Transportation Optimization Modeling for Washington State Hay Shipments: Mode and Cost Implications Due to Loss of Container Services at the Port of Portland

A recent issue impacting hay shipments in Washington State involves the reduction of container services at the Port of Portland, Oregon. Prior to this change, containers filled with hay were shipped almost exclusively via barge on the Columbia River to the Port of Portland. After reaching Portland, the containers were then loaded onto one of three steamship lines: Hyundai, K-Line, or Hanjin and destined to markets in Japan and China. As of September 2004, Hanjin is the only carrier that calls on the Port of Portland. This research effort collected firm level data on the production, transportation and marketing of hay in Washington and utilizes this information to develop an optimization model of regional hay movements. One alternative evaluated in this study is determining industry shifts in transportation usage and modal choice in reaction to the transportation changes after September 2004. The results indicate that after all barge and hay shipments were eliminated into Portland, total transportation costs decrease initially overall, while some producers experience shipping cost increase. Both rail and truck volumes increase substantially in the absence of container shipments on barge. The total industry impact is a $6.3 million increase in transportation costs from the Base Scenario to Scenario 3. Also, once trucks rates are allowed to increase due to the shortage of trucks and the increased demand for truck services, the total transportation cost increased by $8.7 million.