Rail Rates And The Availability Of Water Transportation: The Missouri Valley Region

Prior to deregulation, there was no clear relationship between the availability of water transportation and railroad rates. The Interstate Commerce Commission established maximum rates, so that railroads could not readily respond to changes in demand conditions. Any change in the management of navigable waterways stood only to affect the direct users-the shippers and barge operators. However, in the wake of the Staggers Rail Act, rail rates are more sensitive to both intramodal and intennodal competition so that any interruption or improvement in the availability of barge transport may now affect rail customers as well. Using the ICC's annual Carload Waybill Sample, this study examines railroad rates in the Missouri River Basin. The results point to water-compelled railroad rates for the movement of some commodities-in particular farm products. However, other bulk commodities appear to move under railroad rates that are independent from the influence of barge transportation.