transportation demand and volume sensitivity: a study of grain shippers in the upper mississippi...
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Transportation Demand and Volume Sensitivity:Transportation Demand and Volume Sensitivity:
A Study of Grain Shippers A Study of Grain Shippers in the in the
Upper Mississippi River ValleyUpper Mississippi River Valley
byby
Kenneth Train Kenneth Train University of California – BerkeleyUniversity of California – Berkeley
andand
Wesley W. WilsonWesley W. WilsonUniversity of OregonUniversity of Oregon
andandInstitute for Water ResourcesInstitute for Water Resources
Transportation Research Board Transportation Research Board January 14, 2008January 14, 2008
Navigation and Economics Navigation and Economics Technology ProgramTechnology Program
A group of academic and non-academic economists, planners, etc. working with the Army Corps of A group of academic and non-academic economists, planners, etc. working with the Army Corps of Engineers to develop the economics underlying benefit measurement of investments in the Engineers to develop the economics underlying benefit measurement of investments in the waterways. Program is directed by Keith Hofseth of the Institute for Water Resources. Studies waterways. Program is directed by Keith Hofseth of the Institute for Water Resources. Studies involve both base line studies as well as planning tools. Topics include:involve both base line studies as well as planning tools. Topics include:
Choice modelingChoice modeling Spatial EquilibriumSpatial Equilibrium Spatial EconometricsSpatial Econometrics Congestion modelingCongestion modeling Port EfficiencyPort Efficiency Port ChoicePort Choice Forecasting transportation traffic.Forecasting transportation traffic.
All research on All research on
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This is one paper in a series that examines the responsiveness of transportation demands to key This is one paper in a series that examines the responsiveness of transportation demands to key determinants.determinants.
BackgroundBackground
Transportation demand decisions commonly Transportation demand decisions commonly involve decisions with regard to:involve decisions with regard to:– ModeMode– Destination/Origin Destination/Origin – Volumes ShippedVolumes Shipped
BackgroundBackground
Analysis focuses on the annual shipment Analysis focuses on the annual shipment volumes of shippers and how these volumes volumes of shippers and how these volumes adjust in response to changes inadjust in response to changes in– RatesRates– Transit timesTransit times– ReliabilityReliability
But, shipper attributes may also matter But, shipper attributes may also matter e.g., modal access, capacity, distances to e.g., modal access, capacity, distances to alternative modesalternative modes
Survey Survey
Implemented by Washington State University Social Implemented by Washington State University Social and Economic Sciences Research Center.and Economic Sciences Research Center.
States: Iowa, Illinois, Indiana, Wisconsin, Kansas, States: Iowa, Illinois, Indiana, Wisconsin, Kansas, Missouri, Nebraska, North Dakota, South Dakota, Ohio, Missouri, Nebraska, North Dakota, South Dakota, Ohio, and Minnesota and Minnesota
List of shippers from Dunn & Bradstreet, FarmNet List of shippers from Dunn & Bradstreet, FarmNet Services, and NDSU list of warehouses/grain elevatorsServices, and NDSU list of warehouses/grain elevators
Stratified sampling: > or < 100 miles to riverStratified sampling: > or < 100 miles to river August – October 2006.August – October 2006. 480 responses, with 27.5% response rate.480 responses, with 27.5% response rate.
Shipper LocationsShipper Locations
Destination locationsDestination locations
Mode AccessMode Access
ModeMode YesYes NoNo
Mean Distance to Mean Distance to Mode if No Direct Mode if No Direct
AccessAccess(miles)(miles)
Median Median Distance to Mode if No Distance to Mode if No
Direct AccessDirect Access(miles)(miles) NN
TruckTruck 479479 11 N.A.N.A. N.AN.A
Rail Rail 201201 270270 2525 2020 248248
BargeBarge 2323 435435 137137 9090 390390
Longevity at locationLongevity at location
YearsYears FrequencyFrequency %% Cumulative %Cumulative %
1010 1717 3.743.74 3.743.74
2020 3333 7.257.25 10.9910.99
3030 5959 12.9712.97 23.9623.96
4040 6161 13.4113.41 37.3637.36
5050 6666 14.5114.51 51.8751.87
6060 3939 8.578.57 60.4460.44
7070 2727 5.935.93 66.3766.37
8080 3030 6.596.59 72.9772.97
9090 4545 9.899.89 82.8682.86
100100 5656 12.3112.31 95.1695.16
110110 1515 3.33.3 98.4698.46
120120 22 0.440.44 98.998.9
130130 33 0.660.66 99.5699.56
140140 11 0.220.22 99.7899.78
150150 11 0.220.22 100100
TotalTotal 455455 100100
Response of annual volumes Response of annual volumes to changes in to changes in
average rates, times, and reliabilityaverage rates, times, and reliability
Shippers were asked if the average rates they Shippers were asked if the average rates they faced rose by X%, would they reduce their faced rose by X%, would they reduce their annual volume shipped, and if so by how annual volume shipped, and if so by how much.much.
Asked for: rate to shipper alone, rate to all Asked for: rate to shipper alone, rate to all shippers, transit time, and reliabilityshippers, transit time, and reliability
Response to rate increasesResponse to rate increasesto all shippersto all shippers
% Rate% RateChangeChange ChangeChange
No No ChangChang
ee
% Change % Change given a given a
Change OccursChange Occurs
Implied Implied Elasticity Elasticity given agiven a
Change OccursChange Occurs
1010 88 4848 15.815.8 1.581.58
2020 2323 5656 23.323.3 1.171.17
3030 1717 4848 32.832.8 1.091.09
4040 3737 3838 30.630.6 0.770.77
5050 3838 4444 3838 0.760.76
6060 3939 3333 42.642.6 0.710.71
TotalTotal 162162 267267 41.841.8 0.880.88
Response to rate increases Response to rate increases to shipper aloneto shipper alone
% Rate % Rate ChangeChange ChangeChange
No No Change Change
% Change given % Change given aa
Change OccursChange Occurs
Implied Elasticity Implied Elasticity given a given a
Change OccursChange Occurs
1010 2929 4949 31.2531.25 3.133.13
2020 4242 2828 35.4635.46 1.771.77
3030 4141 3939 35.1835.18 1.171.17
4040 4949 2626 52.0852.08 1.301.30
5050 5656 1515 55.0255.02 1.101.10
6060 3434 1212 61.8561.85 1.031.03
TotalTotal 251251 169169 46.4446.44 1.481.48
Response to time increases Response to time increases
% Time % Time ChangeChange ChangeChange
No No Change Change
% Change% ChangeGiven a Given a Change Change OccursOccurs
Implied Elasticity Implied Elasticity given a given a
Change OccursChange Occurs
1010 1414 6666 15.2515.25 1.531.53
2020 1515 6161 19.1419.14 0.960.96
3030 2121 3535 31.0631.06 1.041.04
4040 2828 4040 29.9129.91 0.750.75
5050 2727 3232 37.2537.25 0.750.75
6060 3939 4141 39.7339.73 0.660.66
TotalTotal 144144 275275 31.5731.57 0.860.86
Response to reliability decreases Response to reliability decreases
% Reliability % Reliability Change Change ChangeChange No ChangeNo Change
% Change % Change given a given a Change Change OccursOccurs
Implied Implied Elasticity Elasticity given a given a Change Change OccursOccurs
1010 1212 5757 16.2516.25 1.631.63
2020 2121 4646 21.9221.92 1.101.10
3030 2626 4444 27.1327.13 0.900.90
4040 2626 3737 29.2529.25 0.730.73
5050 2929 4545 33.4633.46 0.670.67
6060 2828 3535 32.5732.57 0.540.54
TotalTotal 142142 264264 28.1928.19 0.840.84
Stated preference questions related to Stated preference questions related to annual shipment volumes:annual shipment volumes:
If rates increased by XX percent, would your If rates increased by XX percent, would your annual shipment volumes decrease? annual shipment volumes decrease?
If yes, by what percent? If yes, by what percent?
Possible responses: Possible responses: – No No – Yes and the percentage of decrease.Yes and the percentage of decrease.
Model componentsModel components
As a matter of theory, we can illustrate that the sp As a matter of theory, we can illustrate that the sp questions can be modeled from a wide range of alternative questions can be modeled from a wide range of alternative models. Empirically, we have two parts:models. Empirically, we have two parts:
– Probit model of whether shipper reduces its annual volume Probit model of whether shipper reduces its annual volume – Regression of amount of reduction, given a reduction occurs Regression of amount of reduction, given a reduction occurs
corrected for the probability that a reduction may not occur.corrected for the probability that a reduction may not occur.
Model for volume response to rate Model for volume response to rate changes to all shipperschanges to all shippers
(1)(1) (2)(2) (3)(3)
VariableVariable LevelLevel SelectionSelection LevelLevel SelectionSelection LevelLevel SelectionSelection
Log (1+rate Log (1+rate change)change) -1.380-1.380 -0.864-0.864 -0.901-0.901
(5.41)***(5.41)*** (2.71)***(2.71)*** (2.82)***(2.82)***
Log (rate change)Log (rate change) 0.5020.502 0.6160.616 0.7060.706
(4.93)***(4.93)*** (4.89)***(4.89)*** (5.31)***(5.31)***
Access Barge Access Barge 0.3050.305 0.0670.067
(0.54)(0.54) (0.12)(0.12)
Access Rail Access Rail 0.1620.162 0.0770.077
(1.14)(1.14) (0.25)(0.25)
Access Barge and Access Barge and RailRail 1.2451.245 0.9020.902
(3.10)***(3.10)*** (1.70)*(1.70)*
continuedcontinued
Log(Storage Capacity)Log(Storage Capacity) -0.149-0.149
(2.15)**(2.15)**
Log(Rail Car Loading Log(Rail Car Loading cap)cap) 0.2110.211
(2.50)**(2.50)**
Log(Distance to Rail)Log(Distance to Rail) 0.1690.169
(2.11)**(2.11)**
Number of OptionsNumber of Options 0.0640.064
(2.09)**(2.09)**
ConstantConstant 0.5790.579 0.1310.131 -0.202-0.202 0.1730.173 -0.306-0.306 1.2901.290
(6.16)***(6.16)*** (0.99)(0.99) (1.12)(1.12) (1.05)(1.05) (1.66)*(1.66)* (1.80)*(1.80)*
ObservationsObservations 404404 404404 404404 404404 370370 370370
Elasticities wrt Rate Change for all Elasticities wrt Rate Change for all shippersshippers
PercentagePercentageChange inChange in
RatesRatesConditionalConditional
ElasticityElasticityUnconditionalUnconditional
ElasticityElasticity
ProbabilityProbabilityof aof a
Volume ChangeVolume Change
1010 -1.407-1.407 -0.075-0.075 0.0500.050
2020 -1.116-1.116 -0.153-0.153 0.1230.123
3030 -0.954-0.954 -0.208-0.208 0.1910.191
4040 -0.845-0.845 -0.246-0.246 0.2510.251
5050 -0.764-0.764 -0.272-0.272 0.3040.304
6060 -0.700-0.700 -0.289-0.289 0.3500.350
Model for volume response to rate Model for volume response to rate changes to shipper alonechanges to shipper alone
(1)(1) (3)(3) (5)(5)
VariableVariable LevelLevel SelectionSelection LevelLevel SelectionSelection LevelLevel SelectionSelection
Log (1+rate Log (1+rate change)change) -1.995-1.995 -2.275-2.275
--1.7601.760
(5.21)***(5.21)***(6.31)**(6.31)**
**(3.70)(3.70)
******
Log (rate change)Log (rate change) 0.4930.493 0.5300.530 0.5730.573
(4.91)***(4.91)*** (5.55)***(5.55)*** (4.47)***(4.47)***
Access Barge Access Barge -0.031-0.031 1.0261.026
(0.15)(0.15) (1.52)(1.52)
Access Rail Access Rail 0.0970.097 -0.134-0.134
(1.50)(1.50) (0.45)(0.45)
Access Barge and Access Barge and RailRail 0.2050.205 0.2070.207
(1.38)(1.38) (0.35)(0.35)
continuedcontinuedLog(Storage Log(Storage Capacity)Capacity) -0.141-0.141
(1.99)**(1.99)**
Log(Rail Car Log(Rail Car Loading Loading Capacity)Capacity) 0.1910.191
(2.36)**(2.36)**
Log(Distance Log(Distance to Rail)to Rail) -0.009-0.009
(0.12)(0.12)
Number of Number of OptionsOptions -0.037-0.037
(0.92)(0.92)
ConstantConstant 0.4930.493 0.6040.604 0.5640.564 0.6070.607 -0.027-0.027 1.9621.962
(4.03)***(4.03)*** (4.04)***(4.04)*** (4.77)***(4.77)*** (4.27)***(4.27)*** (0.09)(0.09) (2.62)***(2.62)***
ObservationsObservations 340340 340340 340340 340340 309309 309309
Elasticities wrt Rate Change for Elasticities wrt Rate Change for shipper aloneshipper alone
Percentage Percentage Change in Change in
RatesRatesConditionalConditional
ElasticityElasticityUnconditional Unconditional
ElasticityElasticity
ProbabilityProbabilityof aof a
Volume ChangeVolume Change
1010 -2.709-2.709 -0.657-0.657 0.2150.215
2020 -1.840-1.840 -0.737-0.737 0.3470.347
3030 -1.493-1.493 -0.761-0.761 0.4360.436
4040 -1.284-1.284 -0.759-0.759 0.5020.502
5050 -1.136-1.136 -0.742-0.742 0.5530.553
6060 -1.023-1.023 -0.719-0.719 0.5940.594
Model for volume response to time Model for volume response to time changeschanges
(1)(1) (3)(3) (5)(5)
VariableVariable LevelLevel SelectionSelection LevelLevel SelectionSelection LevelLevel SelectionSelection
Log(1+time change)Log(1+time change) -0.955-0.955 -0.937-0.937--
1.0821.082
(2.41)**(2.41)** (2.54)**(2.54)**(2.31)(2.31)
****
Log(time change)Log(time change) 0.4830.483 0.4940.494 0.4790.479
(4.20)***(4.20)*** (4.27)***(4.27)*** (3.96)***(3.96)***
Access Barge Access Barge -0.558-0.558 -0.480-0.480
(0.88)(0.88) (0.75)(0.75)
Access Rail Access Rail 0.0090.009 -0.378-0.378
(0.06)(0.06) (1.28)(1.28)
Access Barge and Access Barge and RailRail -0.443-0.443 -1.103-1.103
(0.96)(0.96) (1.74)*(1.74)*
continuedcontinuedLog(Storage Log(Storage Capacity)Capacity) 0.0490.049
(0.71)(0.71)
Log(Rail Car Log(Rail Car Loading Loading Capacity)Capacity) 0.0850.085
(1.06)(1.06)
Log(Distance Log(Distance to Rail)to Rail) -0.034-0.034
(0.45)(0.45)
Number of Number of OptionsOptions 0.0160.016
(0.56)(0.56)
ConstantConstant -0.161-0.161 0.0070.007 -0.180-0.180 0.0360.036 0.0380.038 -0.376-0.376
(0.50)(0.50) (0.05)(0.05) (0.63)(0.63) (0.21)(0.21) (0.09)(0.09) (0.53)(0.53)
ObservationsObservations 383383 383383 383383 383383 352352 352352
Elasticities wrt Time ChangeElasticities wrt Time Change
Percentage Percentage Change in Change in
RatesRatesConditionalConditional
ElasticityElasticityUnconditional Unconditional
ElasticityElasticity
ProbabilityProbabilityof aof a
Volume ChangeVolume Change
1010 -1.841-1.841 -0.310-0.310 0.1550.155
2020 -1.179-1.179 -0.321-0.321 0.2470.247
3030 -0.960-0.960 -0.335-0.335 0.3120.312
4040 -0.839-0.839 -0.344-0.344 0.3620.362
5050 -0.756-0.756 -0.348-0.348 0.4030.403
6060 -0.694-0.694 -0.349-0.349 0.4370.437
Model for volume response to reliability Model for volume response to reliability changeschanges
(1)(1) (3)(3) (5)(5)
VariableVariable LevelLevel Select Select LevelLevel SelectSelect LevelLevel
SelectSelect
Log(1+rel. Log(1+rel. change)change) -0.526-0.526 -0.719-0.719 -0.644-0.644
(2.26)**(2.26)** (3.58)***(3.58)*** (3.00)***(3.00)***
Log (rel. change)Log (rel. change) 0.3910.391 0.2850.285 0.2150.215
(3.35)***(3.35)*** (2.68)***(2.68)*** (1.91)*(1.91)*
Access Barge Access Barge -0.119-0.119 -0.038-0.038
(0.54)(0.54) (0.17)(0.17)
Access Rail Access Rail 0.1350.135 -0.189-0.189
(2.01)**(2.01)** (1.18)(1.18)
Access Barge and Access Barge and RailRail -0.000-0.000 -0.435-0.435
(0.00)(0.00) (1.71)*(1.71)*
continuedcontinued
Log(Storage Log(Storage Capacity)Capacity) 0.0300.030
(0.75)(0.75)
Log(Rail Car Log(Rail Car Loading Capacity)Loading Capacity) 0.0540.054
(1.53)(1.53)
Log(Dist. to Rail)Log(Dist. to Rail) -0.048-0.048
(1.07)(1.07)
Number of OptionsNumber of Options -0.229-0.229 -0.063-0.063 0.3100.310 -0.234-0.234 0.2920.292 -0.493-0.493
(1.14)(1.14) (0.42)(0.42) (4.28)***(4.28)*** (1.59)(1.59) (3.52)***(3.52)*** (1.15)(1.15)
ConstantConstant -0.004-0.004
(0.32)(0.32)
ObservationsObservations 377377 377377 377377 377377 348348 348348
Elasticities wrt Reliability ChangeElasticities wrt Reliability Change
Percentage Percentage Change in Change in
RatesRatesConditionalConditional
ElasticityElasticityUnconditional Unconditional
ElasticityElasticity
ProbabilityProbabilityof aof a
Volume ChangeVolume Change
1010 2.4172.417 0.6190.619 0.2310.231
2020 1.2591.259 0.3880.388 0.2790.279
3030 0.9060.906 0.3110.311 0.3090.309
4040 0.7350.735 0.2720.272 0.3310.331
5050 0.6320.632 0.2480.248 0.3480.348
6060 0.5610.561 0.2310.231 0.3630.363
ConclusionsConclusions Shippers do respond to rates, transit time, and Shippers do respond to rates, transit time, and
reliability.reliability.
Shippers respond by adjusting their annual volumes.Shippers respond by adjusting their annual volumes.
A large share of shippers have no feasible A large share of shippers have no feasible alternatives to their chosen mode/destination.alternatives to their chosen mode/destination.
Elasticities wrt rates, times, and reliability are Elasticities wrt rates, times, and reliability are generally small.generally small.
Conclusions, cont’d Conclusions, cont’d
Shippers adjust their annual volumes more in Shippers adjust their annual volumes more in response to a rate change to the shipper response to a rate change to the shipper alone than to a rate change to all shippers.alone than to a rate change to all shippers.