Economic Feasibility of an Air Cargo Handling Facility at Fargo, North Dakota Report as inadecuate

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Exports to Taiwan in 1990 via air freight were approximately$2.9 billion, and imports via air freight to the united Stateswere $3.1 billion. Total U.S. exports/imports to/from Taiwan in1990 were $11.5 billion and $22.7 billion, respectively. ChinaAirlines operates three air cargo hubs in the united States: NewYork, Los Angeles, and Dallas.The real per capita Gross National Product (GNP) in Taiwanfor 1989 was $7,512, up from $3,297 in 1985. This implies thatthe Taiwanese economy is one of the fastest growing economies inAsia. Trade volume between the united States and Taiwan hasincreased substantially over the last 10 years and is predictedto grow in the future.The objective of this study is to evaluate the economicfeasibility of Fargo, North Dakota, as an air cargo handlingfacility for products shipped to (from) Taiwan.Two static transshipment models were used to determine theeconomic feasibility of an air cargo hub being located at Fargo.Both transshipment models minimized trucking costs of cargo from(to) customs districts to (from) air cargo hubs and air cargocosts from (to) hubs to (from) Taiwan for exports and imports.Total savings and market shares for both export and importmodels are presented by evaluating the feasibility of an aircargo hub at Fargo. The model, excluding Fargo as a cargo hub,results in $47 million in exports and $1.7 million in imports.Including Fargo as a cargo hub at the New York rate saves $2.73million; at the Dallas rate, $2.84 million; and at the LosAngeles rate, $3.08 million. Fargo's market share is 11.8% forexports and 14.8% for imports. Fargo gains its entire marketshare for both exports and imports from New York for all models.In conclusion, this study indicates Fargo has a logisticaladvantage over New York and Dallas in shipping and receiving aircargo between Taiwan and Northern Plains states (Minnesota,Illinois, and Montana). This does not necessarily mean it wouldbe economically feasible to place an air cargo hub at Fargo. Inaddition to logistics, economic feasibility depends on investmentand operating costs, and a volume large enough to minimize perunit operating costs through economies of scale.v

Subject(s): Demand and Price Analysis

Issue Date: 1992-04

Publication Type: Report

PURL Identifier:

Total Pages: 23

Series Statement: Agricultural Economics Miscellaneous Report


Record appears in: North Dakota State University > Department of Agribusiness and Applied Economics > Agricultural Economics Miscellaneous Reports

Author: Golz, Theresa K. ; Golz, Joel T. ; Koo, Won W.


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