MODAL CHOICE ELASTICITIES AND COST OF MISALLOCATION OF FREIGHT TRANSPORTATION ON THE RIYADH-DAMMAM CORRIDOR (SAUDI ARABIA)
This dissertation investigates the railroad and motor carrier modal choice of freight receivers for transporting imported manufactured commodities in the Riyadh-Dammam corridor in Saudi Arabia. A disaggregated model of the non-linear logit form is used. Five of the explanatory variables considered appear to be important in the receiver's modal choice decision. These variables are flexibility of service, freight rate, susceptibility of shipment to damage, containerization, and an index that represents the value, weight, and volume of shipments. The goodness-of-fit and predictive capability of the model are very satisfactory.
The first two explanatory variables are policy-oriented variables, i.e., under the control of carriers and/or governmental transportation agencies. Point and arc direct and cross elasticities were used to analyze the sensitivity of receivers to changes in these two variables. It was found that receivers are more sensitive to changes in flexibility of service than to changes in freight rates. Also, it was found that truck users are more sensitive to changes in these two variables than rail users. The model was used to derive an estimate of freight misallocation cost. For the observed sample this cost is estimated to be about $55,952; total misallocation cost for 1984 is estimated to be about $5.5 million.
The model seems very useful in explaining and predicting receivers' modal choice. It provides useful information for carriers as well as governmental transportation agencies. Unique attributes of this work include its emphasis on receiver choice of mode and its application in a maritime-land transport move in a non-Western context. The model appears to be very useful in the analysis of such problems in developing countries.