Impacts of Policy-Induced Freight Modal Shifts (2019) / Chapter Skim
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59 This chapter summarizes the analysis conducted by the NCFRP Project 44 research team on methodologies that could explain and forecast freight mode choice. The literature review undertaken as part of this research can be found in full in the latter part of this section.
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60 Impacts of Policy-Induced Freight Modal Shifts Continuous Dependent Variable Models These models estimate mode choice as a continuous dependent variable, typically the market share of a freight mode. Frequently used independent variables are (1)
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Overview of Available Methodologies 61 However, since OLS cannot solve the system of linear equations, estimating market-share models for multiple modes requires advanced techniques such as maximum likelihood estimation. Discrete Choice Models These models estimate freight mode choice by computing the probability that the corresponding decision-maker selects mode i to transport shipment n.
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62 Impacts of Policy-Induced Freight Modal Shifts that the decision concerning shipment size has a tremendous influence on freight mode choice. It has been found that the closer the shipment size is to the capacity of a freight vehicle or mode, the more likely it is that vehicle or mode will be selected to transport the shipment (Holguín- Veras 2002)
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Overview of Available Methodologies 63 The Economic Order Quantity Model Inventory management models calculate the shipment size needed to minimize the total logistics cost, which includes inventory as well as transportation costs. These principles are embedded in the economic order quantity (EOQ)
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64 Impacts of Policy-Induced Freight Modal Shifts ITIC Model The FRA (2005) developed the ITIC model to estimate the impacts of alternative policies on freight mode choice.
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Overview of Available Methodologies 65 sensitive data, which are practically impossible to obtain, such as the annual volume of cargo sent by the shipper to each individual customer (after all, the ITIC is a shipment-level model)
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66 Impacts of Policy-Induced Freight Modal Shifts McFadden et al.
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Overview of Available Methodologies 67 reliability have statistically significant effects on choices, and a number of unobserved characteristics have important effects. Shippers located close to a river are more likely to use the river than to use rail, and as the distance from the river increases, shippers switch to rail.
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68 Impacts of Policy-Induced Freight Modal Shifts shipping cost, in-transit carrying cost, ordering cost, and recipient's inventory carrying cost, which is derived to obtain the optimal frequency of reordering. Samuelson (1977)
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Overview of Available Methodologies 69 the air mode and waterways. Table 15 also shows that some references (e.g., Cunningham 1982 and Gray 1982)
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70 Impacts of Policy-Induced Freight Modal Shifts Table 16 shows the variables considered in publications on freight mode choice, with freight rate, transit time, shipment size, and reliability being some of the most important variables. Table 16 shows that econometric models are able to provide solid depictions of freight mode choice with a smaller number of independent variables than supply chain models, as the maximum number of variables required for econometric models is around seven while that of supply chain models is twelve.
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