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Choice of Air Cargo Transshipment Airport: An Application to Air Cargo Traffic to/from Northeast Asia

  • Hiroshi Ohashi

    (Faculty of Economics, University of Tokyo)

  • Tae-Seung Kim

    (Korea Transport Institute)

  • Tae Hoon Oum

    (Sauder School of Business, University of British Columbia)

  • Chunyan Yu

    (Sauder School of Business, University of British Columbia)

Based on a unique data set of 760 air cargo transshipment routings to/from the Northeast Asian region in 2000, this paper applies an aggregate form of multinomial logit model to identify the critical factors influencing air cargo transshipment route choice decisions. The analysis focuses on the trade-off between monetary cost and time cost while considering other variables relevant for choice of transshipment airport. The estimation method considers the presence of unobserved attributes, and corrects for resulting endogeneity via a two-stage least squares estimation using instrumental variables. Our empirical results show that choice of air cargo transshipment hub is more sensitive to time cost than the monetary costs such as landing fees and line-haul price. For example, our simulation results suggest that a one-hour reduction in total transport and processing time for a particular O-D air cargo traffic would be more effective than a US$1,000 reduction in airport charges. This suggests that it is important to reduce air cargo connecting time at an airport via adequate investment in capacity and automation even by increasing landing and other airport charges.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2004/2004cf291.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-291.

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Length: 24 pages
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:tky:fseres:2004cf291
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  1. Oum, Tae Hoon & Park, Jong-Hun, 2004. "Multinational firms' location preference for regional distribution centers: focus on the Northeast Asian region," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(2), pages 101-121, March.
  2. Douglas, George W & Miller, James C, III, 1974. "Quality Competition, Industry Equilibrium, and Efficiency in the Price-Constrained Airline Market," American Economic Review, American Economic Association, vol. 64(4), pages 657-69, September.
  3. Malchow, Matthew B. & Kanafani, Adib, 2004. "A disaggregate analysis of port selection," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(4), pages 317-337, July.
  4. Cullinane, Kevin & Toy, Neal, 2000. "Identifying influential attributes in freight route/mode choice decisions: a content analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 36(1), pages 41-53, March.
  5. Mori, Tomoya & Nishikimi, Koji, 2002. "Economies of transport density and industrial agglomeration," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 167-200, March.
  6. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
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