Crude oil transportation route choices : a connectivity reliability-based approach

Abstract

The crucial nodes of maritime transportation routes, such as the Strait of Malacca and the Suez Canal, remain vulnerable to various risk events including political instability and military conflict, piracy and terrorism, and vessel incidents. Existing shipping route choice studies often consider transportation costs and environmental effects, but ignore the connectivity reliability of these straits and canals. In this paper, we develop a bi-objective programming model to determine maritime transportation routes for crude oil, taking both transportation costs and connectivity reliability into consideration. We propose a method to measure the connectivity reliability of straits and canals, which captures the dependence structure of risk events. We apply our model to evaluate Gwadar Port using data covering 1999 to 2021, which is being built to enhance the reliability of Chinese oil imports. We find that the Gwadar Port can substitute for the Lombok Strait only if its connectivity reliability can be improved by 2.4%. In order to fully exploit the strategic advantages of Gwadar Port in substituting for other key straits, its connectivity reliability must be improved by 12.2%. Given the varying dependence of risk events identified in our model, our findings provide rich managerial and policy implications for connectivity reliability improvement.