Distribution of Freight Demand by Mode

Distribution of Freight Demand by Mode

Source: Adapted from Tioga Group (2004).

The selection of a transportation mode is the outcome of several factors, cost being important, but also the level of service, frequency, and the general value of time attributed to the cargo being transported. Thus, it is a general trade-off between cost and value of time, which illustrates the attractiveness of a specific mode in relation to others.

The above graph represents the distribution of unit transport time across modes connecting two markets. It is assumed that all modal options are available (air, truck, rail, and maritime). Trip time varies from short for air cargo to long for maritime shipping. Inversely, the value of time is high for air cargo and low for maritime shipping.

Each mode has a range of unit transport costs for which it is considered competitive and services this transport volume. However, the cargo volumes associated with a specific value of time vary. For instance, the high unit transport costs of air cargo correspond to the fastest trip time, which is linked with low volumes of goods being serviced. On the opposite side of the spectrum, goods with a low value of time generate larger volumes serviced by maritime transportation and rail.

There is, therefore, a range of market shares associated with the value of time of freight, leading to a range of modal (and intermodal) options. Any change in the cost (or time) effectiveness of a transportation mode is expected to impact its modal share of the goods it carries.