Freight Transport & Demand

Models
Trends in Growth of Freight Transport
NTDPC – RECOMMENDATIONS (2012)
 Vehicle Terminals Unload Unload
storage container Vehicle

Container
storage

Load
container Load
vehicle
Traffic enters and
leaves system

Legend
Way links
Vehicles moves
Fixed facility over links

Activities

Way interaction
Vehicles
Containers Vehicle passes from
one link to another
Traffic

BASIC COMPONENTS OF TRANSPORTATION SYSTEM

 URBAN GOODS
MOVEMENT

EXTERNAL INTERNAL

DIRECT INTER INDUSTRY

CONSIGNMENTS CONSIGNMENTS

FRIEGHT TERMINAL HOUSE-HOLD BASED

CONSIGNMENTS CONSIGNMENTS

PICKUP AND DELIVERY

COMPONENTS

SPATIAL PATTERN OF GOOD MOVEMENTS

BY COMMODITY TYPE AND CONSIGNMENT
SIZE

BROAD CLASSIFICATION OF URBAN GOODS MOVEMENTS

 Demand for Demand for
Demand for
Freight Transport
Goods
Transport Facilities
Complexity of Freight Movements

Specification of mono-multi-modal transport

route to reach each destination
Decision Layers

Choice of transport modes, vehicles & multi-

modal facilities to deliver the goods

Decisions on Logistics: Use & Location of

inventories, supply chain management ~ JIT & LM
Decisions on Productions, Destinations, Type of
Products, Volume.
Trade Relationships: who produces what, how much
quantity and for what intermediate or final consumer
Industrial Supply Chain Illustration
 Factors Affecting Freight Demand
• Economy • Fuel Prices
• Industrial location patterns • Publicly Provided Infrastructure
• Globalization of business • User Charges & Other Costs
• International Trade Agreements • Government Subsidization for
• Just-In-Time Inventory Practice Carriers
• Carrier-Shipper Alliance • Environmental Policies &
• Centralized Ware Housing Restrictions
• Packaging Materials • Safety Policies & Restrictions
• Recycling • Effect of Truck Sizes & Weight
Limits
• Economic Regulation & De-
regulation • Congestion
• Intermodal Operating • Technological advancements
Agreements
 Factors Affecting Freight Movement
1. Location factors: Sources of raw materials, products –
intermediate and final demand locations
2. Physical factors: Characteristics and nature of raw materials and
end products
3. Range of Products: Vast range of products – large number of
commodity exchange matrices
4. Geographical factors: Location and density of population
affects distribution of goods
5. Operational factors: Size of firm, policy for distribution
channels, its geographical dispersion
6. Dynamic Factors: Seasonal variation in demand and changes in
consumer’s tastes
7. Pricing Factors: Length of supply contract, frequency and
quantity, use of own-account operations, commodity specific
needs of mode, hierarchical transport system
 Players of Freight Transport

• Firms (Senders & receivers)

• Shippers
• Carriers
 Sender (Consigner) Influenced by sources &
Scans & selects freight forwarder on the basis of destinations, type of goods &
reliability, speed, price etc. contract

Freight Forwarder (Shipper)

Organises shipping process with carriers,
insurance etc. Influenced by supply of
services, networks, vehicle
types
Operators / Carriers
Provides trains, ships, trucks and man-powers
and routes

Drivers
Chooses actual route to be taken on road

Receiver (Consignee)
Receives the goods

Actors & Process of Freight Movements

The factors influencing the demand for freight are more complex
and interdependent than the factors influencing passenger
demand because:
• Decisions by shippers, carriers and receivers affect whether or not a
particular shipment is made and, if so, by what mode and route;

• There are many different types of commodities that make up the

freight traffic, and these commodities have wide range of prices or
values associated with them (also some are perishable while others
are not);

• Freight movements are measured in various units such as

dollar(Rupee) value, quantity, weight, volume, container, carload,
truckload etc.; and

• The cost of moving freight is much harder to determine compared

with cost to move passengers because more specialized services are
required for freight (i.e. handling, loading, unloading, classifying,
storing, packaging, warehousing, inventorying, etc.).
Aggregate Freight Demand Models
(Van Es 1982; Friesz et al. 1983, Harker 1985, Kim and Hinkle 1982)

• Freight Generation & Attraction Model – Production and

Consumption Locations
 Direct Survey of demand & supply ~ suitable for inter-urban
freight movements

 Macroeconomic models ~ IOM, LQ : REA

 Growth Factor Methods ~ Future trip ends

 Zonal MLR Models ~ Urban Regions

 Relationship with warehouse capacity, shopping area in TAZ ~

Urban areas
 Freight Distribution Model
• Growth Factor Models ~ Urban studies
• Direct Demand Models ~ Regional Studies
• Gravity Models: SCGM/DCGM (GC)
Tijk = f(Supply & Demand for product k, GC)
GCijk = f(OoPC, TT, Variability of TT,WT, Prob. of
Damage)
• Optimization Model (LPP / TP)
 Contd….

• Freight Mode Choice Model – Shipper’s

decision, constraint of size of
consignment(MNL)

• Freight Assignment Model (Multi class

assignment / Inter-modal freight assignment)
 Intermodal Freight Assignment
(Freidrich et. al, 2003)

• Generation of direct route legs between all

origins & destinations using uni-modal search
• Generation of route legs between transfer
points using a uni-modal search
• Construction of route tree
• Calculation of generalised costs for all routes
including transfer costs
• Distribution of demand onto routes
 Equilibrium Approach
Freight Network Equilibrium Simultaneous Transportation
Equilibrium Model (STEM)
Model (FNEM) [Friesz et al.,1983] [Moavenzadeh et al.,1983]

• Shippers and carriers treated • Shippers and carriers

sequentially
treated simultaneously
• Non-linear costs and delay
functions ~ Volume of • Planning of Intercity
commodities transport demand in Egypt
• Shippers’ behavior modeled by • Four stages of trip
Wardrop’s first principle generation, distribution,
(elastic transport demand sub-
model) mode choice and traffic
• Carriers’ behavior modeled by assignment are combined to
Wardrop’s second principle achieve network level
equilibrium
 Generalised Spatial Price Equilibrium Model
(GSPEM) Harker, 1985
• Integration of spatial process and shipper-
carrier equilibrium
• Simultaneous prediction of
– Production & Consumption of Goods
– Shipper’s routeing of freight traffic
– Freight Rates
 Disaggregate Approach
[Gray,1982; Van Es,1982]

“ To transport x tonnes of commodity k at time t by

transport mode m from origin i to destination j “
General Utility functions based on…..
• Characteristics of transport services
• Attributes of the goods to be transported
• Characteristics of the market
• Attributes of the shipping firm
Further Discussion: Self Study
 Aggregate Four Stage Freight Transport Demand Model

Source: G. de Jong et al.,2007

Source: G. de Jong et al.,2007
Freight Modal Split Models
 Criteria for freight Network Planning Models

• Multiple Modes • Sequential shipper & carrier

• Multiple Commodities sub-models
• Sequential loading of • Simultaneous shipper &
commodities carrier sub-models
• Simultaneous loading of • Sequential Computable
commodities Generalised equilibrium
• Explicit congestion (CGE) and network models
• Elastic transportation • Simultaneous Computable
demand Generalised equilibrium
(CGE) and network models
• Explicit shippers
• Explicit carriers
Later….