Toward sustainable port-hinterland transportation: A holistic approach to design modal shift policy mixes

Port-hinterland transport involves freight gathering and distribution between hinterland economies and ports. It is responsible for a major portion of the negative externalities of the entire port-related logistic chain. This study proposes an integrated model framework to facilitate the design of modal shift policy mixes to increase the sustainable performance of port-hinterland transport. The integrated model framework consists of three parts: (1) an econometric model to transform the hinterland economic scenarios into changes in port throughput, (2) a system dynamic model to estimate the changes in port-hinterland freight externalities due to changes in port throughput, and (3) a Monte Carlo simulation to identify those modal shift policy mixes with lower freight externalities. The proposed methodology is applied to Qingdao Port and its hinterland freight transport in China. The results show that hinterland economic growth will significantly raise port throughput and port-hinterland transport externalities. Four common modal shift policy instruments are considered, namely, internalization of external cost (IEC)-based pricing, road construction, increasing railway service level, and railway subsidy. The results show that the policy mix’s efficacy in reducing externalities increases with the increase in freight demand, but the holistic effect of the policy mix is lower than the sum of the effects of individual policies because these policies share the goal of facilitating modal shifts. The results of Monte Carlo simulations show that despite the uncertainty for hinterland economic prospects, the policy mixes with better performance in reducing externalities commonly include IEC-based pricing and increasing railway service level. The proposed methodology provides decision makers with a systematic framework for policy making toward sustainable port-hinterland transport.