- This study analyzes the impact of the 1980 Staggers
Rail Act (SRA) on Pacific Northwest (Oregon, Washington,
Idaho and Montana) wheat transportation.
A minimum cost uncapacitated transshipment network
flow model is employed to simulate the origination and
destination pattern of grain flows before (1977) and after
(1985) the SRA. The grain transportation flow for those
two years is compared and analyzed as a basis for measuring
the impact of rail deregulation. The Transportation
Simplex Algorithm is used to find the optimum (minimal
cost) wheat transportation flow for the two time periods.
Four modes of transportation—truck, barge, rail, and
ocean carriers—are used to link a sample of inland grain
elevators (source), barge terminals (transshipment), PNW
ports on the Lower Columbia River and Puget Sound
(transshipment), and foreign countries (sink).
The empirical results indicate that the SRA has had a
significant impact on modal distribution, overall
transportation costs, and rate competition. Under the assumption
of perfect information and profit maximizing behavior,
and considering both single car and multicar
rates, two-thirds of the total PNW wheat traffic should
have moved by rail in 1985. This represents a significant
increase compared to 1977, when this percentage was estimated
at only 46.43 percent. This increase in rail
modal share has come at the expense of truck-barge shipments.
The truck-barge share of wheat transportation
declined from 47.53 percent in 1977 to 25.66 percent in
1985. Most of this increase in rail shipment is the result
of lower shipping costs offered through multicar rates.
If only single car rail rates are considered in 1985, the
rail market share is only 25.66 percent; while truckbarge
market share is 66.60 percent. The volume of wheat
exported through the Lower Columbia River ports and Puget
Sound appears not to have been affected by the SRA.
Overall wheat transportation cost decreased significantly
over this time interval. In nominal terms, it
cost an average of 5.32 percent less in 1985 than in 1977
to transport a metric ton of PNW wheat to the port terminals
on the west coast. When adjusted for inflation,
average wheat transportation cost decreased around 44
Sensitivity analysis showed that the wheat transportation
market in the PNW has been very competitive since
1977 with some apparent changes in market behavior.
First, railroads had a greater ability in 1985 than in
1977, to capture wheat traffic from truck-barge by lowering
rates. When rail rates are reduced by one percent,
rail traffic increases 7.93 percent in the 1985 model and
only 2.40 percent in the 1977 model. Rail rate increases,
on the other hand, lead to higher traffic losses in 1977
than in 1985. For an increase of one percent in rail
rates, rail traffic decreased 10.21 percent in 1977, and
only 4.76 percent in 1985.
The conclusion of this study is that there has been a
significant diversion of wheat traffic from truck-barge to
rail, during the period of rail deregulation. Overall
transportation costs have also decreased, and the railroads
ability to capture wheat traffic by reducing rates
has been enhanced. It is concluded that the impact of
the SRA on PNW wheat transportation is due largely to the
introduction of multicar rates by the railroads serving
The implications of these findings are that railroad
deregulation has provided many of the benefits expected by
this legislation. Shippers are favored by the SRA because
they are paying lower transportation costs. Railroads
have benefited, to the extent that their market
share has increased. Barge companies, however, have been
adversely influenced by the SRA because they have lost
their modal share of wheat traffic to railroads. Shippers,
while benefiting from lower rates, seems now more
vulnerable to the potential for future rail rate increases.