sustainability

Article
Characteristics Analysis of Freight Mode Choice
Model According to the Introduction of a New
Freight Transport System
Seungjin Shin , Hong-Seung Roh and Sung Ho Hur *
Department of Logistics Research, The Korea Transport Institute, Sejong-Si 30147, Korea;
[email protected] (S.S.); [email protected] (H.-S.R.)
* Correspondence: [email protected]; Tel.: +82-44-211-3011; Fax: +82-44-211-3226




Received: 22 January 2019; Accepted: 20 February 2019; Published: 25 February 2019


Abstract: The purpose of this study is to identify the characteristics of freight mode choices made
by shippers and carriers with the introduction of a new freight transport system. We set an area
in which actual freight transport takes place as the analysis scope and performed a survey of the
shippers and carriers that transport containers to identify their stated preference (SP) regarding the
new freight mode. The SP survey was carried out through an experimental design and this study
considered the three factors of transport time, transport cost, and service level. This study compared
and analyzed the models by distance using an individual behavior model. The results of estimating
the model showed that the explanatory power of the model classified by distance and the individual
parameters have statistical significance. The hit ratio was also high, which confirms that the model
was estimated properly. In addition, the range of elasticity and the value of travel time analyzed
using the model were evaluated to be appropriate compared to previous studies. The findings of
the elasticity analysis show that strategies for reducing the transport cost are effective to increase the
demand for the new transport mode. The value of travel time of freight transport was found to be
higher than the current value generally applied in Korea. Considering that the value of travel time
currently used is based on road freight transport, further research is required to apply a new value of
travel time that reflects the characteristics of the new transport mode in the future.

Keywords: intermodal; automated freight transport system; SP survey; freight mode choice model;
freight transport

1. Introduction
In 2015, the modal share of freight transport in Korea (based on ton-km) was 76.2% for roads, 18.4%
for shipping, 5.3% for railways, and 0.1% for air transport, showing that road transport dominated
compared to other means of transport. In addition, transport costs accounted for 71.1% of the nation’s
logistics costs in 2015 [1,2]. Structural problems continued to increase because of the extremely
high proportion of road transport in the freight transport process. Such structural problems include
increased inland transport costs, increased traffic congestion costs, increased air pollution and noise,
maintenance required due to road damage, and serious traffic accidents caused by freight trucks.
Currently, the land freight transport system can be divided into railway transport, which has not
changed much in terms of shape over 250 years, and truck transport, which has a history of about 100
years. However, the need for new freight transport modes, including the intermodal automated freight
transport system, in order to overcome the structural limitations of land freight transport has been
emerging worldwide.
In Europe and the US, the development of various types of new-concept transport system
technologies began in the early 2000s. Recently, these countries have been on the verge of

Sustainability 2019, 11, 1209; doi:10.3390/su11041209 www.mdpi.com/journal/sustainability

Sustainability 2019, 11, 1209 2 of 13

commercialization as they have entered the stage of verifying the developed technologies, such
as through operating test beds of the newly developed transport systems. In particular, technically
advanced countries such as the US, Germany, the Netherlands, and Japan are developing various types
of intermodal automated freight transport systems, including automated freight transport systems
for bulk cargo between logistics hubs and underground freight transport systems [3–5]. Typical
technologies in this area include Freight Shuttle System, CargoRail Tram, CargoCap, TubeXpress
(SUBTRANS), SkyTech, Cargo Tunnel, and UCM [6]. In Korea, the development of an intermodal
automated freight transport system technology (Phase 1; development name: AutoCon III), which
received support from the Ministry of Land, Infrastructure, and Transport’s (MOLIT’s) Transport and
Logistics Development Research Project, started on June 2017, so we expect the relevant technologies
to be commercialized in the near future [7]. However, we lack the information and data to make policy
decisions, as there has been insufficient research to forecast changes in the transport environment and
the modal split due to introducing new systems independent of technology development.
As such, the purpose of this study is to analyze the characteristics of the process shippers
and carriers in Korea used in choosing freight transport modes and to identify the conditions and
ratio of the modal share structure between the new system of transport and truck transport after
introducing the intermodal automated freight transport system to provide the basic data required for
the policy-making process. Therefore, this study considers changes in the transportation environment
assuming the introduction of a new freight transport mode (intermodal automated freight transport
system) which does not currently exist and performed a stated preference (SP) survey to identify
changes in the perception of the shippers and carriers in the freight transport market. Section 2 presents
the differentiation of this study through a consideration of previous studies and Section 3 summarizes
the process used to collect the data required to build a freight mode choice model. Section 4 builds a
freight transport mode choice model according to the introduction of a new freight transport system
using the collected data, while Section 5 analyzes the characteristics of the choices of freight transport
means by the shippers and carriers using the model. Finally, Section 6 presents the conclusions drawn
from the study and the limitations of this study.

2. Consideration of Previous Studies

In Korea, there have only been a few studies on the mode choice model related to freight transport
and it is difficult to find studies that have built a mode choice model for new transportation modes
(Table 1). Studies that estimate the freight mode choice model in Korea can be classified according to the
transport mode and data type. First, the studies that analyze the difference according to the transport
mode can be divided into studies that analyze the competitive relationship between commercial and
private trucks in road transport [8–10] and studies that analyze the competitive relationship between
transport modes such as roads, railways, and shipping [11–14]. Meanwhile, if we classify the previous
studies based on the type of data, they can be divided into studies that use revealed preference (RP)
data to investigate the actual situation [9,10] and studies that use SP data to implement hypothetical
choices [8,11–14]. RP survey is intended to identify preferences and demands for existing modes and
SP survey is for new modes that do not currently exist.
Recent studies have identified preferences for new transport modes on the basis of hypothetical
conditions and have identified a modal share structure for existing modes [11–13]. Lee et al. (2009)
conducted SP surveys for container, steel, and hazardous materials cargos to find the utility function
for dual mode trailer (DMT) [11]. Choi et al. (2008) conducted SP surveys for container, cement, and
steel cargos under the actual transportation environment, and defined mode choice character [12].
Kim et al. (2008) conducted SP surveys for container and bulk cargo according to changes in
transportation time, transportation cost, trans-shipment time, trans-shipment cost, shuttle time, and
shuttle cost [13]. Choi and Lim (1999) and The Korea Transport Institute (KOTI) (1998) [9,10] conducted
large-scale RP surveys on shippers to identify preferences and demand for existing alternatives.
Sustainability 2019, 11, 1209 3 of 13

In other countries, research has been performed for more diverse purposes compared to the
research in Korea, such as research techniques, methodologies, competition by modes, and analysis
areas. Studies that applied the SP survey techniques to freight transport include Norojono et al. (2003),
Shinghal et al. (2002), and Fowkes et al. (1991) [15–17] and methods of integrating SP and RP data to
apply them to model estimation have been attempted in the study by De Jong et al. (2001) [18]. In terms
of methodology, all of the studies in Korea used logit models, while disaggregate logit models and
multiple regression models were used in other countries. Different from the traditional four-step travel
demand model, the logit model is a probabilistic choice model which can analyze individual mode
choice characteristics because it is estimated using the disaggregate data. The logit model is based
on the theory of selective behavior, which is in turn based on the microeconomic consumer theory.
The estimation coefficient of the logit model is widely used in the construction of the mode choice
model because it is easy to interpret the marginal utility of each explanatory variable. De Jong and
Ben-Akiva (2007) used a logit model to analyze the composite transport network when considering
a non-selective alternative set of one million alternatives from the Swedish freight volume data [19].
Ham et al. (2005) applied a linear regression model to estimate the coefficient of the logit model using
US freight volume survey data for a mode choice model considering road and rail [20]. Bolis and Maggi
(2003) investigated Italian and Swiss companies and demonstrated through a logistic regression model
that railways can be competitive against road transport by improving the on-time arrival rate [21]. In
terms of case studies on the competitive relationship between roads and railways, Norojono et al. (2003)
analyzed the modal share characteristics of roads and railways in Indonesia and proposed measures to
increase the use of railway logistics and Shinghal et al. (2002) configured a competitive relationship
between roads and railways to study the factors of freight mode choice in India [15,16]. All of the three
studies mentioned above used SP survey data and logit models.

Table 1. Scope of analysis.

Researchers Country Data Type Model Alternatives Variables

Road, rail, dual
Lee et al. (2009) Korea SP * Logit Cost, time, reliability
mode trailer
Cost, time, service level
Choi et al. (2008) Korea SP Logit Road, rail (reliability, availability, safety,
information provision)
Cost (trans-shipment, shuttle),
Kim et al. (2008) Korea SP Logit Road, rail, shipping
time (trans-shipment, shuttle)
Choi (2004) Korea SP Logit Road (four types) Cost, time, punctuality
Choi and Lim (1999) Korea RP ** Logit Road 16 explanatory variables
KOTI (1998) Korea RP Logit Road Cost, time
Ha et al. (1996) Korea SP Logit Road, rail Cost, time, punctuality
Distance-based link costs,
time-based link costs, loading
De Jong and Norway,
RP Logit Road, rail, water, air and unloading costs, access
Ben-Akiva (2007) Sweden
and egress costs,
trans-shipment costs
Combined average value of shipments,
Ham et al. (2005) US RP Road, rail
model average shipment distance
Hierarchical Rail, large truck,
Norojono et al. (2003) Indonesia HEVM *** Cost, time, quality, utility
SP amall truck
Cost, time, on-time arrival
rate, No. of monthly
Bolis and Maggi Italy, Logistic
ASP **** Road, rail shipments, minimum
(2003) Switzerland regression
notification time for shipping
order
Shinghal et al. (2002) India SP Logit Road, rail Cost, time, punctuality
Cost, time, service level
(reliability, availability, safety,
This paper Korea SP Logit Road, AutoCon
convenience, connectivity,
potential)
Note: * stated preference, ** revealed preference, *** heteroscedastic extreme value (HEV) choice model, **** adaptive
stated preference.
Sustainability 2019, 11, 1209 4 of 13

Although technologies for new freight transport systems are being developed all over the world,
thereSustainability
are only a2018, few 10, cases
x FOR PEER REVIEWfreight mode choice models have been built that apply
in which 4 ofto
13 new

freight transport systems in Korea and in other countries. For this reason, it is necessary to develop
minimum notification time for
a new freight mode choice model that reflects changes in the freight transport shippingenvironment,
order such as
new freight transport
Shinghal et al. systems,
India
to identify
SP
the characteristics
Logit
of
Road, rail
choosing the freight transport
Cost, time, punctuality
modes
(2002)
required to make policy decisions on freight transport systems.
Cost, time, service level
(reliability, availability, safety,
3. Collecting Research Data
This paper Korea SP Logit Road, AutoCon
convenience, connectivity,
potential)
3.1. SP Survey Design
Note: *stated preference, **revealed preference, ***heteroscedastic extreme value (HEV) choice model,
The individual behavior model is the appropriate
****adaptive model for the research objective to identify
stated preference.
the transport mode
Although choice characteristics
technologies for new freightof shippers.
transport Since
systems arethe
beingindividual
developedbehavior
all over themodel
world, uses
disaggregate
there are data,
only aitfew
cancases
reflect the mode
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beenshipper
built thatinapply
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to new This
studyfreight
applied the logit
transport model,
systems which
in Korea andisinthe most
other widelyFor
countries. used
this model
reason, to
it isconfigure
necessary transport
to develop amode
new freight mode choice model that reflects changes in the freight transport
choices. Since the data used in the study is intended to reflect changes in the transport environment environment, such as
new
related to freight transport
introducing new systems,
freightto identify the
transport characteristics
modes and to graspof choosing the freight transport
the characteristics modes in a
of the shippers
required to make policy decisions on freight transport systems.
diversified freight transport market, we decided that SP data was more appropriate than RP data.
The SP survey design was oriented toward building a new freight transport mode split model
3. Collecting Research Data
by researching and analyzing the possibility of selecting a transport mode after introducing a new
freight
3.1.transport
SP Survey system
Design as shown in Figure 1. The SP survey provides individual respondents
with alternatives composed of hypothetical situations, each of which consists of factors such as
The individual behavior model is the appropriate model for the research objective to identify
transport cost andmode
the transport time, choice
whichcharacteristics
represent theofmode choice
shippers. characteristics.
Since the individualFor the given
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the respondents
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it canrate, or choose
reflect the mode their preferred
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characteristics of eachThe choice
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This
used study
in previous studies, so this study used the same method. However, the
applied the logit model, which is the most widely used model to configure transport mode SP survey was performed
by considering
choices. Sincethethe
limitations
data used in ofthe
potential
study isresponse
intended to errors
reflectduring
changesthe investigation
in the process due to
transport environment
related hypothetical
composing to introducingscenarios.
new freight transport modes and to grasp the characteristics of the shippers in
a diversified freight transport market, we decided that SP data was more appropriate than RP data.

Figure 1. SP survey design process.

cost and time, which represent the mode choice characteristics. For the given alternatives, the
The SP survey design was oriented toward building a new freight transport mode split model
respondentsby may rank, rate, or choose their preferred alternatives. The choice method was widely
researching and analyzing the possibility of selecting a transport mode after introducing a new
used in previous studies,system
freight transport so this study
as shown used 1.the
in Figure The same method.
SP survey provides However, the SP survey
individual respondents with was
performed by considering
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hypothetical situations, each ofresponse errors
which consists during
of factors such the investigation
as transport
process due cost
Sustainability to and time, which
composing
2019, 11, 1209
represent the
hypothetical mode choice characteristics. For the given alternatives, the
scenarios. 5 of 13
respondents may rank, rate, or choose their preferred alternatives. The choice method was widely
The SP used survey period was from July to September 2018. As shown in Figure
in previous studies, so this study used the same method. However, the SP survey was
2, the survey was
limited to shippers
performedand carriers that
by considering the use BusanofNew
limitations Portresponse
potential and handle containers
errors during based in Busan,
the investigation
The South
Ulsan, and SP survey
process due period
Gyeongsang was from July
Province,
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hypothetical to September 2018.
are areas near
scenarios. As shown
Busan New Port,in Figure
which 2,isthe survey to
expected was
limited to shippers
The and
SP carriers
survey period
introduce the new freight transport system. that
was use
from Busan
July to New Port
September and
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As shown containers
in Figure 2, based
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survey Busan,
was Ulsan,
and South limited
Gyeongsangto shippers and carriers
Province, which thatare
useareas
Busannear
NewBusan
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Port,containers
which is based in Busan,
expected to introduce
Ulsan, and South Gyeongsang Province, which are areas near Busan New Port, which is expected to
the new freight transport system.
introduce the new freight transport system.

Figure 2. Spatial scope of SP survey.

Figure 2. Spatial scope of SP survey.
Figure 2. Spatial scope of SP survey.
As shown in Figure 3, the SP survey was performed by the respondents choosing a preferred
As shown in Figure
alternative between3,thethe
twoSP survey of
alternatives was
roadperformed
transport modebyandthethe
respondents choosing
new freight transport mode.a preferred
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However, transport
since the mode
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The four optional alternatives for freight transport mode include rail transport, road transport, coastal automatedtransport
freight mode.
transportalternatives
system is limitedforto shuttle transport connecting
The four optional
shipping, and air transport. However, freight
since transport
the function modeofthe port and surrounding
include
the rail transport,
intermodal areas, the
automated roadmodal
freighttransport,
transport
share of rail transport, coastal shipping, and air transport is not expected to change even if a new
coastal
systemshipping,
is limited andtoair transport.
shuttle However,
transport since the
connecting the function
port and ofsurrounding
the intermodal automated
areas, the freight
modal share
freight transport system is introduced, so this study set two alternatives.
transport system is limited to shuttle transport connecting the port and surrounding
of rail transport, coastal shipping, and air transport is not expected to change even if a new freight areas, the modal
share of railsystem
transport transport, coastal shipping,
is introduced, and air
so this study settransport is not expected to change even if a new
two alternatives.
freight transport system is introduced, so this study set two alternatives.

Figure 3. Comparison of automated intermodal transport systems with conventional logistics systems
from a logistics process perspective. Source: Korea Agency for Infrastructure Technology Advancement
(2014) [22].

The choice situation was set according to the transportation distance for connecting the production
hub and international logistics hub in the target area. The choice of transport mode may vary depending
on the freight transport distance. Therefore, this study investigated the actual transport environment
of import and export container items in order to identify the characteristics of choosing modes that
vary depending on the representative transport distance. The transport condition was assumed to be
one-way transport of one 40 ft container (1 forty-foot equivalent unit (FEU) or 2 twenty-foot equivalent
unit (TEU)). Transport distances were divided into distances less than 20 km and distances more than
Sustainability 2019, 11, 1209 6 of 13

20 km, taking into account considered route alternatives between Busan New Port and the international
industrial logistics complex in the hinterland of the port. This study selected transport cost, transport
time, and service level (a significant non-quantitative factor in the freight transport process) as the
attribute variables, as these were found to be most important in the freight mode choice models of
previous studies. The service level was defined to include the reliability of arriving at the destination
at a given time, availability of use when needed, safety of freight transport against damage or loss,
convenience of providing information about the location or arrival of cargo, connectivity with other
modes, and the potential to smoothly handle future increases in trade volume. The investigators
explained these points for the understanding of the participants before the survey. The service level
was quantified by dividing the cases into 100% when satisfied, 80% when normal, and 60% when
unsatisfied. We used a three-level orthogonal arrays table in the design of the SP survey. Furthermore,
the lower limit was set at −20% to reflect the survey finding that carriers and shippers, who were
not willing to switch at the time of introducing the new transport mode, were willing to switch when
the transport cost, transport time, and service level dropped by 20%. In addition, the upper limit is
set to +10% referring to a previous study [12] and level 3, assuming that the transport cost, transport
time, or service level will be further increased or improved. The reference value of road transport
cost and time were classified into the on-board transport cost and the cost of loading and unloading.
First, the on-board transport cost was set as half (84.01 USD) of the round-trip fare (168.03 USD) of
Busan New Port based on the 40 ft land transport rate announced by the Korea Trucking Association
(2013) [23] and the cost of loading and unloading was set as 53.34 USD per unit, reflecting the market
price of Busan New Port. In addition, the on-board transport time was calculated as 1.18 hours per
trip (71 minutes) using the average number of container shuttle operations per day (6.5 times) and
average operation hours per day (7.7 hours), according to the freight transport market trend in 2017
(third quarter). In terms of the loading and unloading time, we confirmed that 18–25 containers are
processed per hour in the field, but this study assumed that 15 containers are handled per hour, so
the total time required to load and unload one container is 8 minutes (4 minutes each for origin and
destination). In terms of the transport costs of the new transport system, we assumed that the cost of
loading and unloading would be the same, while the on-board transport cost would be 90% of the road
on-board transport cost. The transport time was calculated as the sum of the on-board transport time,
the access/egress from the origin to the terminal and from the terminal to the destination, terminal
operating time, and the waiting time. The on-board transport time was assumed to be 40 minutes
when traveling the average distance of road transport at 50 km/h, the access time to the terminal was
15 minutes, and the terminal operating time and waiting time were each assumed to be 20 minutes.
Table 2 summarizes the levels by attribute variable for each alternative.

Table 2. Scope of analysis.

Road New Freight Transport System

Level Transport Cost Transport Service Transport Cost Transport Service
(USD) Time (h) Level (%) (USD) Time (h) Level (%)
Level 1 −20% 152.56 1.05 60 145.84 1.16 60
Level 2 Reference Value 190.70 1.32 80 182.30 1.45 80
Level 3 10% 209.77 1.45 100 200.53 1.60 100
Note: Based on the US Dollar and the Korean Won exchange rate (1124.8 won/USD) as of 7 February 2019.

3.2. Collecting Research Data

As mentioned above, the SP survey of this study is composed into the preliminary survey and the
first and second surveys, as shown in Table 3. In the preliminary survey, 50 samples were collected
for the purpose of revising and supplementing the questionnaire and selecting the survey target. In
the first survey, 50 samples were checked to confirm whether the modified questionnaire worked and,
Sustainability 2019, 11, 1209 7 of 13

after confirming the questionnaire, the second survey of 250 samples was conducted. Among the 350
companies surveyed, 206 companies (59.0%) were carriers and 143 companies (41.0%) were shippers.

Table 3. SP survey samples.

Goal Sample Performance Sample Ratio (%)

Preliminary Survey 50 50 100.0
1st Main Survey 50 48 96.0
2nd Main Survey 250 251 100.4
Total 350 349 99.7

The main survey was carried out after supplementing and revising the questionnaire following
a preliminary survey. Considering the difficulty involved in answering the survey, the investigators
visited the participants in person to explain and receive answers. After collecting the questionnaires,
we excluded questionnaires that simply repeated the same response or had logically contradictory
answers; here, logically contradictory answers refers to surveys in which the participant did not
respond to several types of questions presented in the SP experiment, such as when the participant did
not fully understand the SP experiment or when the participant had a fixed choice and did not consider
the context of the transport mode. We also excluded cases in which personal attribute data, such as
the age of the participant and the freight size, were omitted. Table 4 summarizes the data collected
through the process above; market segmentation was performed according to the transport distance.

Table 4. Market segmentation and number of available data.

Less Than 20 km More Than 20 km Total

No. of Respondents 123 152 275
No. of Available SP Data 1264 1586 2850

4. Estimating the Freight Transport Mode Choice Model

4.1. Model Configuration

This study used a logit model as an individual behavior model to estimate the demand for
switching freight based on the disaggregate data. The market was segmented according to the freight
transport distance; the model is shown in Table 5. The utility function consisted of transport time,
service level, and transport cost as the explanatory variables and the model was configured so that the
relative utility of the new transport mode for road transportation can be identified by setting truck
transport as a reference.

Table 5. Market segmentation and number of available data.

Model Type Market Segmentation Utility Function

Model 1 Total
Vi = β 0 + β 1 ( TI ME) + β 2 (SL) + β 3 (COST ),
Model 2 Distance less than 20 km where Vi : Utility function (AutoCon, Truck); β 0 :
By Distance
Distance greater than or Dummy; β 1 ~β 3 : Parameter; TIME: Transport
Model 3 time; SL: Service level; COST: Transport cost
equal to 20 km

4.2. Model Estimation and Testing the Results

4.2.1. Model Estimation and Significance Test

Table 6 shows the results of estimating the mode choice model according to Table 5. First, the
likelihood (ρ2 ), which indicates the goodness-of-fit of the model, was between 0.32 and 0.41, ensuring
Sustainability 2019, 11, 1209 8 of 13

a certain level of significance depending on the model. Typically, if the likelihood (ρ2 ) has a value in
the range of 0.2–0.4, the model is usually evaluated to be significant [24]. In general, the mode choice
model of freight transport tends to have a lower likelihood than that of passenger transport, because
the entities that make up the passage are more complex and lack homogeneity compared to passenger
transport. In addition, both the statistical significance (t-value) of the individual parameters and the
sign of utility were found to be appropriate. The AutoCon dummy variable has a (+) value, which
indicates that the new freight transport mode was preferred over conventional truck transport. These
results suggest that the new transport mode has the potential to gain a competitive advantage over
road transport.

Table 6. The results of modeling.

Model 1 Model 2 Model 3

Standard Standard Standard
Coefficient t-Ratio Coefficient t-Ratio Coefficient t-Ratio
Error Error Error
AutoCon
0.39097 0.07970 4.906 *** 0.40525 0.11688 3.467 *** 0.39232 0.10895 3.601 ***
Dummy
COST −0.64390 0.02541 −25.341 *** −0.73251 0.03829 −19.129 *** −0.55827 0.03388 −16.476 ***
TIME −1.71034 0.24757 −6.909 *** −1.84794 0.36127 −5.115 *** −1.61219 0.33960 −4.747 ***
Level of
0.01496 0.00297 5.035 *** 0.01431 0.00427 3.355 *** 0.01524 0.00416 3.663 ***
service
L (*) −1215.7570 −631.8402 −576.3973
L (0) −1920.4897 −1074.1270 −845.7610
ρ2 0.36695 0.41176 0.31849
ρ2 0.36606 0.41028 0.31632
Observations
2850 1586 1264
(n)
Note: * Significant level 90%; ** Significant level 95%; *** Significant level 99%.

4.2.2. Testing the Results of Market Segmentation According to the Transport Distance
Table 7 shows the hypothesis test results for comparing the individual parameters for the models
classified according to the transport distance. For transport distances less than 20 km and more than
20 km, we can confirm that, with the exception of the transport cost, none of the explanatory variables
are statistically different from each other.

Table 7. Test hypothesis of parameter on distance.

Model 2 Model 3
(Less Than 20 km) (More Than 20 km) Test Hypothesis of
Parameter Standard Error Parameter Standard Error Parameter on Distance

COST −0.73251 0.03829 −0.55827 0.03388 −3.40759

SL −1.84794 0.36127 −1.61219 0.33960 −0.47546
TIME 0.01431 0.00427 0.01524 0.00416 −0.15454

We could confirm the statistical significance by testing the hypothesis for comparing the whole
model in market segmentation by distance using Model 1, which used the full data set, and Models
2 and 3, which used market segmentation by distance [25]. First, the null hypothesis (H0 ) and the
alternative hypothesis (H1 ) were set as follows in order to comprehensively compare the estimation
results of the model by market segmented subgroups.

Hypothesis 0. H0 : β1 = β2 = . . . = βx

Hypothesis 1. H1 : Not all βx ’s are the same

Sustainability 2019, 11, 1209 9 of 13

Here, βx is the vector of coefficients for the market segmented subgroup x by distance. The test
statistic used to test this hypothesis is statistic, and the equation is as follows.
" #
2
2
∑ Lnx x



X = −2 L N β̂ − β̂ , (1)
x =1


where L N β̂ : Log-likelihood function value at the maximum value of the log-likelihood function
when using the whole data and Lnx β̂ x : log-likelihood function value at the maximum value of the

log-likelihood function when using the sample data of the market segmented subgroups.
With the likelihood test statistic (X2 ) 14.2578, which was calculated from the hypothesis test for
comparing the whole model in the market segmentation by distance, the null hypothesis was rejected
at a significance level of 0.5% and 4 degrees of freedom, so the difference in the vector of the estimated
coefficient values between the two groups was clearly significant.

4.2.3. Final Model

This study set the final model as shown in Table 8 through a model estimation process and
a statistical testing procedure. The model corresponds to Model 2 and Model 3 in Table 4, and is
classified according to the transport distance. This study presents a model by dividing the mode
choice model by distance according to the introduction of a new freight transport mode. In addition, it
seems reasonable to present a separate model for each item since the absolute values of the individual
coefficients are different, which results in different elasticities.

Table 8. Selected mode choice model by distance.

Model Utility Function

U AutoCon = 0.40525 - 0.73251·COST + 0.01431·SL - 1.84794·TIME
Model 2
UTruck = - 0.73251·COST + 0.01431·SL - 1.84794·TIME
U AutoCon = 0.39232 - 0.55827·COST + 0.01524·SL - 1.61219·TIME
Model 3
UTruck = - 0.55827·COST + 0.01524·SL - 1.61219·TIME

5. Evaluating the Applicability of the Model and Interpreting the Results

The model estimated in this study can be applied not only to analyze how new freight modes
and trucks change the mode split depending on the competition conditions, but also to provide the
basic data required for the process of making policy decisions using models. Elasticity is generally
used in the policy-making process and the value of travel time is also used as an index to evaluate the
importance of freight transport or the economic feasibility of transport facility investment projects.

5.1. Evaluating the Predictive Power and Applicability of the Model

By using the estimated model, we can predict how the modal split will change as the transportation
environment changes. For example, when there is a cost change in each transport mode, we can use
the model to calculate the new modal split. To accomplish this, we first need to assess how well the
estimated model reflects reality. This study uses the hit ratio to achieve this, as the hit ratio refers to the
ratio in which the transport mode predicted in the model matches the actual chosen transport mode.
Table 9 shows the results of calculating the hit ratio for the optimal model, showing a value between
80.5% and 77.8%.
Sustainability 2019, 11, 1209 10 of 13

Table 9. Hit ratio of selected mode choice models.

Model Log-Likelihood Ratio (ρ2 ) Hit Ratio (%)

Model 2 0.41176 80.52
Model 3 0.31849 77.77

5.2. Scope of Elasticity and Applicability of Evaluating Policy

Elasticity refers to the degree of change in demand for changes in the explanatory variables and
in the freight transport process, the elasticity of transport cost or time is measured for use as data in
determining policies. Table 10 shows the elasticity results calculated in this study. Looking at prior
studies that estimate the elasticity of freight items in other countries, Winston (1981) proposed a cost
elasticity (−0.04 ~ −2.97) and a time elasticity (−0.15 ~ 0.69) for road transport and a cost elasticity
(−0.08 ~ −2.68) and a time elasticity (−0.07 ~ 2.33) for railway transport [26]. Since there are no items
directly comparable to this study, we can only compare a rough distribution. In terms of the value
of travel time of freight transport in the study by Small and Winston (1999), the transport cost was
−0.04 ~ −2.97 for roads, −0.08 ~ −2.68 for railways, and the transport time was −0.15 ~ −0.69 for
roads and −0.07 ~ −2.33 for railways [27]. Looking at the domestic case studies, the elasticity of
container transport was studied by Ha et al. (1996) and Choi et al. (2008). In the study by Ha et al. (1996),
the elasticity of container transport cost was railway (−3.46) and road (−3.81) and the transport cost
was railway (−1.90) and road (−1.44) [14]. In addition, in the study of Choi et al. (2008), the elasticity
of transport cost was railway (−2.88) and road (−4.38) and the elasticity of transport time was railway
(−1.43) and road (1.74); thus, the elasticity of transport cost was higher than that of transport time [12].
However, both domestic and foreign studies have no data on containers, and have also not established
a mode choice model for new transport modes, making it difficult to make an accurate comparison.
Table 10 shows the elasticity by model, in which the transport costs in all models regardless of distance
was found through an analysis to be much higher than the elasticity of transport time or service level.
These results show that reducing fares is a great way to increase freight demand.

Table 10. Elasticities by distances and modes.

Elasticity
Model Variables Mode
AutoCon Truck
AutoCon −1.074 0.928
TIME
Truck 1.543 −1.345
AutoCon 0.476 −0.458
Model 2 SL
Truck −0.663 0.66
AutoCon −6.24 5.763
COST
Truck 8.091 −9.354
AutoCon −0.893 0.766
TIME
Truck 1.385 1.22
AutoCon 0.476 −0.46
Model 3 SL
Truck −0.732 0.726
AutoCon −4.498 4.23
COST
Truck 6.379 −7.36

5.3. Estimating the Value of Travel Time and Implications

The value of travel time of freight transport can be interpreted as the monetary cost that the
shipper or carrier is willing to sacrifice to reduce transport time by one unit. In the model, it is
Sustainability 2019, 11, 1209 11 of 13

calculated as the ratio between the time parameter and the cost parameter. As shown in Table 11, the
value of travel time was calculated to be 22.43 USD/unit for less than 20 km and 25.67 USD/unit for
more than 20 km.

Table 11. Value of travel time (VOT) by distance.

Model 2 Model 3
TIME −1.84794 −1.61219
Parameter
COST −0.73251 −0.55827
won/vehicle 25,228 28,878
VOT
USD/vehicle 22.43 25.67
Note: Based on the US Dollar and the Korean Won exchange rate (1124.8 won/USD) as of 7 February 2019.

In Korea, the value of travel time applied to the economic feasibility evaluation is calculated
by using the truck driver’s wage level, which is 14.73 USD/unit at the time of this study and
15.29 USD/unit when adjusted by reflecting the consumer price index of 2017 [28]. In Japan and the
US, the value of travel time includes the inventory value of the freight in transit and the opportunity
cost of the truck in addition to the driver’s wage. Particularly in Japan, the value of travel time for
freight transported by railway is larger than the value estimated using the wage rate method because it
is estimated separately by using SP. In this study, considering the fact that it is a new freight transport
mode and working on the premise that the value of travel time of the new freight transport system
to be developed will be higher than that of road transport, we can confirm that the derived values
are reasonable.

6. Conclusions
This study developed a new freight mode choice model based on the introduction of a new
freight transport system. This is due to the need to develop a separate transport mode choice model
according to the introduction of the new transport mode. For this purpose, we investigated the stated
preference of the new transport mode for shippers and carriers who actually transport containers.
We used the individual behavior model and SP survey data. The SP survey used to acquire data
was prepared through experimental design and the attribute variables were transport time, service
level, and transport cost. In addition, this study tried to analyze the models by distance. Through
this analysis, it was found that the explanatory power and the individual parameters of the model
classified according to distance were statistically significant. It also showed a high hit ratio, which
proved that the developed model was appropriate. Also, the range of elasticity and the value of travel
time were evaluated to be appropriate compared to previous studies. By analyzing the elasticity, this
study confirmed that strategies for reducing the transport cost were more effective than strategies for
reducing transport time or increasing the service level in order to increase the demand for the new
transport mode.
Although this study is meaningful in that it established a freight mode choice model to estimate
the freight volume that could be converted from the traditional transport system to the new system
after introducing a new automated freight transport system, the research had the following limitations,
which need to be addressed in future studies. First, though the changes in freight traffic patterns when
introducing a new freight transport system should be considered, this study performed the survey
centered around areas near Busan New Port without configuring a separate area of influence. Second,
the freight value of travel time estimated in this study was higher than the current value of travel time
applied in Korea. Considering that the current value of travel time is based on road transport freight,
we need to find a way to apply an estimated value of travel time by reflecting the characteristics of the
new transport mode. Third, the transport distance was divided into less than 20 km and more than
20 km through assumption when segmenting the market of the model, but further studies are needed
to segment the transport distance by analyzing the competitiveness of the two transport modes by
Sustainability 2019, 11, 1209 12 of 13

distance. Finally, this study developed a freight mode choice model based on the introduction of a
new transport mode, but the developed freight mode choice model has not yet been applied to the real
world. We hope that future studies will address these limitations.

Author Contributions: For research articles with several authors, a short paragraph specifying their individual
contributions must be provided. The following statements should be used “Conceptualization, S.S. and S.H.H.;
Methodology, S.S.; Software, S.S.; Validation, S.S., S.H.H. and H.-S.R.; Formal Analysis, S.S.; Investigation, H.-S.R.;
Resources, S.H.H.; Data Curation, S.S and S.H.H.; Writing-Original Draft Preparation, S.S.; Writing-Review &
Editing, S.H.H.; Visualization, S.H.H.; Supervision, H.-S.R.; Project Administration, H.-S.R.; Funding Acquisition,
H.-S.R.”.
Funding: This research was supported by a grant from “Transportation logistics research Program
(18TLRP-B134108-02),” funded by Ministry of Land, Infrastructure and Transport of Korean Government (MOLIT).
Conflicts of Interest: The authors declare no conflict of interest.

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