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Railroad wheat transportation markets in the central plains: modeling with error correction and directed graphs

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  • Bessler, David A.
  • Fuller, Stephen W.

Abstract

Time series methods are used to study the dynamics of regional, export-wheat, railroad rates linking seven central US regions to Texas Gulf ports. Research focuses on the extent and nature of regional rate interactions to determine whether regional rail transportation rates are established independently, through interaction and/or dominated by several regional leaders. Analysis is carried out on 1988-1994 public waybill data for seven Business Economic Areas (BEA) located in Kansas, Oklahoma, Texas and Colorado: these regions originate virtually all of the eight million tons of hard red winter wheat annually shipped to Texas Gulf ports. Results show all rail transportation markets linked in varying degrees. Some regions are near-independent or highly exogenous regarding rate-setting, while others interact with and to rates established in other regions. Regions that are dominated by a single carrier tend to be more independent and insulated regarding rate-setting. Export rates in regions dominated by the Union Pacific (UP) generally account for a significant variation in the rates of other regions. Data show the UP to have been aggressive in providing incentives for country elevators to consolidate for purposes of making unit train shipments, thus their presumed influence on rates of other regions. As expected, export rates for regions with substantial storage and transhipment facilities are sensitive to export rates of regions which ship to the transhipment facilities. Finally, results suggest that rate-setting in a particular region is in part a function of the dominant railroad's management and its aggressiveness, an expected outcome in an oligopolistic market.

Suggested Citation

  • Bessler, David A. & Fuller, Stephen W., 2000. "Railroad wheat transportation markets in the central plains: modeling with error correction and directed graphs," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 36(1), pages 21-39, March.
    • Handle: RePEc:eee:transe:v:36:y:2000:i:1:p:21-39
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    Cited by:

    1. Fellin, Luis & Fuller, Stephen & Kruse, John & Meyer, Seth D. & Womack, Abner, 2008. "The Upper Mississippi and Illinois Rivers as Grain Transport Arteries: A Spatial Mapping Equilibrium Analysis," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 47(2).
    2. Michael S. Haigh & Nikos K. Nomikos & David A. Bessler, 2004. "Integration and Causality in International Freight Markets: Modeling with Error Correction and Directed Acyclic Graphs," Southern Economic Journal, John Wiley & Sons, vol. 71(1), pages 145-162, July.
    3. Michael S. Haigh & David A. Bessler, 2004. "Causality and Price Discovery: An Application of Directed Acyclic Graphs," The Journal of Business, University of Chicago Press, vol. 77(4), pages 1099-1121, October.
    4. Xiaojie Xu, 2019. "Price dynamics in corn cash and futures markets: cointegration, causality, and forecasting through a rolling window approach," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 33(2), pages 155-181, June.
    5. Indira Kadyrkanova & David Bessler & John Nichols, 2000. "On milk prices in Kyrgyzstan," Applied Economics, Taylor & Francis Journals, vol. 32(11), pages 1465-1473.
    6. Oxley, Les & Reale, Marco & Wilson, Granville Tunnicliffe, 2009. "Constructing structural VAR models with conditional independence graphs," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 79(9), pages 2910-2916.
    7. Taylor, Richard D. & Koo, Won W., 2009. "Expected Changes in China's Grain and Oilseed Industries and Implications for the U.S. and World Agriculture," Agribusiness & Applied Economics Report 51991, North Dakota State University, Department of Agribusiness and Applied Economics.
    8. Haigh, Michael S. & Bryant, Henry L., 2001. "The effect of barge and ocean freight price volatility in international grain markets," Agricultural Economics, Blackwell, vol. 25(1), pages 41-58, June.
    9. Carlos Arnade & Gary Vocke, 2016. "Seasonal Variation in the Price Discovery Process of International Wheat," Agribusiness, John Wiley & Sons, Ltd., vol. 32(1), pages 16-32, January.
    10. Michael S. Haigh & Henry L. Bryant, 2000. "The effect of barge and ocean freight price volatility in international grain markets," Agricultural Economics, International Association of Agricultural Economists, vol. 25(1), pages 41-58, June.
    11. Elvin AFANDI & Majid KERMANI, 2014. "Financing Obstacles of Bangladeshi Firms: Evidence from Pre-Crisis and Post-Crisis Periods," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(9), pages 1158-1174, September.

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