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Environmental Regulation Impacts on Freight Diversion

Author

Listed:
  • Fuller, Sam
  • Fleming, Kelly
  • Brown, Austin L.
  • Sperling, Daniel
  • Murphy, Colin

Abstract

The purpose of this whitepaper is to summarize research regarding how much freight might be diverted from California ports if port costs increase due to policy, especially environmental regulations. Although no publicly available study that examines the precise research question was identified, there is scientific literature examining freight diversion in response to generalized increases in costs. Findings suggest that freight diversion is unlikely to be a major consequence if California imposes port requirements designed to reduce greenhouse gas (GHG) emissions from maritime shipping, if such requirements result in modest cost increases (around $30/TEU1 or below) for shipping companies. However, this statement is based on studies of port demand elasticity that have not been recently updated.The potential diversion effect of proposed environmental policies should be examined on the basis of costs (in terms of dollars per TEU ) and elasticities of demand for specific ports. Future research could update elasticities (which have been observed to change over time) and address the specific question more directly.

Suggested Citation

  • Fuller, Sam & Fleming, Kelly & Brown, Austin L. & Sperling, Daniel & Murphy, Colin, 2018. "Environmental Regulation Impacts on Freight Diversion," Institute of Transportation Studies, Working Paper Series qt814582b5, Institute of Transportation Studies, UC Davis.
    • Handle: RePEc:cdl:itsdav:qt814582b5
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    References listed on IDEAS

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    1. Magnus S. Eide & Øyvind Endresen & Rolf Skjong & Tore Longva & Sverre Alvik, 2009. "Cost-effectiveness assessment of CO 2 reducing measures in shipping," Maritime Policy & Management, Taylor & Francis Journals, vol. 36(4), pages 367-384, August.
    2. Sheng, Dian & Li, Zhi-Chun & Fu, Xiaowen & Gillen, David, 2017. "Modeling the effects of unilateral and uniform emission regulations under shipping company and port competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 99-114.
    3. Bart W. Wiegmans & Anthony Van Der Hoest & Theo E. Notteboom, 2008. "Port and terminal selection by deep-sea container operators," Maritime Policy & Management, Taylor & Francis Journals, vol. 35(6), pages 517-534, December.
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