The barge and rail freight market for export-bound grain movement from midwest to Mexican Gulf: an econometric analysis

An econometric model of the barge and rail freight market is developed so that factors which influence barge and rail rates for export-bound grain from Midwest to Mexican Gulf can be better understood. Three-stage least squares method is used to estimate the system of four equations that constitute the model. A number of identified factors turned out to be significant in determining grains rail and barge transportation rates. Given the interactive nature of supply and demand processes it is difficult to pinpoint a single most important factor. Yet it is clear that a substitute nature of the two transportation modes in addition to direct price-quantity relationship determine most of the transportation rates.