Modeling Approach Selected

Selecting the methodological approach to be developed as part of this research project required careful consideration of the alternative modeling methodologies, data requirements and data availability, and the ability of these methodologies to provide sound estimates of the impacts of market changes and public policy on freight mode choice. The key features of the most important modeling approaches are summarized in Table 17.

Table 17

As shown, freight mode/vehicle choice models can be divided into two major families: econometric and supply chain-based models. The former use Random Utility Theory and advanced econometric techniques to capture the decision dynamics at the core of the freight mode/vehicle choice process, while the latter replicate the chain of logistical decisions that minimize the logistical costs (transport plus inventory costs) by finding the mode/vehicle that provides the optimal combination of shipment size and frequency of delivery. Moreover, econometric models are subdivided into two sub-families: Shipment-Level Models and Market Share Models. It is worth mentioning that, with the exception of the US where the Intermodal Transportation and Inventory Cost (ITIC) Model is still used (Federal Railroad Administration 2005), the freight mode/vehicle choice models in use in all other countries—developed and developing—are shipment-level models.

Overall, econometric models provide the best tradeoff between the ability to capture the decision dynamics that drive the choice of freight mode/vehicle and practicality, so they provide the best modeling foundation to predict the effects of alternative mode choice policy scenarios in real-life settings.

4.1. Best choice: Shipment Level Models
4.2. Second Best Choice: Aggregate (Market Share) Models
4.3. Not Recommended: Supply Chain-Based Models

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