One Belt, One Road…but how to select a best route?

With a launch of a “one belt, one road” beginning in 2013, China announced a desirous idea of transforming informal domestic and mercantile landscapes over a entrance decades by building a ‘Silk Road Economic Belt’ and a ‘21st Century Maritime Silk Road’.

Massive investments into these infrastructure networks have already taken place.

For a land-based routes, 11 Chinese cities have so distant non-stop approach railway enclosure services to European cities, and many of these are enjoying subsidies from a internal governments. For a oceangoing routes, in new years Hong Kong-based Cosco Pacific has continued to deposit heavily in a Port of Piraeus (Greece), transforming it into an critical heart pier in southern Europe, covering a credentials of center and East Europe.

At a same time, China has cooperated with executive and eastern European (CEE) countries to erect railways joining Budapest and Belgrade, a capitals of Hungary and Serbia, respectively. Upon their execution in 2018, a transport time by sight between southern Europe and executive Europe will be significantly reduced. With a growth of these railway networks and a arise of a Port of Piraeus, a competitiveness of a new trade routes between Asia and executive Europe has been dramatically improved.

Against this background, it is peerless for supervision process makers and logistics practitioners to consider a opening and intensity of these rising trade routes so as to make optimal track choices. But how to do it?

To weigh a opening of several trade routes, mixed criteria will need to be taken into consideration. They include: economics factors (freight rate, outing frequency, outing time, outing punctuality and load loss); record factors (infrastructure and travel network); governance factors (geopolitical fortitude and supervision support); environmental factors and also a form of commodity. Among these criteria, obscure trade-offs are inevitable.

Multi-criteria welfare creation (MCDM) is a procession directed during plucking a best choice from a set of possibly alternatives. It allows a decision-maker to change a accumulation of criteria.

The many renouned MCDM apparatus used is Analytic Hierarchy Process (AHP), that can assistance to scrupulously establish a weight of any pattern concerned in a final outcome of a ensuing layers. AHP process involves 4 steps: (i) Structuring a welfare problem into a hierarchical model; (ii) Making pairwise comparisons and collecting information to obtain a settlement matrix; (iii) Estimating a relations weightings of a criteria and sub-criteria; and (iv) Checking a coherence of all weights.

Another common MCDM apparatus is a supposed “technique for method of welfare by likeness to ideal solution” (TOPSIS), that is a process for last a priority method of mixed alternatives. It is formed on a element that a best choice is a one that has a shortest geometric stretch to a “positive-ideal solution” and a longest geometric stretch from a “negative-ideal solution”. Unlike AHP, a TOPSIS allows trade-offs between criteria, where a bad outcome in one pattern can be negated by a good outcome in another criterion. Thus, TOPSIS can yield a some-more picturesque form of modelling that doesn’t simply embody or bar choice solutions.

In Apr 2016, to review a opening of 3 conflicting trade routes, we conducted an online consult and collected 191 questionnaires from applicable stakeholders including supervision process makers and courtesy practitioners. With a information from a questionnaires, we built a welfare pattern and dynamic a weights by requesting AHP. Then we were means to allot priority to a criteria and discern a opening of a 3 routes regulating TOPSIS.

We found that a Traditional Sea-Land Line (TSLL) performs improved than a China-Europe Sea-Land Express Line (CESEL) and a New Eurasian Land Bridge (NELB). It also reveals a clever welfare from all a respondents that criteria per outing quality, such as punctuality, load detriment and geopolitical stability, take dominance over burden rate. By dividing a respondents into groups, a outcome indicates that supervision process makers and courtesy practitioners any request remarkably conflicting weightings to certain criteria.

For example, a mercantile pattern has a most aloft weight in a supervision organisation than in a courtesy group. As a result, a dual groups reason hostile views on a opening ranking of a China-Europe Sea-Land Express Line and a New Eurasian Land Bridge. The supervision process builder considers that a NELB performs improved than a CESEL, while a courtesy practitioners reason a conflicting view. This implies that a stream growth of NELB and a destiny prospects do not accept adequate approval from courtesy practitioners. The supervision should compensate courtesy to a industry’s welfare instead of overestimating a significance of mercantile factors, so as to foster a new routes to industrial practitioners.

The doubt and a intensity of track growth underneath several conflicting scenarios are also addressed by requesting a MCDM framework. We found that oil cost sensitivity of varying degrees will not impact a opening ranking of a 3 routes.

The doing of a tellurian sulphur top by 2020 could urge a opening of a TSLL and a CESEL, though usually to a singular degree. The NELB has a intensity of being a really rival choice to a TSLL – if poignant improvements can be done on certain criteria.

Dong Yang is partner highbrow of a Department of Logistics and Maritime Studies during Hong Kong Polytechnic University and Liping Jiang is a associate highbrow of a Department of Operations Management of Copenhagen Business School