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The effects of financial incentives on vessel speed reduction: Evidence from the Port of Long Beach Green Flag Incentive Program

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Listed:
  • Celeste Ahl

    (Alston & Bird LLP)

  • Elaine Frey

    (California State University)

  • Seiji Steimetz

    (California State University)

Abstract

We analyze the efficacy of using dockage-fee discounts as an incentive for oceangoing vessel operators to comply with the Vessel Speed Reduction programs of seaports, such as those implemented at the ports in Long Beach, Los Angeles, San Diego, New York and New Jersey. On the basis of unique data from the Port of Long Beach’s program, we find that discounts are indeed effective, and that those effects vary considerably by operator type, suggesting a role for differentiated pricing strategies to better motivate compliance. We also develop a novel method for exploiting those data to estimate the value of time for vessel operators, with estimates ranging from US$268 to $759 per hour. Our findings are obtained from a discrete-choice model for panel data that estimates how the probability of compliance is influenced by potential dockage-fee savings and speed-reduction delays, and by the characteristics of operators and their vessels. That model also reveals the tradeoffs those operators make between time and money, from which we derive our value of time estimates.

Suggested Citation

  • Celeste Ahl & Elaine Frey & Seiji Steimetz, 2017. "The effects of financial incentives on vessel speed reduction: Evidence from the Port of Long Beach Green Flag Incentive Program," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 19(4), pages 601-618, December.
    • Handle: RePEc:pal:marecl:v:19:y:2017:i:4:d:10.1057_mel.2016.12
    DOI: 10.1057/mel.2016.12
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    References listed on IDEAS

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    1. Thalis Zis & Robin Jacob North & Panagiotis Angeloudis & Washington Yotto Ochieng & Michael Geoffrey Harrison Bell, 2014. "Evaluation of cold ironing and speed reduction policies to reduce ship emissions near and at ports," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 16(4), pages 371-398, December.
    2. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
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    Cited by:

    1. Dan Zhuge & Shuaian Wang & Lu Zhen & Gilbert Laporte, 2021. "Subsidy design in a vessel speed reduction incentive program under government policies," Naval Research Logistics (NRL), John Wiley & Sons, vol. 68(3), pages 344-358, April.
    2. Lu, Bo & Fan, Lijie & Wang, Huipo & Moon, Ilkyeong, 2024. "Price-cutting or incentive? Differentiated competition between regional asymmetric ports," Transport Policy, Elsevier, vol. 147(C), pages 215-231.
    3. Dan Zhuge & Shuaian Wang & Lu Zhen & Gilbert Laporte, 2020. "Schedule design for liner services under vessel speed reduction incentive programs," Naval Research Logistics (NRL), John Wiley & Sons, vol. 67(1), pages 45-62, February.
    4. Zhuge, Dan & Wang, Shuaian & Wang, David Z.W., 2021. "A joint liner ship path, speed and deployment problem under emission reduction measures," Transportation Research Part B: Methodological, Elsevier, vol. 144(C), pages 155-173.

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