DEVELOPMENT OF A POLICY SENSITIVE MODEL FOR FORECASTING FREIGHT DEMAND

An important part of any quantitative analysis of freight transport is a capability for forecasting the demand for a certain type of service under a given set of conditions. The paper represents a first attempt to develop a freight demand model which involves the choice of mode as well as shipment size without imposing the assumption of constant transport rate. A multinomial logit model of mode and shipment size is developed at the level of the individual firm. The utility function is derived from logistics inventory theory which considers explicitly the tradeoffs the firm can make in response to a short-run change in transport level of service. The model incorporates as variables all those factors that influence the choices that were made, from the service measures in which transport performance is measured to the characteristics of the commodity being shipped, the markets involved and the receivers' use of the product.