Understanding Grain Movements for Demand Estimation: The Columbia-Snake River System in Washington State

Grain producers and handlers in Washington State have benefited from a multimodal transportation network of roads, railroads, and the Columbia–Snake River barge system to move large amounts of grain effectively in a timely and economic manner. The competitive environment of the grain industry brings many changes, including the number of firms and houses, mergers, and modal competitiveness. Additionally, marketing strategies are affected because choices of available transportation modes reflect the decision processes of warehouses or firm managers. This aggregate study of grain marketing and transportation in the Pacific Northwest helps lay the groundwork for subsequent estimates of empirical demand. Such subsequent modeling attempts may include revealed and stated preference analysis in discrete choice demand models. A thorough understanding of the industry and market characteristics should improve empirical estimation efforts and produce more defensible policy analysis. Based on a 90% shipment volume response rate, results show that in the Columbia–Snake River grain situation, one destination absorbs more than 90% of shipments. Modal competition is active; barge has a market share of more than 50%, down 12–16% from 10 years ago. Multiple-car shipments have increased, but not drastically. Rates are consistently competitive over the period. Finally, grain demand is seasonal but generally has been stable over time. The revealed preferences from this aggregate analysis suggest that price elasticity may vary across shippers, times of movement, and modal availability.