Transportation optimization modeling for Washington State hay shipments: Mode and cost implications due to loss of container services at the Port of Portland

Stephanie Marie Meenach

A recent issue impacting hay shipments in Washington State involves the reduction of container services at the Port of Portland. As a result, the Port of Seattle and Tacoma have experienced a considerable increase in hay shipments received by rail and truck since September of 2004. Prior to this date, 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. As of September 2004, Hanjin is the only carrier that calls on the Port of Portland. K-Line and Hyundai now require producers to haul their containers to the Ports of Tacoma or Seattle by either truck or rail. As a result, barge shipments of containers out of the Port of Pasco decreased dramatically, while rail shipments to the Port of Tacoma and Seattle increased considerably. The primary objective of this research is to collect firm level data on the production, transportation and marketing of hay in Washington and then apply this information to the development of a transportation model of hay movements. This included detailing the varied usage of transportation service by mode for producers and processors prior to September 2004. After establishing the regional hay transportation and marketing utilization prior to this date, this information is utilized to develop a model that can be used to evaluate many different alternative policy scenarios. 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. This study investigated the impacts on industry structure and operating practices as firms react to these changes in the market. A cost minimization transportation optimization model is developed for hay shipments out of Washington that is used to investigate impacts to producers, brokers and ports. 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.

Transportation optimization modeling for Washington State hay shipments: Mode and cost implications due to loss of container services at the Port of Portland

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