ESTIMATING THE POTENTIAL DEMAND FOR A NEW FREIGHT TRANSPORTATION MODE

This paper demonstrates the potential of estimating the modal penetration by a new freight transportation mode into an existing two mode market. The approach is to estimate the existing modal split by use of a logit model. The characteristics of the new mode are then substituted for one of the existing modes and a new modal split is calculated. The same procedure is followed for the other existing mode. In a disaggregate model the dominate mode in the three binary comparisons is assigned the shipment (which is the unit of observation in the disaggregate model). In the aggregate model each mode is assigned a percentage of the total traffic on a link (which is the unit of observation in the aggregate model). The above methodology was applied to a disaggregate data base. The existing modal split model classifies shipments extremely well and the estimated parameters of the model are statistically significant and have the intuitive signs. Applying the new model methodology to the above situation suggests that between 30 and 40% of the shipments of the shipper could economically travel by the new mode--a freight pipeline. The above methodology was also applied to an aggregate data base. Modal split equations were estimated for eight digit STCC commodities from the 1967 Census of Transportation. Applying the new methodology to the aggregate situation yields new modal penetration between 1.75% to 99.68%. The new modal penetration results should be viewed with great care. The modal split models in the aggregate case leave much of the variance unexplained. In addition, competitive reactions of the other modes are not included in the analysis. Nevertheless, a new modal penetration methodology in the spirit of Quandt and Baumol (1966) has been introduced and empirically tested. (Author)