BC economist to study state of U.S. shipping industry
Felter Family Associate Professor of Economics Theodore Papageorgiou and colleagues have been awarded a three-year, $700,000 grant from the National Science Foundation to study the infrastructure of the nation’s ports, their impact on supply chains, and how best to plan for an investment in facilities that receive the United States’ share of shipping traffic—which transports approximately 80 percent of all global trade.
“We are very excited to receive this funding,” Papageorgiou said. “It allows us to push forward with this project and work harder and obtain some exciting data. We are also gratified to see our work recognized by the National Science Foundation. It is a very competitive process, so we are thrilled to be selected for NSF funding.”
Papageorgiou will work with two other economists, Harvard University’s Myrto Kalouptsidi and New York University’s Giulia Brancaccio. The trio’s prior research into the international shipping industry earned them last year’s Frisch Medal of the Econometric Society, regarded as one of the premier prizes in economics scholarship.
“This research is a continuation of the work that we have done on international shipping and how it shapes global trade,” Papageorgiou said. “This has to do with the role of ports in the U.S., so it is closely relatable.”
Earlier, the economists studied the role of the transportation sector in shaping international trade, and constructed a model that showcases previously overlooked costs.
In part, they want to look at the pandemic-era supply chain shocks that left retailers and consumers short on goods. Delays were often illustrated by images of cargo ships moored while awaiting facilities and personnel to unload their contents.
“We are trying to answer three primary questions,” Papageorgiou said. “In an uncertain economic environment, what are the returns to investing in transportation infrastructure? How should funding be coordinated and spent? What are the drivers of port performance and why are ports so prone to disruption?”
The team will collect a range of data sets on trade, shipping, and ports and analyze that information using a state-of-the-art modeling framework for port technology and demand for port services, he said.
The broad data profile ranges from geography and infrastructure—such as berths and cranes—to demand for port services and time delays bringing vessels to port to discharge cargo. Global shipping annually transports approximately 80 percent of global goods and materials adding up to 11 million tons valued at $20 trillion, and the team will focus on vessels known as “bulkers” that account for nearly half of global ship transport as they ferry raw materials like grain, steel, fertilizer, and oil, Papageorgiou said. The team plans to draw insights from queuing theory to better detail the costs associated with delays, or “time at port.” Ultimately, the research should highlight where to target infrastructure improvements.
The team envisions their findings being used by policymakers to determine how best to upgrade the nation’s top 50 ports to improve performance and lessen the impact of economic and supply shocks, he said.
“Port infrastructure acts as insurance against these severe economic shocks,” Papageorgiou said. “When you have a very high demand for port services, you need to have the infrastructure to meet that demand. That capacity can serve as insurance against demand shocks. How we prioritize infrastructure improvements depends on the frequency of these shocks and how much we want to ensure against a repeat of what happened two years ago.”
The award is part of $7.5 million in NSF-funded projects exploring local and national infrastructure through the Strengthening American Infrastructure (SAI) program, which incorporates scientific insights about human behavior and social dynamics to better design, develop, rehabilitate, and maintain strong and effective American infrastructure, according to the NSF.
“The SAI program stimulates human-centered research that not only improves people’s lives but also provides a strong foundation for socioeconomic vitality and broad quality of life improvement,” said SAI Program Manager Steven Breckler in a news release. “SAI focuses on how knowledge of human reasoning and decision-making, governance, and social and cultural processes enable the building and maintenance of effective infrastructure that improves lives and society and builds on advances in technology and engineering.”