Economic Benefits of Productivity Increases through Truck-to-Rail Mode Shift in Freight Transport

The study of economic benefits of improving (or not improving) the efficiency of freight movement has been recognized as a critical research topic by decision makers and researchers alike. While many factors can impact freight efficiency, there are two main obstacles:

1) The lack of reliable tools to simulate how efficiency changes affect the flow of goods.
2) The absence of the framework to translate the output into an economic impact measure.

This study applies a Computable General Equilibrium (CGE) model for the Chicago region to analyze the impacts of productivity increase in the trucking sector. The CGE model used in this study is derived from the Chicago-CGE model developed in an earlier effort at the University of Illinois at Chicago’s Urban Transportation Center (UTC).

Principal Investigator(s):

Kazuya Kawamura, Associate Professor, Department of Urban Planning and Policy
University of Illinois at Chicago

Participants:

Kazuya Kawamura
Elizabeth Fu
Alexandra McNally

Status:

02/01/2016

Objective:

This study’s goal is to develop an analytical framework to apply the CGE model in the analysis of freight mode shifts through the simulations of plausible impacts of such change.  The framework developed in this study can also be applied to the analysis of the effects of fuel price increase or policy measures such as carbon tax

Strategy:

The first scenario focuses on the positive benefit of greater productivity in trucking industry that can result from less congested roads and also being able to take on high-valued commodity. The second scenario looks at the negative impact associated with the decrease in the capital and labor inputs for trucking.

Expected Results or Products:

The result of the simulation of scenario in which trucking sector increases productivity by 20% is a 1.09% change in real gross regional product (RGRP) and value-added gross regional product (GRPVA). The second simulation analyzed reduced requirement for capital and labor cost due to larger mode share of rail. The results of this simulation are a -0.32% change in both RGRP and GRPVA.

This project demonstrated the feasibility of applying CGE models to evaluate the impacts of changes in productivity or output that may result from the mode shift between truck and rail. Compared against the Input-Output Models that are often used in economic impact studies, the CGE models are able to capture the effect of operating efficiency of the trucking sector. Our analysis indicates that increased productivity of trucking sector can produce considerable increases in the regional economy while the effect of decreases in the factor inputs to the trucking sector results in a modest decrease in the regional economy.

The results underscore the need for further effort to develop sophisticated analytical tools to evaluate the impacts of infrastructure investments and/or policies that promote a better balance of freight traffic among the modes.

Download:

Download the report

Contact:

Kazuya Kawamura
Department of Urban Planning and Policy
University of Illinois at Chicago
412 South Peoria Street
Chicago, IL 60607
Voice: (312) 312-413-1269
Email: kazuya@uic.edu

Sponsors:

National University Rail Center (NURail)

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