INTEGRATED MODELING TRANSPORT NETWORK OF THE EUROPEAN TRADE AND Jinxue Hu and Olga Ivanova TNO – Netherlands Organization of Applied Scientific Research Abstract Trade and transport statistics are two sides of the same coin. Ideally we would like to have the data on the trade flow between two countries in combination with the information about the split of this flow between various (multi-modal) routes linking the pair of countries. In reality trade and transport statistics are quite difficult to match due to differences in methodology for data collection and the use of surveys. In particular transport statistics show us only the location of loading and unloading and does not say anything about origin and destination of the commodity flows. Trade data provides information on the origin and destination of the flows but may also include re-exports and transit flows. The unification and reconciliation of transport and trade statistics is of great value to both policy makers and the scientific community. The methodological approach presented in the present paper attempts to combine trade and transport data into a single consistent multi-commodity and multimodal freight OD matrix for Europe. We apply logit shares for route choice in combination with a cross-entropy function in order to find the optimal trade-off between available trade and transport statistics. The result of this exercise is the identification of the transhipment flows and pure trade flows for the intra and extraEuropean trade. The methodology presented in this paper has been developed within the framework of the ETIS-Plus project for DG MOVE. 1. INTRODUCTION Trade and transport statistics are two sides of the same coin. Ideally we would like to have the data on the trade flow between two countries in combination with the information about the split of this flow between various (multi-modal) routes linking the pair of countries. The unification and reconciliation of transport and trade statistics is of great value to both policy makers and the scientific community. The methodological approach presented in the present paper attempts to combine trade and transport data into a single consistent multi-commodity and multi-modal freight origin-destination (OD) matrix for Europe. As an introduction to the methodological description we would like to provide some explanations about the content of existing statistical data on trade and transport and indicate the main difficulties for reconciling the two data sources. Ideally we would like to include in the dataset the information about trade flows from country A to country B split between different transport routes that the trade flows follow. The routes can in principle include multiple modes of transportation. Unfortunately none of the elements of such data is readily available from statistics for reasons that are explained in details below. Existing trade statistics usually contains not only pure trade flows between the countries (that are of interest for our dataset) but also re-exports. This complicates the process of separating real trade flow from an accounting one. © AET 2013 and contributors 1 In case of European countries, re-exports represent part of the transit of the extra-European trade flows via European countries. Not all transit flows are registered as re-exports but only the part that changes ownership status at the border. Hence even by separating re-exports we will not get information about the total extra-European transit flows through the European countries. Intra-European trade statistics is currently based on surveys which reduces its reliability for the analysis and makes it more difficult to use it as hard data. Extra-European trade statistics is more reliable since it is based on actual customs registrations, however it also includes re-exports. Transport statistics is based on surveys (hence it is less reliable) and provides data on loading-unloading matrices of transport flows between countries. This data does not give information about the initial origin and the final destination of transport flows neither within Europe nor worldwide, instead it includes data on transport flows which could be separate parts of the multi-modal routes. The goal of our methodological procedure is to estimate the matrix of initial origin to final destination trade flows (called IO-FD matrix) within Europe based on the transport data. This matrix includes only the pure European trade flows including the transport routes that these trade flows take. In order to create the reconciled set of transport and trade data we have followed the steps described below. In our methodology we take transport statistics as given to the extent possible and introduce only changes to it when needed. The trade statistics is allowed to vary in order to fit the transport-related data. 1. Read in transport and trade data and bring it to harmonised dimensions: (1) at the country level and (2) at the NSTR1 commodity level. 2. Check whether transport data allows for generation of single or twomode routes between all existing intra-European trade flows. In case this is not possible adjust the transport data. 3. Group European countries into several geographical groups and identify the transit country for each of these groups on the basis of transport statistics. The transit country is the country with the largest amount of in and out-going transport flows. 4. Generate all possible transport routes between European countries on the basis on transport statistics. The routes include one mode routes where from transport statistics we see that there is a direct loadingunloading connection and two-mode routes that combine road, rail, inland waterways and sea modes. Additionally we generate routes that consist of road mode with transit at the countries determined in step 3. 5. Select the most feasible multi-modal routes of all possible multi-modal routes per each pair of European countries, on the basis of their transport costs. We select the three cheapest multi-modal routes and remove the other multi-modal routes. This set of selected multi-modal routes plus all single mode routes constitute the set of possible transport routes. © AET 2013 and contributors 2 6. Set-up a nonlinear programming problem for the estimation of the OD matrix transport flows between European countries. The optimization problem consists of several constraints. It includes the fixed transport data, the set of possible routes for each country pair, the choice of each trade flow to take particular routes (according to logit choice) and the objective function which minimises the difference between the generated OD transport matrix and the intra-European trade matrix (based on actual trade data). The difference is measured as an entropy function. The result is a OD transport matrix, which includes all transport in Europe and are translated into routes. 7. Once we know the OD transport matrix between European countries we can set-up a procedure for the estimation of the IO-FD matrix. The OD transport matrix that we have estimated in step 6 contains both pure intra-European trade and the extra-European transit flows. The IO-FD matrix should only include the pure intra-European trade and thus the extra-European transit flows should be identified and separated. We use data on the extra-European maritime flows and the extra-European trade flows to estimate the extra-European transit flows. We use a nonlinear programming approach for the estimation of extra-European transit flows. The optimization problem includes constraints on non-negativity of trade and transit. Extra-European maritime flows and the European OD transport matrix are considered fixed. The objective function minimises the difference between the generated extra-European trade and transit flows and the extraEuropean trade flows (based on actual data). The difference is measured as an entropy function. The result of the estimation procedure is the set of consistent trade and transport chains for each pair of countries by commodity type, which is based on the following outcomes of the methodological procedure: 1. IO-FD matrix of consistent trade and transport flows between European countries, which consists of only pure intra-European trade flows. 2. Transportation flows on the routes which link each pair of European countries. This includes one-mode routes, multi-modal routes and road routes with transit points. 3. Extra-European transit flows via a particular European country. After entering Europe or before departing Europe, these flows follow the same transportation routes as intra-European trade flows. The methodology presented in the paper has been developed within the framework of ETIS-Plus1 project for DG MOVE. In this project we used an adjusted approach compared to the approach described in this paper. In the project the transport statistics were considered fixed while in this paper we allow it to vary to some extent. © AET 2013 and contributors 3 1.1 Literature review There are only a few studies that try to reconcile existing transport and trade statistics for a particular country. Existing studies are done for large transit countries such as the Netherlands and Hong Kong and focus on the identification of the volume and value of the transit flows that pass through these countries. For the Netherlands data on transit flows is estimated by the national bureau of statistics on the basis of statistical model but does not include the origin and destination at country level (CBS, 2008). The main focus of the CBS procedure is to find an estimate of the transit flows that pass through the Netherlands by type of transport mode on the basis of Bayesian techniques. Other studies have also focused on identifying transit flows. This was done for Hong Kong by using data from the Hong Kong Census and Statistics Office (Feenstra and Hanson, 2000). The Dutch Bureau for Economic Policy Analysis (Centraal Plan Bureau) has done a comparison of trade data from the generalized trade system and the specialized trade system (Gelhar, 2006). The generalized trade system includes re-exports while the specialized trade system does not. There are multiple studies that have estimated the OD traffic matrix using traffic counts. This is known as the OD matrix estimation problem (Lo and Chan, 2003). The data application is different from our paper but the approach is similar. The challenge is that there are many alternative combinations possible from the transport counts. Exogenous data can be used to address this challenge. Many studies have used a target matrix as exogenous information, towards which the estimated OD matrix can be optimized (Hazelton, 2003). Such a matrix estimation method can either be done with statistical estimation procedures or by using a mathematical programming method based on an entropy theory (Sherali et al, 2003). Other methods of using exogenous data are Bayesian estimation and generalized least squares. We will use the entropy function and minimize the difference between the estimated OD matrix with the target OD matrix. The major difference of our methodology is that we make use of statistical data (transport and trade data) rather than the results of surveys. The estimated matrix that we use in the study is based on the transport flows data whereas the target matrix represents the data on bi-lateral trade flows. 2. DATA 2.1 Trade and transport data Trade and transport data both include different information on the flows of goods. The table below gives an overview of this. On the one hand transport statistics show transported weights by transport mode and by loadingunloading location. On the other hand we have trade data given in weight or value. This trade data is also available with information on the main transport mode used. However it does not show information on the multi-modal route or the location of loading-unloading. In our exercise we only use trade data © AET 2013 and contributors 4 without information on the main transport mode. By combining the two data sources one can get the different types of goods flows, pure import and export, re-exports and transit flows. Figure 1. The matrix of trade and transport statistics by type Source: Linders et al. (2006) We use the trade and transport data from the project ETIS-Plus2 for DG MOVE. In this project public transport data by mode and commodity has been harmonized and disaggregated. In our dataset intra country flows are omitted. We use the trade and transport data in volumes, at the country level and in the NSTR1 commodity classification. The commodity NSTR3 “petroleum products” is excluded from the estimation procedure. This is because a vast amount of oil is transported via pipelines. However good data on pipeline transport is not available in OD matrix format. 2.2 Transport cost data Transport costs of the different routes depend on several factors. We have used the needed transport costs data from the model TRANSTOOLS3. Firstly the average load rate is calculated using the load capacity, load as fraction of capacity and the number of loaded trips as fraction of total number of trips. Secondly we calculate costs related to time using speed, distance, loading and unloading time and waiting time. Finally, costs related to distance are calculated using energy costs per km and distances. The data was provided for the four different transport modes and 10 types of NSTR1 commodities. The transport costs have been calculated for each country pair, commodity and transport mode. The average transport costs per tonne and per intraEuropean trip are presented in the table below to provide an indication of their values. © AET 2013 and contributors 5 Table 1: Average transport costs by transport mode, in euro per tonne per trip within Europe Inland Sea waterway 32 24 Rail Road 97 124 We have used the transport costs from TRANSTOOLS for intra-European transport routes. In case of extra-European routes we do not use transport costs. We assume that all transport flows go via the maritime transport routes which makes mode choice redundant. Also these are often long distance routes where transport costs don’t play an important role in the choice between various seaports. 3. METHODOLOGY 3.1 Part 1: Estimation of the European multimodal transport network The first part of the estimation procedure includes the construction of the multimodal transport network for Europe. This network represents all transport routes in Europe and is based on the transport flows data at the country level. This European multimodal network is created by merging the different modal networks into one multimodal network. We take into account rail, road, inland waterway and sea routes. The multimodal network consists of both single and multimodal routes. In order to create routes from transport links of various modes we need information on the existing connections between the transport links. However, country level data from ETIS-Plus does not provide enough detail on existing connections (transit points) between the modes. Therefore we assume that all transport links can be connected to each other. Also we assume each route to either consist of one or two transport links in order to simplify the procedure. We derive the transport flows on the multi-modal transport network as follows. ORIG EUtranspod EUtranspod ( EUtranspojORIG EUtransp ORIG ) jd j Where EUtranspod stands for the estimated intra-European multimodal transport network, EUtranspojORIG EUtranspORIG stands for the multimodal jd ORIG routes created from the original transport data and EUtranspod stands for single mode routes based on the original transport data. For each intra-European trade flow at least one transport route should exist. If there are no single or two mode routes possible we adjust the transport data. We also identify a list of potential transit countries that are countries with either large ports or with large logistic centers. We group European countries © AET 2013 and contributors 6 into several geographical zones and identify the transit country for each of these zones based on transport statistics. The transit country is the country with the largest amount of in and out-going transport flows. We generate all possible transport routes for each pair of countries by taking transport statistics as it is for single routes and by combining the road, rail, inland waterways and sea transport statistics for the multi-modal routes. Besides that we also generate routes that consist of road mode with transit to another road mode at the earlier identified transit countries. Only for the bulk goods we assume no multi-modal routes except when there are no alternative single routes available for a country pair. (NSTR2, 4, 6 an d 7 are considered bulk goods). On the basis of data on transport costs, we select the three cheapest multimodal routes and remove the other multi-modal routes. This set of selected multi-modal routes plus all single mode routes constitute the set of possible transport routes. We can now setup the first nonlinear programming problem for the estimation of the European OD transport matrix. We do this by matching the transport network with trade data. The intra-European trade flows are assigned to the transport network by applying logit shares based on transport costs as follows. r odc P r exp(TCodc ) r exp(TCodc ) r r Where TCodc stands for the transport costs for a specific route between country o and d by commodity c . In order to identify the optimal balance between the available trade data and the OD transport matrix we use the following constrained optimization problem. European trade flows choose their preferred routes on the transport network using logit shares. The input transport volume data is considered fixed in the model whereas trade volume is allowed to vary. The objective function minimizes the distance between the estimated OD transport matrix and the trade matrix (that is based on existing trade statistics). We use the cross-entropy function as follows. min CE EUtranspod log( od EUtranspod ) ORIG EUtradeod Where CE is the sum of cross-entropies, EUtranspod the volume of an estimated ORIG trade and transport route between origin and destination and EUtradeod the original volume of the trade flow. The CE is minimized subject to the constraints and this procedure is referred to as the minimum sum of cross entropies approach or MSCE (McDougall, 1999). © AET 2013 and contributors 7 The volume of trade data is allowed to vary and hence adjust in order to match the transport statistics. The transport data is considered fixed (at the aggregate level). In this manner we attempt to implicitly correct for re-exports in the trade data. However, at the level of the individual transport links the transport volume can vary compared to the original transport data. 3.2 Part 2: Estimation of the extra-European transit flows The European transport matrix for Europe is estimated in part 1. The transport flows in this matrix can either be an intra-European pure trade flow or a transit (hinterland) transport flow, which is part of an extra-European trade flow. The second step is to make a distinction between these two types of flows by splitting in a proper way the European OD transport matrix. In order to do that we combine the extra-European trade data and maritime data with the previously estimated OD transport matrix for Europe. We firstly identify for each of the extra-European trade flow its European port of entry. After entering the port the goods can either be consumed in the same country or take a hinterland route to another destination country. The choice of port is as follows. portoid ORIG extraEUtranspoid extraEUtradeod portod i Where extraEUtranspoid stands for the estimated extra-European trade flows ORIG going through port i , extraEUtradeod stands for the original extra-European trade data, portoid stands for the port choice for each OD pair. Each OD portod i pair can choose a port from a set of available ports. The set of available ports can be small or large depending on the number of connecting hinterlands routes to the destination country. The choice of port is based on the volume transported to the ports and over the hinterland routes. In our first optimization problem we have identified a consistent intraEuropean multimodal network representing all volumes transported over routes. This network is the basis for our hinterland network. In the porthinterland network construction we estimate which of the flows follow the hinterland routes and which not. We assume all the intra-European routes to potentially be a hinterland routes in case they are linked to a seaport. Firstly the port-hinterland transport network is created by merging the European transport network with the extra-European maritime transport flows. We assume connections between the maritime flows and the European transport network exists in all countries with a seaport. © AET 2013 and contributors 8 Secondly we optimize the port-hinterland network by matching it with trade data. The European transport network and the maritime transport flows are considered fixed. The extra-European trade flows will have to be assigned to a port and optionally to a hinterland route as well. In the model the choice of port and hinterland route is allowed to vary. The objective function minimizes the distance between the port-hinterland flows and the original extraEuropean trade flows while respecting the transport data. Again we use the Cross-Entropy function as the objective function. min CE (extraEUtranspoid ) log( od i extraEUtransp oid i ORIG extraEUtradeod ) Here extraEUtranspoid stands for the extra-European transport routes from ORIG country o to country d going through seaport i and extraEUtradeod stands for the original trade extra-European data. Note that seaport i can be in the destination country d . The above described statistical modeling exercise is applied for both the incoming and the outgoing extra-European flows. 3.3 Estimation of European IO-FD matrix We estimate the European IO-FD matrix by taking the estimated European multimodal transport network from part 1 and subtracting the extra-European transit flows. These transit flows were identified in the extra-European porthinterland network from part 2. The European IO-FD matrix consists of only pure intra-European trade flows with their transport route. We have now identified the optimal intra-European transport OD matrix, which OPTIMAL is EUtranspod and the optimal extra-European port-hinterland network OPTIMAL which is extraEUtranspoid . We can now estimate the extra-European transit flows and the pure intra EU trade flows by using the following logic. OPTIMAL EUtradeod EUtranspod EUtransitij with i o and j d OPTIMAL OPTIMAL EUtransitij extraEUtranspoij extraEUtranspijd o d Where EUtradeod is the pure European IO-FD trade matrix and EUtransitij represents the transit/hinterland flows of extra-European trade flows. The OPTIMAL estimated matrix extraEUtradeoij expresses the incoming extra-European OPTIMAL flows through port i and extraEUtradeijd the outgoing extra-European flows through port j . © AET 2013 and contributors 9 4. RESULTS The first result is an IO-FD matrix of pure intra-European trade flows without re-exports or transit flows. The second result is the European transit flows, which are actually a part of extra-European trade flows. Thirdly for each trade flow we have information about the transport routes that it follows including the transport mode and loading/unloading locations. On the basis of the European OD transport matrix we have identified a part to be intra-European trade, transported over a single or multi-modal mode route, and another part as a transit or hinterland route from an extra-European trade flow. These shares are given in the table below. The shares for the hinterland route include both transit flows for incoming and outgoing extra-European trade flows. Table 2: Share of total volume transported in Europe which is European trade using single- or multi-modal routes, or extra-European trade using hinterland route, by commodity European trade transported over a single mode route European trade transported over a multi-modal route Extra-European trade transported over hinterland route 0 Agricultural products and live animals 53% 21% 26% 1 Foodstuffs and animal fodder 44% 9% 47% 2 Solid mineral fuels 78% 3% 19% 4 Ores and metal waste 59% 6% 35% 5 Metal products 6 Crude and manufactured minerals, building materials 57% 18% 25% 91% 1% 8% 7 Fertilizers 74% 9% 18% 8 Chemicals 9 Machinery, transport equipment, manufactured articles and miscellaneous articles 47% 10% 44% 55% 19% 26% NSTR1 Nearly half of the transport of “foodstuffs and animal fodder” and “chemicals” in Europe is part of an extra-European transport route. It seems that these are the products which typically go through only specific (specialized) ports and this is why there is relatively large amount of hinterland transport. On the other hand “crude and manufactured minerals, building materials” are mainly transported on an intra-European single-route. This indicates that this type of product has a more local nature. “Agricultural products and live animals” and “machinery, transport equipment and manufactured articles” have the highest share of multi-modal routes. These seem to be products which are typically transhipped within Europe through for instance distribution centres. © AET 2013 and contributors 10 From the extra-European trade flows it is interesting to see which products are typically transhipped after arriving in a port and which products often go directly to the port of the destination country. The graph below shows the percentage of incoming port throughput which arrives directly in the destination country or takes a hinterland route by transport mode. Figure 2: Share of extra-European trade flows arriving in European ports that take a hinterland route, split by transport mode 100% 80% direct 60% iww rail 40% road mar 20% 0% 0 1 2 4 5 6 7 8 9 We see that NSTR2 “Solid mineral fuels” has the lowest transhipment rate. This product often goes directly to the country of destination. And in the few cases it does take a hinterland route it mostly goes by inland waterway. The highest transhipment rates are observable for NSTR5 “Metal products” and NSTR9 “Machinery, transport equipment, manufactured articles”. Road and sea are the most used transport mode for transhipped products while inland waterway and rail are used less. More detailed results at the country level is given in the table below. The top10 port countries are shown here. This table shows the countries with the highest incoming port throughput and shows what percentage of the incoming throughput is transhipped to another European country. Also, it gives the main receiving country. © AET 2013 and contributors 11 Table 3: Top 10 countries with highest incoming port throughput and their transhipment rates of incoming flows with the main receiving country Country Transhipment rate Main receiving country (% of total seaport (% received of total throughput) seaport throughput) NL IT ES FR UK BE DE PT PL RO 39% 24% 27% 31% 34% 48% 57% 28% 58% 36% DE (16%) ES (6%) IT (5%) NL (6%) BE (6%) FR (14%) NL (10%) ES (13%) DE (13%) IT (5%) The Netherlands, the largest port country, has a transhipment rate of 39% for the incoming transport flows. Of the total incoming throughput 16% has Germany as destination country. The highest transhipment rates can be found for Poland and Germany. Often the main receiving country is a neighbouring country. From the results is seems that Germany has very high trade figures. It has one of the highest transhipment rates, meaning that a lot coming in their ports is transhipped to other European countries. And at the same time Germany receives most of the transhipment from the ports in the Netherlands and Poland. The consistent trade and transport flows in the European IO-FD matrix and the port-hinterland network are different from the original trade statistics. The deviation with the original trade statistics are given in the figure below. The volume of the estimated trade flows is much lower than the original one except for NSTR9. The fact that the estimated trade flows are lower in volume is because they should represent only the pure trade flows and the re-exports are removed. The difference could give an indication for the volume of reexports. The reason why the estimated flows for NSTR9 are higher is because NSTR9 is likely largely overestimated in transport statistics. NSTR9 contains transport via containers. The goods transported in containers are difficult to register since the goods are not visible from the outside and containers transport a wide variety of goods which are then difficult to classify to the correct NSTR group. © AET 2013 and contributors 12 Figure 3: Total tonnes of trade by NSTR group in original trade data and in the estimated trade flows, in million tonnes 700 0 600 1 500 2 400 4 5 300 6 200 7 100 8 9 0 original estimated The estimated trade and transport flows has almost no deviation from transport statistics. This is at the least the case at the more aggregate level. After all, the total volume of transport at the commodity level was fixed in the constrained optimization problems. However, at the level of individual transport links there could deviation from the original transport data. 5. CONCLUSION AND RECOMMENDATIONS 5.1 Conclusions The unification and reconciliation of transport and trade statistics is of great value to both policy makers and the scientific community. This study has proposed a methodological approach for reconciling a multi-commodity and multimodal trade and transport OD matrix for Europe. A trade-off is made between trade and transport statistics using entropy function. This methodology corrects for re-exports and transit flows in the trade data and estimated the multi-modal routes including information on transport mode and location. This methodology can be further improved or adjusted and hopefully helps to make trade and transport data more consistent as a part of further research projects. 5.2 Recommendations Several issues with the data and modelling can still be improved in further research and are described here. Not all trade data could be matched with transport data. This is for instance the case with assigning the extra-European trade flows to the port-hinterland © AET 2013 and contributors 13 network. The hinterland of the Europe was modelled but the hinterland of the non-European countries was not. This could lead to problems. For instance there were trade flows of a certain commodity from the Philippines but no maritime transport flows. This is because trade from the Philippines could be transported via Singapore or another country. There was no information available on the non-European hinterland network. We therefore could not explain well the extra-European trade flows which could have been using non EU hinterland routes. The non EU hinterland network would be useful to model as well. The non-negativity constraint for trade flows on occasion gave a problem in the second optimization problem. Sometimes the modelled hinterland routes would have a larger volume than the total volume transported on that route. For instance the excess volume that could not be transported over this route should choose an alternative route. In those cases we assigned the excess volume to the direct route to the port of the destination country directly instead of going over a hinterland route. We recommend including a more refined mechanism. If pipeline and air transport data would become available in the future in OD matrix format by commodity, it would be very interesting to include those in the model as well. © AET 2013 and contributors 14 BIBLIOGRAPHY CBS (2008) Integration of international trade and transport flow statistics for the Netherlands Feenstra, R.C. and Hanson, G.H. (2000) Intermediaries in entrepôt trade: Hong Kong re-exports of Chinese goods Gehlhar, M. (2006) GTAP 6 Data Base documentation - 15c Re-export trade for Hong Kong and the Netherlands Hazelton, M.L. (2003) Some comments on origin-destination matrix estimation, Transportation Research Part A 37 (2003) 811-822 Linders, G.M., Odekerken-Smeets, M.E.P. and Groot, H.L.F. de (2006) “Linking trade and transport statistics: The Dutch Case” ERSA 2006 Lo, H. and Chan, C. (2003) Simultaneous estimation of an origin-destination matrix and link choice proportions using traffic counts, Transportation Research Part A 37 (2003) 771-788 Sherali, H. D., Narayanan, A. and Sivanandan, R. (2003) Estimation of origindestination trip-tables based on a partial set of traffic link volumes, Transportation Research Part B 37 (2003) 815-836 NOTES 1 More information of this project is available at http://www.etisplus.eu 2 Data is available at viewer.etisplus.net 3 More information of this project is available at http://energy.jrc.ec.europa.eu/transtools/ © AET 2013 and contributors 15
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