ What are the differences in the total logistics cost between business types?
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Research Method
▪ RP(Revealed Preference) Survey
▪ Web-based questionnaires
▪ Survey sample sources: New Zealand Stock Exchange (NZX), Industry association/
groups, and councils
▪ Invitation sent to 1900 NZ based
companies from June ~ September 2011
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Questionnaires
Physical factors
• Company Information
• Product Information
• Inbound & Outbound O/D
• Supply Chain & Logistics facilities
Behavior factors
• Transport mode use
• Mode choice service factors
• Mode preference
• Intermodal preference
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Sampling & Data Collection
▪ Total 176 firms completed
▪ 4 business typesPrimary, 49
Manufactures,
84
Wholesale/
Retail, 34
Logistics, 9
Animal, 7.4%
Vegetables &
Non-animal,
20.5%
Food-stuffs & FMCG,
10.2%
Chemical, 10.2%
Plastics, 12.5%
Leather & Textiles,
11.9%
Wood, 8.5%
Glass & base metal,
6.8%Miscellaneous, 6.3%
Machinery, 5.7%
Durable/Non-
food, 61.9%
▪ 9 Industry(product) groups
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Survey Sample:
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0
1~9
10~19
20~49
50~99
100~499
Over 500
40.0
17.7
16.0
9.1
13.7
3.4
80.2
10.9
5.8
1.7
1.2
0.2
NZ Enterprises Survey SamplePercentage(%)
SMEs(small and medium-sized enterprises)
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0 20 40 60 80 100
Primary
Manufactures
Wholesale/Retails
Road Sea Rail Air
Mode Share:
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Animal Non-animal FMCG Chemical Plastics Textiles Machinery Wood Metal
Air Rail Sea Road
Mode Share:
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What is the use of road transportation fleet?
What is the nature of the relationships with carriers?
?
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Road Transport
by the American Trucking Association,(2006)
United States13%
•LTL (Less than Truck Load)
87%
•Truck Loading
Contracted Carrier 52%
Owned fleet 48%
Contracted Carrier 55%
Owned fleet 45%
by the Federal Labour Standard Commission,(2006)
Canada
Structure of trucking industry
0 20 40 60 80 100
Animal
Food-stuffs & FMCG
Vegetables & non-animal
Machinery & mechanical equipments
Leather, footwear & Textiles
Glass & base-metal
Chemical
Plastic
Wood
Percentage (%)
Owned fleet Contracted carrier
Perishablefood product
Non-perishabledurable product
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What transport mode(s) characteristics do you consider most important?
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Mode Choice:
▪ Timeliness (e.g. transit time, reliability of service),
▪ Transport cost,
▪ Suitability (e.g. suitability for shipment size, suitability for
commodity to be carried),
▪ Customer service (e.g. firm contact, after sale service),
▪ Mode availability/ accessibility (e.g. availability
of equipment/mode at origin or destination point(s)), and
▪ Restitution (e.g. processing of loss and damage claim,
amount of loss and damage)
0
10
20
30
40
50
60
70
Perc
enta
ge (
%)
Primary Manufactures Wholesale/Retails
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What are the most important constraints that discourage you from using RAIL/SEA to carry your products?
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▪ Door-to-door service,
▪ Transferability to/from road,
▪ Transport cost,
▪ Transport time,
▪ Minimum loading size requirement,
▪ Service frequency, and
▪ Mode accessibility
Mode shift:
0 5 10 15 20 25 30 35 40 45 50
Accessibility
Service frequency
Minimum loading size
Transport cost
Transport time
Road transfer
Door-to-door service
24.2
8.3
6.7
9.2
25
9.2
17.5
17.3
15.4
7.7
6.7
38.5
3.8
10.6
Percentage (%)
Sea Rail
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What are the differences in the logistics costs between business types?
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0 5 10 15 20 25 30 35 40 45 50 55 60
Transportation & cargo handling
Warehousing
Inventory carrying cost
Logistics administration
All other logistics costs
49.1
17.1
21.2
7.0
5.6
44.0
20.5
21.1
8.7
5.8
Wholesale/Retailer Manufacurer
Percentage(%)
Logistics Cost
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Conclusions
▪ NZ shippers strongly prefer road transport
▪ NZ shippers rely heavily on contracted carriers
▪ There is increased emphasis on timeliness and cost
as mode choice factors
▪ NZ shippers have negative perceptions about
transporting goods by both rail and sea in terms of poor accessibility and transport time.
▪ Wholesalers/retailers spent more on warehousing costs, while manufacturers spent more on
transportation costs.
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