Project number: MT-15-03

Funding source: Caltrans

Contract Number: 65A0533

Funding amount: $78,148

Performance period: 8/15/2015 to 8/14/2016

Project description

Ports play a vital role in a nation's economic well-being. They represent the major portal for its material exchanges with the rest of the world and, in some cases, with other regions within its own borders. Because it serves as a critical element of the nation's supply-chain, a disruption of a major port can reverberate throughout the entire economy. Imported inputs for intermediate and final consumption cannot be delivered, thereby causing production interruptions down the supply chain and reductions in economic well-being of the end-users. Also exports for other markets are blocked, thus causing an ensuing disruption of production up the supply chain as domestic producers cancel their orders for inputs. An increasing number of port disruptions have taken place in recent years, caused by such phenomena as natural disasters, technological accidents, and labor disputes. Moreover, ports are a prime target for terrorist attacks, which can be fine-tuned to yield the maximum disruption at the port site and beyond.

Many studies have estimated the direct and indirect impacts of port disruptions and found them to be quite significant (Chang, 2000; CBO, 2006; Park et al., 2007, 2008; Park, 2008; Jung et al., 2009). However, very few studies have adequately factored in all the possible forms of resilience that could mute these losses by using remaining resources more efficiently or by recovering more rapidly (see, e.g., Bruneau et al., 2003; Rose, 2009; Rose and Wei, 2013; Rose et al., 2016). In the event of a port disruption, port authorities and operators can implement various measures to speed up the resumption of the activities and reduce ship congestion by utilizing excess capacities of undamaged terminals or rerouting ships to other ports. On the customer-side, businesses that are affected by import or export disruptions, would not stand by passively waiting for port re-openings, but would instead initiate a broad range of coping activities, such as use of stockpiles, conservation, input substitution, diversion of exports for import use, and production rescheduling (recapturing lost production by working overtime or extra shifts after the port is opened). These actions are taken not only by importers and exporters, but by others that are indirectly affected by the port disruptions throughout the economy-wide supply chain.

In this study, we develop an operational framework to evaluate the effectiveness of a comprehensive list of potential resilience tactics that can help ports and related businesses in the supply-chain recover more rapidly from port disruptions. A multi-regional computable general equilibrium (CGE) model is adopted and applied to quantify the relative contributions of various resilience tactics in reducing potential economic impacts of major port disruptions. Two port disruption scenarios caused by natural disasters, each representing a lower-bound and an upper-bound port disruption scenario, respectively, are analyzed as case studies using the CGE model. The port resilience analytical framework developed in this study is readily generalizable to port disruptions of other causes and geographical scales.