Mode-Choice Games in Intermodal Transport Chains - Theoretical Model and Some Case Study Evidence

Shippers can usually choose between several modes of transport in order to ship their cargo. For some modes of transport such as truck, the capacity of each vehicle is limited. As a consequence, there are no significant economies of scale. For other modes of transport such as sea transport, the capacity of a vessel allows for a large volume of cargo, thereby making it possible to exploit the inherent and significant economies of ship size. But if sea transport is to be viable and efficient as compared to truck however, one must typically consolidate the cargo of several shippers in order to provide a sufficiently frequent service at a sufficiently low freight rate. Thus, the shippers‟ mode choices are mutually dependent. If a small number of shippers account for a rather large volume of cargo as may very well be the case (Puckett et al, 2011), one must expect that these shippers take these mutual dependencies into account when choosing mode of transport. This being the case, mode choice should be analysed in terms of game theory.