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Intrarailroad and Intermodal Competition Impacts on Railroad Wheat Rates


Intrarailroad and Intermodal Competition Impacts on Railroad Wheat Rates

The issue addressed in this paper is more fully understanding the relationship of intrarailroad competition and rail rates for wheat in the largest wheat producing states, which are Idaho, Kansas, Minnesota, Montana, North Dakota, Oklahoma, South Dakota, Texas, and Washington. The overall objective of the study is to investigate railroad pricing behavior for wheat shipments. The rate model was estimated with OLS in double-log specification utilizing the 2012 STB Confidential Waybill sample and other data.

The research found that the distance from origin to destination and the total shipment weight had the expected negative relationships with railroad wheat rates and were statistically significant. The distance from origin to the nearest barge loading location had the expected positive relationship to railroad wheat rates and was also significant. The weight of each covered hopper car and the Herfindahl-Hirschman Index were both non-significant. However, the study used other data to determine that intrarailroad competition for wheat shipments within states appears to be present in most states.

by Michael Babcock and Bebonchu Atems