Derived Demand for Grain Freight Transportation, Rail-Truck Competition, and Mode Choice and Allocative Efficiency

• Main Author: Ndembe, Elvis Mokake
• Format: Others
• Published: North Dakota State University 2018
• Online Access: https://hdl.handle.net/10365/28040

The demand for grain freight transportation is a derived demand; consequently changes in the grain supply chain in production and handling, and those in the transportation domain will affect the demand for grain transportation. The U.S. transportation industry (e.g. railroad and trucking), and the grain supply chain in general have witnessed structural changes over the years that have potential long-run implications for demand, intermodal competition, and grain shippers mode choices both nationally and regionally. Deregulation of the railroad and trucking industries initiated innovations (e.g. shuttle trains) that have revolutionized the way grain is marketed. These and other related trends in agriculture including bioenergy suggest a dynamic environment surrounding grain transportation and the need to revisit agricultural transportation demand and evaluate changes over time. A majority of freight demand studies are based on aggregate data (e.g. regional) due to lack of disaggregate data. Aggregation of shippers over large geographic regions leads to loss of information with potential erroneous elasticity estimates. This study develops a method to estimate transportation rates at the grain elevator level to estimate a shipper link specific cost function for barley, corn, durum, hard red spring wheat, and soybeans shippers. The aim of this study is to assess and characterize the nature of rail-truck competition for the transportation of five commodities over distance and time as well as to assess whether North Dakota grain shippers’ mode choices reflect an allocatively efficient mix assuming the choice of mode is based on shipping rates. Our findings indicate that in general, rail dominates most of the grain traffic, however, the degree of dominance is variable by commodity. Additional findings suggest that grain shippers utilize more rail than they would if they chose modes based on rates. This may suggest unmeasured service quality advantages of rail in comparison to truck. === Upper Great Plains Transportation Institute (UGPTI) === Upper Great Plains Transportation Institute (UGPTI)