MPC
Research Projects (2009-10)
Identifying Number
MPC-332
Project Title
Estimation of the Generalized Truck Freight Elasticity of Demand: Case Study of the Seattle-Tacoma to Chicago Corridor
University
North Dakota State UniversityProject Investigator
Alan Dybing
Description of Project Abstract
A number of variables affect the price of transportation. Highway transportation price components such as operating cost, travel time cost, and safety cost vary due to changes in prices of fuel and maintenance as well as the condition of the highway itself. The surface and traffic conditions of a highway affect the cost of transportation due to the constraints they place upon movements that occur. Improvements made to a section of highway have an impact on the cost components and the price of transportation for all consumers that utilize the facility. The degree of the responsiveness of consumers to these price changes, the elasticity of demand, reveals important information to transportation planners and policy makers.
"An elasticity summarizes a large amount of information in a single number, including the choices of consumers with different preferences, with different options, which change over time." (1) The premise of this study is that the preferences and options of freight transportation consumers are different than those of passenger transportation consumers to the extent that a single demand elasticity does not adequately represent the demand for each.
Both passenger and freight transportation consumers make decisions between different transportation modes. The decision of which mode, or combination of modes, are to be used depend upon mode price and other service characteristics. Service characteristics such as transit time, loss and damage, reliability, safety and security have importance in the mode choice decision, particularly for freight transportation. The relative importance of these service characteristics depend on the type of freight, its value, and the supply chain system of the firm making the shipping decisions among other factors, which are not immediately comparable to passenger transportation.
The intent of this research is to provide an estimate of the generalized elasticity of demand for truck freight transportation in the Sea-tac to Chicago corridor for use in transportation planning and policy analysis.
Project Objectives
The objective of this research is to develop a prototype analysis to estimate a generalized elasticity of demand for truck and rail freight transportation in the Seattle-Tacoma to Chicago freight corridor.
Project Approach/Methods
The demand for freight transportation is treated as an input demand or derived demand. This study will utilize a derived demand model to estimate the demand freight transportation within the Sea-tac to Chicago corridor. Each shipper is assumed to have a link-specific minimized cost function which describes the minimum cost of transporting a given quantity of output to a given destination using optimal combinations of railroad and truck services.
Origin/Destination Identification
A key task in this study is to identify origins and destinations for the freight moving along the corridor in order to estimate the demand. The Highway Performance Monitoring System (HPMS) time series data provides Average Annual Daily Traffic (AADT) counts as well as percent combination and percent single unit trucks for the sample. The data does not include the direction of the movements, commodity type, nor origins and destinations. A model will be constructed to reconcile the truck counts with region to region trade flows represented in the various data sources below in addition to import and export freight movements from the PIERS data.
Costs
Once the origin and destination pairs are determined, the costs of the movements will be estimated. The HERS-ST incorporates a number of models to estimate vehicle operating, travel time, and safety costs which will be used to estimate truck costs. In the absence of data for specific commodity groups the Truck Costing Model for Transportation Managers will be used to estimate the cost of truck transportation. (2) Rail rate data will be obtained from the railroads' websites and from the Carload Waybill Sample
Service Characteristics
In addition to price, characteristics such as transit time, loss and breakage, transport reliability and security impact the elasticity of demand for transportation. The importance of these characteristics varies depending on the value and time sensitivity of the movements. A number of the service characteristics for truck transportation may be estimated using the HERS-ST model. The estimates are based upon the actual highway surface conditions and congestion reported in the HPMS data. Rail service characteristics will be estimated using the Uniform Rail Costing System (URCS) and performance measures reported by the railroads operating within the corridor.
Data Sources:
Data sources include the national Highway Performance Monitoring System (HPMS), Freight Analysis Framework (FAF), Carload Waybill Sample, Uniform Railroad Costing System, PIERS data from the Bureau of Transportation Statistics, and the Commodity Flow Survey.
MPC Critical Issues Addressed by the Research
The primary MPC critical issue addressed in this study is multimodal policy and investment assessment. This is done by providing estimates of the impacts of price changes on mode selection, and its impact on transportation demand. The secondary critical issue addressed is the economic analysis of investments and impacts. Through providing a freight specific demand elasticity estimate, policy makers and planners may be better able to assess the impacts of highway improvements.
Contributions/Potential Applications of Research
This study is a prototype analysis for a single corridor. If successful, the methods could be expanded to other freight corridors or regions across the nation, thus allowing for the development of a comprehensive set of truck freight elasticities. These elasticity estimates may be applied to existing models that utilize link elasticities, in particular those which use a single elasticity for both passenger and freight transportation.
Technology Transfer Activities
Research report; journal article submission; conference presentation
Time Duration
July 1, 2009 through July 30, 2010
Total Project Cost
$153,125.00
MPC Funds Requested
$75,000.00
TRB Keywords
Truck, freight, traffic conditions, safety, freight transportation, Sea-tac, Chicago corridor, transportation planning, HPMS,
References
- U. S. Department of Transportation. Highway Economic Requirements System State Version: Technical Report, Washington, D.C., August, 2005.
- http://www.mountain-plains.org/pubs/html/mpc-03-152/
