Vol I, Issue 3   March 2005

Theoretical Model Compares Competitive and Non-Competitive Markets
Most Corps navigation equilibrium models (i.e. models examining what is shipped and how) assume that the market for shipping commodities is competitive. Recently, however, NETS researchers Simon Anderson, PhD of the University of Virginia and Wesley Wilson, PhD of the University of Oregon released a draft report, which develops a theoretical model for a transportation market in which a sector (rail) that has firms with market power faces a competitive sector (truck-barge).

The model explores the impact of improvements in truck/barge transport technology (such as navigation improvements that reduce the cost of barge traffic) on railroad pricing and the consequent effect on shippers. The model introduces the concept of alternative terminal markets to the equation. Under this extension shippers choose the terminal market as well as the mode of transportation. This may be particularly important in the case of railroads because the railroad tracks may be linked to a network with multiple terminal markets. By contrast, the geography of the river system may limit the terminal market shipping options. The model also examines the impact of capacity constraints on railroads.

Fact Sheet | Paper

Team Examines Integration of Shipper Choice Models Into Corps Planning
A team of individuals from the U.S. Army Corps of Engineers, Oak Ridge National Laboratory and academia met recently to discuss the potential for integrating shipper choice demand models into Corps navigation planning. The group determined that incorporating this approach into Corps planning is viable. The team is currently developing specific implementation plans and a budget. The meeting was a follow-on to the recently released NETS Mid-American Grain Study, which assessed among other things the impact on economic models of shippers’ choices related to which mode or modes they use for shipments (i.e. barge, truck, train, etc.).

Mid-American Grain Study Fact Sheet

Study Analyzes Discrete Event Simulation Model on Upper Mississippi
NETS researcher Donald Sweeney, PhD, has recently completed a preliminary analysis of a simulation model that explicitly incorporates seasonal and interdependent traffic demands for specific origin and destination trips on a congested segment of the Upper Mississippi River (UMR). Previous Corps planning models have not incorporated these two key factors.

The interdependency of lock operations created by the service of common tow traffic and the existence of periods of high and low levels of demand for use of the system provide currently untapped sources of efficiency improvements for the implementation of alternative traffic management policies in the operation of the UMR system, according to the study. Such systems include scheduling traffic, re-sequencing vessels and providing economic incentives for decreasing system use during high demand periods and increasing use during low-demand periods.

The study applied the model to the lower five 600-foot locks on the UMR navigation system. The model was employed to identify the potential impact of implementing a shortest-processing time first policy. According to the model the implementation of such a policy would bring about only a marginal improvement of approximately 9 percent in expected lock transit times. Other changes to the operating characteristics of the UMR can be readily examined using the model’s framework, according to Sweeney. Useful extensions of the model and the data requirements needed to implement these extensions are identified in the study.

Fact Sheet | Paper

Columbia-Snake River Survey
NETS researchers Kenneth Train, PhD of the University California Berkeley, Wesley Wilson, PhD of the University of Oregon and Ken Casavant, PhD and Eric Jessup, PhD of Washington State University recently completed a survey of agricultural and non-agricultural shippers that do or could use the Columbia-Snake River. A total of 212 shippers responded, including 181 agricultural shippers (53 percent response rate) and 31 non-agricultural shippers (51 percent response rate). The data are currently being analyzed and will serve as the basis for a descriptive report and an econometric analysis. The descriptive report should be available in approximately one month with the econometric study coming out soon thereafter. Watch the NETS web site for details.

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Navigation Economic Technologies Program, US Army Corps of Engineers