How to Establish West Japan-ASEAN RORO Ship Route?: Based

Journal of the Eastern Asia Society for Transportation Studies, Vol.13, 2019

2278

How to Establish West Japan-ASEAN RORO Ship Route?: Based on

Network Analysis

Jun KIMATAa, Tatsuo OKAMOTOb, Mikio TAKEBAYASHIc

a,bChuo Fukken Consultants Co., Ltd., Osaka, 533-0033, Japan

aE-mail: [email protected]

bE-mail:[email protected]

cGraduate School of Maritime Sciences, Kobe University, Kobe, 658-0022, Japan;

E-mail: [email protected]

Abstract: This paper aims to studythe possibility of establishing West Japan-ASEANRORO

ship routes by network equilibrium analysis. Although a RORO ship is supposed to have an

advantage against container ships in term of transportation timeits high shipping cost seems to

limit its possibility to launch East Asia routes for Japan. In this paper, we apply network

equilibrium analysis of bi-level type model to cargo transportation from West Japan to Ho Chi

Minh Port as case study of ASEANtransport market. We carry out thesensitivity analysis on

shipper’s time preference parameter and ocean tariff for understanding the potential demand

of RORO services. The results suggest that the cargo volume using RORO services can

increase when the shipper’s time preference increase: however, it is difficult to establish a

weekly service even if the time preference magnification to the current rate is doubling.

Keywords: Japan-ASEAN Transport Market, International RORO Ship, Time Preference,

Sensitivity Analysis, Network Equilibrium Approach

1. INTRODUCTION

Ministry of Land, Infrastructure, Transport and Tourism (MLIT) of JAPAN has aimed to

maintain the main container route of Europe and the United States from Japan since the port

competition among Asian ports has raised. Then, MLIT selected Keihin Port and Hanshin Port

as International Container Strategic Ports for this aim.

On the other hand, the Southeast Asian region i.e. ASEAN countrieshave enjoyed their

remarkable economic growth. Actually, the total GDP of ASEAN countries will be close to

Japan’s within ten years.ASEAN is also closer to Europe than East Asian countries including

Japan: this means the geographical advantage in term of global supply chain. Therefore, the

demand of Japanese companies approaching ASEAN is seemed to increase.This tendency will

lead to makeASEAN a strategic production base area for Japanese industry. In addition, along

with the progress of e-commerce, the importance of exporting Japanese products with high

quality and high added value is expected to increase, and it is assumed that trade with Japan

will also increase. In fact, the export container cargo volume from Japan to Southeast Asia

exceeded that for North America in 2006, has steadily increased in recent years, and the

ASEAN container market has been drawing attention as a growth market for future marine

transportation.

When considering this situation, neighboring countries in Asia will strategically expand

the network to overseas ports: China’s The Belt and Road Initiative policy is a good example.

Japan also wants to establish a highly efficient, speedy and highly reliable route network for

Japanese industry under reciprocal relationship with ASEAN countries.Against this backdrop,


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the Japanese government also said in a national port strategy(medium-long-term policy of

ports: PORT 2030), "The shuttle route to the rapidly growing ASEAN is a strategically

important route and will enhance direct service from domestic major ports".

An international ferry/roll-on-roll-off(RORO) ship, which is faster than a full-container

ship, is a transportation mode that is useful for keeping the current complicated global supply

chain because of its faster speed and better punctuality in transport. The policy of PORT 2030

aims to "form an ocean transportation network by various type of services which provide

wider speed band: launching international ferry/RORO ship routes and container shuttle

routes can fit the tight supply chain management". However, international ferry/RORO ship

routes from Japan are currently limited to short sea shipping (South Korea, Taiwan, and some

part of China, see Table 1) and are not in service to ASEAN. Using international ferry/RORO

ship is usually expensive due to high operationalcosts, and this can be one of the reasons of

the limited services of RORO from Japan; but no research has analyzed this phenomenon yet.

Since using RORO service is demanded for providing better supply chain, we need to discuss

the possibility of launching this service in the future.

Table 1. International ferry/RORO ship routes from Japan(2018) Countries Type Route Frequency

China

Ferry: Osaka(J)-Shanghai(C) 6 vessel/month

Ferry: Kobe(J)-Shanghai(C) 2 vessel/month

RORO: Shimonoseki(J)-Taicang(C) 8 vessel/month

Korea/China RORO: Tokyo(J)-Nagoya(J)-Shimonoseki(J)-Busan(K)

-Shidao(C) 4 vessel/month

Korea

Ferry: Osaka(J)-Busan(K) 12 vessel/month

RORO:

Tsuruga(J)-Kanazawa(J)-Busan(K)-Masan(K)

-Tsuruga(J)-Kanazawa(J)-Shimonoseki(J)-Masan(K)

-Busan(K)

8 vessel/month

RORO: Tokyo(J)-Nagoya(J)-Busan(K)-Masan(K)

-Shimonoseki(J)-Masan(K)-Busan(K)-Osaka(J) 4 vessel/month

Ferry: Shimonoseki(J)-Busan(K) 28 vessel/month

Ferry: Hakata(J)-Busan(K) 28 vessel/month

RORO: Kitakyushu(J)-Busan(K) 24 vessel/month

Taiwan RORO: Hakata(J)-Kagoshima(J)-Naha(J)-Miyako(J)

-Kaohsiung(T)-Naha(J)-Kagoshima(J) 4 vessel/month

Russia Ferry: Maizuru(J)-Sakai(J)-Donghae(K)-Vladivostok(R) 4 vessel/month

Source; Ocean Commerce

In this paper, we discuss the possibility of launching RORO ship route between Japan

and ASEAN by applying the network equilibrium model and show the requirement of

launching this service to ASEAN. This paper has five bodies. In the second section, we briefly

review the existing researches. In the third section, we show the structure of the model and the

model setting for the analysis. In the fourth section, we discuss feasibility of establishing

international RORO ship route by the sensitivity analysis on the time preference as well as the

fare. Finally, in the fifth section, we summaryresearch findings and address the direction for

the future research.

2. LITERATURE REVIEW

Generally, the RORO services are classified as family of liner services.The distinguished


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point of ROROfrom conventional container cargo services is using horizontally loading

vessels: cargosare towed into the vessel by wheeled vehicles and then using RORO does not

require any special equipment (Christodoulouet al, 2019).The international RORO service

network is popular in Europe, especially in Baltic area. As for Japan, the Korean route from/to

North Kyushu area is known as the most successful RORO services. Shimonoseki Port is one

of the busiest international RORO terminals in Japan. Regarding its hardware profile, its

depth and extension of the terminal are minus 7.5m and 260m, respectively (Shimonoseki

City Port Authority).

In term of the researches on international RORO ship route from Japan, some

researchesdiscuss the possibility of establishing route connecting Shanghai and Northern

Kansai (Oka and Takebayashi,2015)because of its geographical positon. On the other hand, it

is rarely to find the research on Japan-ASEAN route.There are some previous studies on the

RORO route in Europe. Christodoulou et al (2019) discussed the sustainability of the RORO

route in Northern Europe based on interview surveys. However, their interest is not on fast

boat, but on intermodal transport.There is also research on RORO in ASEAN, but as Kim and

Yoon (2019), domestic RORO routes in island countries are targeted.JICA (2013) is

examining the establishment of international RORO route between ASEAN countries, but the

route between Japan and ASEAN is not covered.

Some researches focusing on shipping market behavior and carriers have been studied.

Kuroda et al (2005) proposed an equilibrium model considering both carriers’ and

shippers’behavior simultaneously. Their model is a deterministic user equilibrium model

including congestion. Shibasaki et al (2011) proposed an equilibrium model considering the

behavior of carrier alliances and shippers. Their model was designed for handling large-scale

networks and describing complicated transportation routes in the seaborne markets. These

approaches adopt "supply-demand interaction" approach. We can find the researches adopting

supply-demand interaction approach in the air transportation research filed. Takebayashi

(2011, 2013) proposed a bi-level air transport market model which can deal with airlines’

shaping network, determining air fares, and flight frequenciesover passenger’s optimalroute

choice behavior.They proposed a bi-level model that airlines’ behavior is treated as leader,

while passengers are regarded as follower. Takebayashi’s model is very comprehensive, but

too liberal for dealing with seaborne market because the tariff is not so flexibly changeable.

Since the bi-level model can provide many policy implications, we adopt the bi-level model

but need to modify for handling the seaborne markets, especially short sea transport.

3. THE MODEL

3.1 Simplified Bi-level Model

We apply the simplified bi-level model.Details are already explained by Takebayshi (2011),

and some important points are described in the following part.

1)Carrier

Carriers competewith each other by controlling their transport capacity for maximizing their

profits.Here, we assume that fare and vessel capacity are given for each link, and only the

transport frequency is a control variable.

Assuming that the link operated by carrier n is𝑙𝑛, OD is rs(r: origin, s: destination), the

transport frequency of the link and the vessel capacity are 𝑓𝑙𝑛 and 𝑣𝑙𝑛 , the fare and

operationalcost are 𝑝𝑙𝑛 and 𝐶𝑙𝑛 , the profit maximization problem of carrier n can be

formulated as follows.


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max : ( )n n n n

n nl

n rs rsk

kl l l lfrs kl

p x f C = − , (1)

Subject to:

, for n n n

rs rsk n

k l l lrs k

x v f l , (2)

0,for n

n

lf l . (3)

𝑥𝑘𝑟𝑠 is the cargo volume carriedonkth path in the rsOD market.𝛿𝑙𝑛

𝑟𝑠𝑘 is a binary variable

that takes one when the link is used in the kth path in the rsOD market, and

zerootherwise.Equation (1) is the objective function, Constraint (2) is the transport capacity

constraint of each link, and Constraint(3) is the non-negative condition of transport frequency.

2) Shipper

Shippers exist independently for each cargo.Shippers aim to minimize their generalized costs

which consist of transport time, fare and congestion.As shipper’s preferences are assumed to

have varieties, we adopt a stochastic user equilibrium (SUE) state with capacity constraints.

The SUE with capacity constraintscan be described as Takebayashi (2011, 2015). 1

min : (ln 1)rs

rs rsk

rs rs rs rs

k k k kx

rs rsk K k K

x x u x

= − + , (4)

Subject to:

,rs

rs rs

k

k K

x X rs

= , (5)

, ,n n n n

rs rsk n n

kl l l lrs k

x x v f l I n N= , (6)

0, for and rs rs

kx k K rs , (7)

where, 𝜃 is the dispersion parameter (estimated as 1), 𝑢𝑘𝑟𝑠 is the generalization cost of the

kth path in the rsOD market, 𝑋𝑟𝑠 is the OD flow, Ω is the set of OD pairs, 𝐾𝑟𝑠 is the path set,

𝐼𝑛 is the link set, Nis the group of carriers.Equation(4) is the objective function, Constraint(5)

is the OD flow conservation law, Constraint(6) is the transport capacity constraint of each link,

and Constraint(7) is the nonnegative condition of the path flow.If carriers’ capacity constraint

considers shippers to actively select routes for congestion, carriers’ constraints are

automatically satisfied by the shipper's optimal behavior.The utility function of shippers in

this model is given as follows.

1 2 3D MU T T C = + + (8)

𝑇𝐷 is the domestic transport time, 𝑇𝑀 is the maritime transport time, Cis the total

transport cost, 𝛼1,𝛼2and 𝛼3are theparameters.

3) Port

Due to the structure of the analysis, we donot set ports as active players. For ports,we set

onlythe evaluation function.The port charge 𝜌ℎ𝐶 and handling cost 𝜌ℎ

𝑆 at port h are included

to carriers’ operationalcost 𝐶𝑙𝑛 and shippers’ generalization cost 𝑢𝑘𝑟𝑠.

4) Domestic transport route

For each shipper, we set the presence/absence of connection between domestic

production/consumption area of cargo and domestic port, fare and required time.

5) Alternative route

The proposed bi-level model requires the alternative route for each OD flow because

equilibriumflow should be obtained under any condition provided by carriers(Takebayashi,

2011). We follow the former research’s approach and set the alternative route for each OD

flow.

3.2 The Network


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In this paper, we deal with Japan-ASEAN seaborne markets. However, obviously, when we

handle this market directly, we need to handle very large scale network: it is difficult to apply

the bi-level model. Then,we need to reduce size of the network – but keep the reality of the

market behavior as possible. In this paper, we analyze the route connecting Ho Chi Minh Port

(hence, HCM Port), which is the largest port of Vietnam closer to Japan than Thailand and

Indonesia in ASEAN, and West Japan.

First, we calibrate the model for reproducingthe current market in Section 3.3:we

dealwith West Japan and HCM Port’s hinterland. The target year is 2013: we use the survey

data of the latest container cargo flow survey by MLIT of this year. In the analysis,we deal

withfour ports (Hanshin Port, Mizushima Port, Hiroshima Port and Northern Kyushu Port) as

West Japan’s representativeport.We consider oversea connecting servicesvia Busan Port and

Kaohsiung Port for describing the transshipment services even in the short sea shipping

market in Asia. As a result, we consider three types of routes connecting 22 West Japan

prefectures and HCM Port’s hinterland (see Figure 1).Figure 2 shows location of target ports.

(a) Domestic transport service: production/consumption areas(22 prefectures) – West Japan

ports (Hanshin Port and otherthree ports), HCM Port – hinterland

(b) Direct international service using full-container ship: West Japan ports – HCM Port

(c) Overseas transshipment service: West Japan ports – transshipment ports (three ports) –

HCM Port

Figure 1.Present condition reproduction network model (for export)

Figure 2.Location of target port

Figure 3 describes the modified shipping services by launching RORO services. In this

Producing area

(West Japan)

Hanshin Port

West Japan port

(3 ports)Ho Chi Minh Port

Transshipment port

(2 ports)

(a)

(a)

(b)

(b)

(c)

(c)

(c)

(a) Domestic transport service

(b) Direct international service using full-container ship

(c) Overseas transshipment service

Hinterland(a)

Hanshin

Mizushima

Hiroshima

North Kyushu

Hanshin

HCM

Target ports

Existing service ports


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figure, we assume that RORO service is available via Hanshin Port: no RORO service is

available from other ports in Japan: this is very strict assumption.

In the scenario studies mentioned later, we carry out the sensitivity analysis on shipper’s

preference (especially the preference on transport time) for discussing the potential demand of

RORO services in the short sea shipping market.

Figure 3.Modified service network by installing RORO service from Hanshin Port

(for export)

3.3 Model Setting

Table 2 shows the OD container cargo flow obtained from the official survey (MILT, 2014):

these flowsare carried from 22 prefectures in West Japan to HCM Port’s hinterland via four

West Japan ports.Since the unit used by the container cargo flow survey is freight ton/month,

we convert it into TEU/month.

The transport network is formed by the combination of link (a):Domestic transport

service, link (b):Direct international service using full-container ship and link (c): Overseas

transshipment service.

Regarding link (a) in Japan, we set a link to the route between the prefecture and the

West Japan port where the container cargo shown in Table 2. We set the domestic transport

cost (JPN/TEU) and the domestic transport time (hour) of each link referring from "National

Integrated Transport Analysis System (NITAS)" by MLIT.For simplifying the condition for

computation, the transport cost and the transport time of the link connecting between HCM

Port and the hinterland is assumed to be zero.

As for link (b), we set up a link between four West Japan ports and HCM Port:according

the survey, direct transport services in the container cargo are operated at the moment. As for

link (c), we set the route if the transshipment servicevia Busan Port or Kaohsiung Port from

the container cargo flow survey.

Five carrier groups (1: Japan, 2: Korea or China, 3: Taiwan or Hong Kong, 4: ASEAN,

5: Western countries) are assumed to provide transport services of links (b) and (c).We set the

transport time (hour) and the transport frequency (vessel/ month) of each link for each carrier

group using the information appearing in the "International Transport Handbook".Table 3lists

carrier groups’ transport frequency for each link (b) and link (c).The maritime transport costs

(JPY/TEU) are given from JETRO report.Although the bi-level model applied in this paper is

link-based, the container ships are actually operated by multiple-port-call loop, fully loaded

ships cannot be assumed at each port.Then, we modify the capacity per vessel (TEU/vessel)

as the average of the handle cargo volume per one vessel.We set up the operationalcost of

each carrier using the average vessel type and average transport distance for each carrier with

Producing area

(West Japan)

Hanshin Port

West Japan port

(3 ports)Ho Chi Minh Port

Transshipment port

(2 ports)

(a)

(a)

(b)

(b)

(c)

(c)

(c)

(a) Domestic transport service

(b) Direct international service using full-container ship

(b*)International RORO service

(c) Overseas transshipment service

Hinterland(a)

Ho Chi Minh

RORO port

(a)

(b*)


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reference to cost benefit analysis manual by MLIT.

The port charge (JPY/vessel) and handling charge (JPY/TEU) at each port are usually

important for the port management in terms of profitability, but these charges are negligible in

this analysis.

Using the data of OD container cargo flow from Japan to ASEAN (MLIT, 2014), we

estimate the parameters of shipper’s route choice behavior given as a logit model. The origin

of container flow is 207 zones in Japan, and the destination is 16 ports in ASEAN.The route

choices are 3,933 domestic routes (combination of 207 zones and 19 ports in Japan) and 304

ocean routes (direct services between 19 Japan ports and 16 ASEAN ports). Level of service

(LOS) data comprises of domestic transport cost (JPY/TEU), domestic transport time (hour),

ocean transport cost (JPY/TEU), ocean transport time (hour) and schedule delay expressed as

inverse of service frequency (month/vessel). Weestimate parameters by maximum likelihood

method.Table 4 lists the results. As a result, we do not have the desirableparameter

combination including all of the important elements, i.e. transport cost, transport time and

transport frequency. Since the RORO ship route service provides a faster transport speed

service with a higher fare than full container ship service, the terms of the transport time and

the transport cost should be treated for the analysis.Thus, we adopt the parameters of set B in

this paper.

Table 2. OD cargo flow (for export)

Unit: TEU/month

OD cargo

flow

Used port (direct + transshipment)

Hanshin

Port

Mizushima

Port

Hiroshima

Port

Northern

Kyushu Port

Origin

Prefecture

Shiga 102 102

Kyoto 20 20

Osaka 1,182 1,181 1

Hyogo 1,589 1,589

Nara 37 37

Wakayama 29 26 3

Tottori 16 16

Shimane 30 30

Okayama 283 89 193

Hiroshima 132 98 15 18 1

Yamaguchi 420 410 10

Tokushima 14 14

Kagawa 12 10 2

Ehime 102 102

Kochi 0 0

Fukuoka 232 232

Saga 18 18

Nagasaki 8 8

Kumamoto 4 0 4

Oita 6 3 3

Miyazaki 15 1 14

Kagoshima 3 2 0

Total 4,254 3,739 211 18 286

Source; MLIT, Japan


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Table 3. Transport frequency of maritime direct route and overseas transit route Unit: vessel/month

West Japan ports - Ho Chi Minh Port (maritime direct route: link (b))

Hanshin Port Mizushima

Port

Hiroshima

Port

Northern

Kyushu Port

Carrier

Group

1: Japan 29 4

2: Korea & China

3: Taiwan & Hong Kong 22.5 4 14.5

4: ASEAN 8

5: Western countries 6

West Japan ports - Busan Port (overseas transshipment route: link (c))


Port

Hiroshima

Port

Northern

Kyushu Port

Carrier

Group

1: Japan 4 8 50

2: Korea & China 24 28 48

3: Taiwan & Hong Kong 12

4: ASEAN

5: Western countries

West Japan ports - Kaohsiung Port (overseas transshipment route: link (c))


Port

Hiroshima

Port

Northern

Kyushu Port

Carrier

Group

1: Japan

2: Korea & China

3: Taiwan & Hong Kong 67.5 30.5

4: ASEAN 9

5: Western countries 12 4

Transshipment ports - Ho Chi Minh Port (overseas transshipment route: link (c))

Busan Port Kaohsiung

Port

Carrier

Group

1: Japan 4

2: Korea & China 32

3: Taiwan & Hong Kong 8 22.5

4: ASEAN 4

5: Western countries 4

Source; Ocean Commerce

Table 4. Parameter estimation of shipper’s route choice

Explainedvariables Weight t value

Set A

Domestic transport time (hour) -1.873×10-1 -22.548

Maritime transport time (hour) -2.760×10-3 -3.781

Duration given by maritime transport frequency (month/vessel) -3.284 -3.765 2 =0.2712

Set B

Domestic transport time (hour) -1.220×10-1 -8.398

Maritime transport time (hour) -3.156×10-3 -4.233

Total transport cost (JYP/TEU) -8.069×10-6 -4.594 2 =0.2741

3.4 Model Validation


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We discuss the workability of the proposed model considering the reproduction of the current

(year 2013) market situation.

Table 5 lists results. The table shows that the transport frequency and the cargo volume

of the direct route from Northern Kyushu Port are overestimated:on the other hand, Busan

transshipment service from Northern Kyushu Port is underestimating.This underestimation of

transshipment service via Busan Port is supposed to come from the fact that the historically

strong connectivitybetween Northern Kyushu Ports and Busan Port is not reflected in the

model.

Table 5. Comparison between estimated and observed values (export) Service frequency Unit: vessel/month

Service type Origin port Observation Estimate

Direct route

Hanshin Port 65.5 60.8

Mizushima Port 4 2.9

Northern Kyushu Port 18.5 49.6

Busan transshipment service

Mizushima Port 28 30.2

Hiroshima Port 36 27.9

Northern Kyushu Port 110 85.3

Kaohsiung transshipment service Hanshin Port 88.5 78.7


Busan Port – Ho Chi Minh Port 44 35.7

Kaohsiung Port – Ho Chi Minh Port 28.5 26.8

Total 457.5 433.0

Cargoflow Unit: TEU/month

Service type Origin port Observation Estimate

Direct route

Hanshin Port 3,535 3,185

Mizushima Port 192 141

Northern Kyushu Port 208 561



Hiroshima Port 18 16


Kaohsiung transshipment service Hanshin Port 204 180


Busan Port – Ho Chi Minh Port 92 76

Kaohsiung Port – Ho Chi Minh Port 228 203

Total 4,574 4,444

Figure 4 depicts the comparison between estimated and observed values of frequency

and cargo flow. The correlation equation about service frequency and cargo flow is 0.708 and

0.893, respectively. The R2 value is 0.836 and 0.985. From these results, we think that the

proposed model can reproduce the export container cargo flow from West Japan to HCM Port

well.Therefore, we adopt this calculation result as the base case for the followinganalysis.

Service frequency Cargo flow


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Figure 4.Comparison between estimated and observed values

(frequency and cargo flow: export)

4.ANALYSIS OF RELATIONSHIP BETWEEN SHIPPER’STIME PREFERENCE

AND FEASIBILITY OF ESTABLISHING INTERNATIONAL RORO SHIP ROUTE

4.1 Launching the International RORO Ship Route into Model

As shown in Table 3 in the former section, all carrierswithout Korea and China set up direct

routes from Hanshin Port to HCM Port.In this section, weconsider the efficiency of launching

RORO ship service instead of conventional container ship service.

The size of RORO ship is assumed to be compatible to the RORO ship operated by Pan

Star Genie No. 1 which is the highest speed RORO ship called to Japan.The gross tonnage of

Pan Star Genie No. 1 is 13,682 GT (4,000 DWG);itsmaximum speed reaches to 22.8 knots;its

loading capacity is 238 TEU/vessel.

We set the transport time of the international RORO ship route is 105.6 hours

considering the route distance andRORO’s average speed (21.5 knots). This ocean transport

time corresponds to 40% of the container ship’stransport time (264 hours).As for the actual

ocean tariff, we obtainedthe ferry-using fare from Hanshin Port to Busan Port is 50,000 JPY

(500 USD) /TEU by the interview survey. Therefore, we calculate the RORO ship fare to

about 290,000 JPY (2,900 USD) in proportion to the route distance.This fare setting seems to

be expensive.However, according to the cost benefit analysis manual by MLIT, the

operationalcost of a ferry of 10,000 to 20,000 GT is 2.90 times higher than that of a same-size

container ship. Therefore, we set the route distance of the RORO ship route as 2.90 times

longer than the container ship route provides. On the other hand, the conventional container

ship route service replaced by the RORO ship route is calling also to both Hanshin Port and

Northern Kyushu Port.Therefore, we increase the capacity per vessel of direct container route

from/to Northern Kyushu Port by adding the capacity served in Hanshin-based conventional

servicewithout change the frequency.

Table 6 shows the results of the RORO ship replacement scenario.The results show that

the frequency of the RORO ship routes is less than 4 vessel/month;it means that the carriers

do not adopt weekly service.As for the load factor, RORO ship route provides 0.651. The

average load factor for the ocean container ship is commonlyknown as 0.7.

Table 6. Simulation results replaced by RORO ship route (for export)

y = 0.7082x + 10.894

R² = 0.8358

0

20

40

60

80

100

0 20 40 60 80 100

Est

imat

e (v

esse

l/m

onth

)

Observation (vessel/month)

y = 0.8933x + 35.764

R² = 0.9848

0

1,000

2,000

3,000

4,000

0 1,000 2,000 3,000 4,000

Est

imat

e (T

EU

/mo

nth

)

Observation (TEU/month)


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Service frequency Unit: vessel/month

Service type Origin port Base case Replace by

RORO ship route

RORO ship route Hanshin Port - 2.4

Direct route

Hanshin Port 60.8 47.3

Mizushima Port 2.9 3.0



Mizushima Port 30.2 31.7

Hiroshima Port 27.9 29.9


Kaohsiung transshipment service Hanshin Port 78.7 89.2


Busan Port – Ho Chi Minh Port 35.7 37.9

Kaohsiung Port – Ho Chi Minh Port 26.8 29.1

Total 433.0 434.2

Cargoflow Unit: TEU/month

Service type Origin port Base case Replace by

RORO ship route

RORO ship route Hanshin Port - 369

Direct route

Hanshin Port 3,185 2,560





Hiroshima Port 16 17


Kaohsiung transshipment service Hanshin Port 180 203


Busan Port – Ho Chi Minh Port 76 80

Kaohsiung Port – Ho Chi Minh Port 203 218

Total 4,444 4,070

Looking at Table 6, launching the international RORO ship route decreases the transport

frequency of direct route from Hanshin Port and transshipment route via Kaohsiung Port from

Northern Kyushu Port.Conversely, the frequency of transshipment route via Busan Port from

Northern Kyushu Port and via Kaohsiung Port from Hanshin Port increase.

As for the carried cargo volume, those of direct route from Hanshin Port decrease by

625 TEU/month. On the contrary, the cargo volume of direct route from Northern Kyushu

Port increases by 210 TEU/month and the cargo volume of transshipment route via Kaohsiung

Port from Hanshin Port increase by 23 TEU/month.These results suggestthat launching

RORO service from/to Hanshin Port brings a negative impact to Hanshin Port itself; but some

positive effect on Northern Kyushu Port and Busan Port: this suggests the cannibalization

between services from/to Hanshin Port occurs and it reducesthe efficiency of Hanshin Port.

Table 6 also shows that the total export cargo volume decreases.This decrease suggests

that the level of service in total becomes inconvenient for shippers. Actually, handled cargo

volume at Hanshin Port decrease from 3,364 TEU/month to 3,132 TEU/month.

Table 7 lists the estimated cargo volume:the table shows that the cargo on the RORO

ship route at Hanshin Port is mainly shifted from the existing direct route at Hanshin Port,

many of which originate from Hyogo prefecture and Osaka prefecture.

Table 7. Estimated cargo volumeof containerdirect route and RORO ship route (for export)


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Unit: TEU/month

Base case Replace by RORO ship route

Container direct route

RORO

ship

route

Container direct route

Hanshin

Port

Mizushi

ma Port

Northern

Kyushu

Port

Hanshin

Port

Hanshin

Port

Mizushi

ma Port

Northern

Kyushu

Port

Origin

Prefecture

Shiga 94 12 80

Kyoto 18 2 16

Osaka 967 127 115 801 163

Hyogo 1,474 183 1,270

Nara 34 4 29

Wakayama 23 4 3 19 5

Tottori 15 2 13

Shimane 27 3 23

Okayama 133 120 18 124 106

Hiroshima 34 41 28 4 29 32 36

Yamaguchi 75 307 7 51 320

Tokushima 13 2 11

Kagawa 7 4 1 6 4

Ehime 91 11 78

Kochi 0.2 0.02 0.2

Fukuoka 214 212

Saga 16 16

Nagasaki 6 1 5

Kumamoto 1 3 0.1 0.4 3

Oita 1 4 0.1 1 5

Miyazaki 5 8 0.5 3 9

Kagoshima 1 2 0.1 0.4 2

Total 3,018 165 713 369 2,560 142 771

Based on the above, at present, we evaluate that it is possible that the introduction of the

RORO ship route to Hanshin Port is not good for shippers and Hanshin Port.

Next, let us focus on the profitability of carries. Table 8lists the service frequency, cargo

volume, operationalexpenses, and freight income of each carrier on the route from Hanshin

Port to HCM Port.Operational expenses are proportional to sailing distance and do not include

general administrative expenses and others:the final company profit is less.Due to replacing

the RORO ship route, the cargo volume handled by carrier 1 significantly decreases: on the

contrary, the freight income is much greater than the increase of operational expense because

the freight rate of RORO is extremely higher than the conventional services’ rate. RORO

routes which is commonly peer-to-peer services need to gather massive volume of

cargoswhen demanding more calling. The capacity of RORO ship is 238 TEU/vessel, whereas

for conventional container ship with loop service, the volume of cargo allocated to Hanshin

Port is only 54 TUE/vessel. Therefore, carrier 1 does not increase the service frequency of the

RORO route any more.Since some shippers, on the other hand,prefer lower fares rather than

reducing transport time.They prefer traditional container services over RORO route.

Therefore, the cargo volume and profits of the carriers 3 and 4 are increasing.

In this simulation, the profitability of the RORO route is too good:one possible reason is

that the setting of operational cost is too low.For example, as the navigation distance increases,

a RORO ship that is a non-stop service need to be loaded with more fuel:the operational cost

can increase. However, due to the limited information for launching the new services, we


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cannot estimate the increase ratio of the operational cost for long haul RORO. Carrying out

the sensitivity analysis on the operational cost of long haul RORO services is demanded, but

due to the limitation of the space, we will discuss the results of sensitivity analysis in our

future work.

Table 8. Estimated service frequency, cargo volume,operationalexpenses and freight

incomeon the route from Hanshin Port to HCM Port Service frequency and cargo volume Unit: /month

Base case Replace by RORO ship route Frequency Volume Frequency Volume

(vessel) (TEU) (vessel) (TEU)

Carrier 1 Container 22.4 1,108

RORO 2.4 369

Carrier 3 Container 16.9 914 18.4 995

Carrier 4 Container 20.6 1,108 27.9 1,511

Carrier 5 Container 1.0 54 1.0 54

Operationalexpenses and freight income Unit: million JPY/month

Base case Replace by RORO ship route Expenses Revenue Profit/Loss Expenses Revenue Profit/Loss

Carrier 1 Container 31.7 42.6 10.9 RORO 43.2 106.3 63.1

Carrier 3 Container 32.4 35.1 2.7 35.4 38.3 2.9

Carrier 4 Container 31.7 42.6 10.9 43.0 58.1 15.1

Carrier 5 Container 10.4 2.1 -8.3 10.4 2.1 -8.3

4.2 Sensitivity Analysis on Shipper’s Time Preference

Based on the simulation results in Section 4.1, we can say that carrierhas no reason for

establishing a weekly service by RORO ship at Hanshin Port.On the other hand, according to

Kimata and Takebayashi (2018), the marginal utility of shippers with respect to domestic

transport time and maritime transport time has increased in recent years.Therefore, it can be

meaningful to discuss the feasibility of the RORO ship route in term of the change of

shipper’s time preference.

For this sensitivity analysis, we install the scale parameter k into Equation (8):this scale

parameter can describethe sensitivity of the time preference. Then, Equation(8) can be

rewritten as

1 2 3D MU k T k T C = + + . (8')

Table 9 shows the results of simulation about the RORO ship route of Hanshin Port as

k=1, 1.25, 1.5, 1.75, 2.According to the simulation results, even if the time value doubles, the

frequency of transport of RORO ships at Hanshin Port is less than 4 vessel/month, and weekly

service cannot established.As k increases, the cargo volume of the route increases, but the

load factor is less than 0.6.

Table 9. Sensitivity analysis on shipper’s time preference

k=1 k=1.25 k=1.5 k=1.75 k=2

Transport frequency (vessel/month) 2.4 2.6 3.3 3.5 3.6

Cargo volume (TEU/month) 369 346 396 442 500

Load factor 0.651 0.562 0.509 0.532 0.591

4.3Sensitivity Analysis on Fare Level


2291

The finding in Section 4.2 is that even if the shipper's time preference magnification is

increased considerably, the weekly service by the RORO ship at Hanshin Port cannot be

established.Then, we discuss the relation between the fare level and the establishment of the

weekly service as the final scenario study.As shown in Section 4.1, RORO carrier is profitable

and should be able to invest in fare discounts.

Table 10 shows the results when the fares for the RORO ship route of Hanshin Port are

discounted by 10%, 20%, 30%, 40%, 50%.According to the result, if k=1 and the fare is 50%

off, the weekly service can established.Also, if k=1.75 or more, the RORO ship route is

established with a fare of 30% off.Even with a fare of 50% off, it is 3.75 times the fare of the

direct container ship route.

Table 10. Sensitivity analysis on shipper’s time preference and fare level

Fare level k=1 k=1.25 k=1.5 k=1.75 k=2

Transport

frequency

(vessel/month)

Regular price 2.4 2.6 3.3 3.5 3.6

10% off 3.3 2.8 3.1 3.2 3.7

20% off 3.6 2.9 3.3 3.4 3.5

30% off 3.3 3.9 3.6 4.3 4.6

40% off 3.9 4.2 4.5 4.7 4.9

50% off 4.4 4.7 4.9 4.9 5.3

Cargo volume

(TEU/month)

Regular price 369 346 396 442 500

10% off 394 421 478 521 605

20% off 474 516 569 631 697

30% off 592 653 673 1,022 1,089

40% off 697 773 1,068 1,126 1,188

50% off 1,027 1,121 1,174 1,094 1,274

Load factor

Regular price 0.651 0.562 0.509 0.532 0.591

10% off 0.506 0.637 0.657 0.691 0.682

20% off 0.554 0.749 0.722 0.773 0.849

30% off 0.754 0.705 0.789 0.990 0.999

40% off 0.746 0.778 0.995 1.001 1.010

50% off 0.988 1.003 1.008 0.933 1.004

Red: Transport frequency is over 4 vessel/month.

Actually, the drastic change in shipper’s time preference – doubling, for example –

cannot happen.Then, in the following part, we discuss the case of when the shipper’s time

preference magnification is k=1.25 and fare is 40% decrease – this case may be feasible.

SeeingTable 10, the load factor of the case is 0.778, which exceeds 0.7 – commonly

acceptable commonly acceptable load factor for the ocean container ship.Table 11 shows that

the total handled cargo volume at Hanshin Port increase slightly from 3,364 TEU/month in

the base case to 3,396 TEU/month.Thus, we consider that the introduction of RORO ship

route to Hanshin Port in this condition is good for the RORO carrier and Hanshin Port.

On the other hand, as shown in Table 11, the frequency of direct route from Northern

Kyushu Port decreases by more than 20 vessel/month and the total export cargo volume from

Japan also decrease greatly. So, we think that these suggest that the shippers may have a bad

influence.

Table 11. Simulation results in the case of k=1.25 & fare 40% off (for export)


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Simulation results of transport frequency Unit: vessel/month

Service Type Origin port Base case

RORO ship route

addition

k=1,

regular

price

k=1.25,

fare 40%

off

RORO ship route Hanshin Port - 2.4 4.2

Direct route

Hanshin Port 60.8 47.3 45.8

Mizushima Port 2.9 3.0 4.7

Northern Kyushu Port 49.6 44.7 21.9


Mizushima Port 30.2 31.7 31.9

Hiroshima Port 27.9 29.9 33.7


Kaohsiung transshipment service Hanshin Port 78.7 89.2 77.1


Busan Port – Ho Chi Minh Port 35.7 37.9 34.2

Kaohsiung Port – Ho Chi Minh Port 26.8 29.1 26.1

Total 433.0 434.2 419.0

Simulation results of cargo volume Unit: TEU/month

Service Type Origin port Base case

RORO ship route

addition

k=1,

regular

price

k=1.25,

fare 40%

off

RORO ship route Hanshin Port - 369 773

Direct route

Hanshin Port 3,185 2,560 2,445

Mizushima Port 141 142 178

Northern Kyushu Port 561 771 483


Mizushima Port 21 22 21

Hiroshima Port 16 17 16


Kaohsiung transshipment service Hanshin Port 180 203 178


Busan Port – Ho Chi Minh Port 76 80 72

Kaohsiung Port – Ho Chi Minh Port 203 218 200

Total 4,444 4,070 3,651

5. CONCLUDING REMARKS

5.1 Findings Obtained and Suggestion for Future Port Policy

In this paper, we discuss the possibility of launching the international RORO ship route

between Japan andASEAN, which has become increasingly important in port policy in recent

years, by using the network equilibrium model as an example of HCM Port route.The findings

and results are shown below.

1) Carrier cannot have an incentive toestablish a weekly service by international

RORO ship between Hanshin Port and HCM Port at present.

2) Launching RORO ship route under the currentsituation may bring a negativeimpact

on shippers and Hanshin Port in term of the total export cargo volume.The total


2293

handle cargo volume at Hanshin Port decreases.

3) If the shipper’s time preference increases, the number of cargos using this RORO

service will increase. However, it is difficult to establish a weekly service even if

the time preference magnification to the current rate is doubling.

4) If the fare level of RORO ship route can be lowered drastically, carrier may have a

weekly service.However, it should be noted that the transport frequency of direct

routes at other ports and the total export cargo volume can decrease.

Summary 1) can be a reason why the carriers do not set up the RORO ship route under

the present situation. Summary 2) can be a good suggestion for the policy makers. From this

suggestion, our concern is that there is a possibility that drop of shippers’ convenience and the

port’s competitivenesscan be reduce by introduction of a transport service that does not fit in

the situation.

As the realization of Society 5.0 approaches, the time value is said to increase in the

near future.From this, we think that international RORO ship with high transport speeds need

to be utilized more as important transport systems in the future.As shown in Summary 3) and

4), we consider that not only increase of time value but also reduction of fare is indispensable

in order to establish a RORO ship route.In addition to trying to reduce the operationalcost in a

structural manner, fare discounts due to the introduction of subsidies are also considered in

the short term.However, as noted in the summary, negative impacts such as a drop in

convenience at other ports and potential for export may occur, sowe think that careful

consideration is necessary.

5.2 Future Research

In this paper, we simulated the network between West Japan and HCM Port, but we have

room for verification as to whether or not the RORO ship route is established for other

markets of ASEAN.For extending our understanding about launching the long-haul RORO

services, we need to research other ASEAN routes.

As mentioned in Chapter 3, the reproducibility of the direct route of Northern Kyushu

Port in the simulation model of this paper is not sufficient. Furthermore, as mentioned in

Chapter 4, the simulation in this paper might underestimate the operational cost of the long

haul RORO service. In addition to improving the accuracy of the model and modeling other

routes mentioned above, modeling and analyzing the entire ASEAN main route including

trilateral transportation is also a future subject for us.

In addition, the RORO ship is said to be a transportation system located between the

aircraft and the container ship. In the future, we try to consider establishing a RORO ship

route including a shift from air cargo.

ACKNOWLEDGEMENTS

This research is partially supported by the Research Grant by the Ports & Harbours

Association of Japan (PHAJ). Waterfront Vitalization and Environment Research Foundation

(WAVE) also supports this research.

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2294

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Documents

How to Establish West Japan-ASEAN RORO Ship Route?: Based