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TRANSPORTATION DEMAND FOR GRAIN SHIPMENTS A Revealed and Stated Preference Approach
| Content Provider | Semantic Scholar |
|---|---|
| Author | Novermber |
| Copyright Year | 2004 |
| Abstract | A survey of grain shippers was conducted to obtain information about the mode and origin/destination (O/D) of their shipments, the next-best alternative mode and O/D, as well as factors that might induce the shipper to switch to the next-best alternative. An econometric model was estimated on the combined revealed-preference data (the shippers’ observed choices in the market) and stated-preference data (the choices that shippers said they would make if transportation rates or times rose for their current mode and O/D.) The estimated model is used to forecast the share of shippers that would change mode and/or O/D in response to specified changes in transportation rates and time. The analysis indicates that many shippers would switch to an alternative mode and/or O/D in response to a relatively small rate increase for their current mode and O/D. The share who would switch rises with the magnitude of the rate increase, though less than proportionately. Shippers are found to respond to transit times in addition to rates, with the response to transit times being smaller than the rate response. While many shippers are found to respond to fairly small changes in rates or transit times, a large share of shippers are found to be essentially insensitive to large changes in rates and times. INTRODUCTION This paper examines grain shippers’ choice of mode and origin/destination (O/D), with particular emphasis on the response of these choices to changes in transportation rates and times. The analysis is based on a survey of 369 shippers who were interviewed between December 2003 and February 2004. The surveyed shippers are grain elevators sampled from a list of elevators obtained from the USDA and supplemented by trade association lists. Information was obtained on the shippers’ current modes and O/D’s (called “revealed preference data”) and on how the shippers report they would change the mode and/or O/D of their shipments in response to changes in transportation rates and times (“stated preference data.”) Econometric models of shippers’ decisions were estimated on these combined revealed and stated preference data. The findings can be summarized as follow: • A large share of shippers do not have viable alternatives available to them. 26% of the surveyed shippers reported that they would have to shut down if the mode and O/D that they currently use were not viable. • Of the shippers who have alternatives available to them, a considerable number would switch to their next-best alternative if the rate for their current mode and O/D choices rose. A ten percent increase in transportation rates for the mode and O/D of a shipment is predicted to induce 14% of shippers to switch to the next-best alternative. • As implied by the previous point, the arc elasticity of mode and OD choice with respect to rates is 1.4 for a 10% increase in rates. • Though some shippers are very responsive to rates, other shippers would continue using their current mode and O/D choices in the face of large rate increases. A doubling of rates for their current mode and O/D is predicted to induce 62% of shippers to switch to their next-best alternative. The remaining 38% would not switch even when their rates doubled. • As implied by the previous point, the arc elasticity of mode and O/D choice with respect to rates is 0.6 for a 100% increase in rates. • The arc elasticity decreases as the magnitude of the rate increase rises, from 1.4 for a 10% rate increase to 0.6 for a 100% rate increase. This difference reflects the fact that small rate increases induce the shippers who are readily able to switch to do so, leaving only the shippers who are captive or nearly so to respond, as possible, to larger rate increases. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.iwr.usace.army.mil/docs/iwrreports/04-NETS-P-07.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
