What is the optimal subsidy scheme for multiple port-hinterland corridors with a given subsidy budget?

Abstract

The excessive use of road transportation between ports and their hinterlands goes against the goals of energy saving and emission reduction, hindering the development of sustainable regional transportation. In response, local governments have implemented a series of incentive policies, including subsidies, to activate the potential modal shift (PMS) from road to non-road (mainly referred to rail- or water-based intermodal) transportation for port-hinterland connections. However, the lack of coordination among subsidy policies targeting different freight corridors weakens their effectiveness in encouraging this modal shift. Against this background, this study develops a framework for determining the optimal subsidy scheme (OSS) for multiple port-hinterland corridors with a given subsidy budget, aiming to maximize the PMS from the perspective of regional subsidy coordination. The proposed framework can assist local governments in designing more effective subsidy strategies from a coordinated perspective, enabling the allocation of total subsidies across different freight corridors within a given budget for a particular region, thereby maximizing the PMS. The framework is then applied to four port-hinterland corridors in the Yangtze River Delta region of eastern China. The results show that subsidy policies for no-road transportation can increase both the PMS and the associated potential CO₂ reduction (PCR) in these four corridors, especially when subsidies are coordinated. Specifically, compared to the independent (uncoordinated) subsidy strategy, the PMS increases by 10.81 and 11.01 times in the partially and fully coordinated subsidy strategies, respectively. Correspondingly, the PCR increases by 13.48 and 13.77 times, respectively. Given the balance of policy feasibility and practical effectiveness, the OSS in the partially coordinated subsidy strategy is to provide shippers with a subsidy of 138.48 CNY/TEU (Chinese Yuan, CNY; twenty-foot equivalent unit, TEU) for rail and 138.47 CNY/TEU for waterway in the Changzhou City - Port of Shanghai corridor, 787.38 CNY/TEU for rail in the Shangrao City - Port of Ningbo Zhoushan corridor, and 217.49 CNY/TEU for rail in the Yiwu City - Port of Ningbo Zhoushan corridor.