François Combes

Empirical Evaluation of Economic Order Quantity Model for Choice of Shipment Size in Freight Transport

The choice of shipment size in freight transport depends on the logistical imperatives of shippers and the technical possibilities of carriers. The choice is closely related to the mode of transportation and therefore important for public policy. The theory of optimal shipment size and mode choice is robust. Numerous inventory-theoretical models of optimal shipment size are applied by shippers in operational contexts. However, none has been validated empirically over a large and heterogeneous population of shipments, and thus none are useful for modeling freight transportation demand, particularly because of the lack of adequate data. The simple economic order quantity (EOQ) model was assessed empirically on a national scale over a heterogeneous population of shipments. The French ECHO database, which observed commodity flow rates between shippers and receivers, was used to estimate the EOQ shipment size specification, and the validity of the EOQ model was confirmed. The study revealed the dominant role of the commodity flow rate between shipper and receiver and of commodity value density. The relationship between mode choice and shipment size is highlighted.

Building a Model of Freight Generation with a Commodity Flow Survey

This study estimates a disaggregate freight generation model with the French shipper survey ECHO. This survey contains accurate information about French shippers, with variables describing their economic activity, the diversity of their production, their relationships with their clients and carriers, etc. These variables and their influence on production and attraction are first investigated sequentially. Then generation models are estimated using ordinary least squares, through various approaches: continuous explanatory variables only, continuous and qualitative variables and their interactions, and finally simple models for applications with limited data availability.

Inventory Theory and Freight Transport Modelling

Inventory theory is concerned with the optimal operation of production, logistics, transport, etc. It can prove particularly useful to freight transport modelling. Indeed, analysing inventory theoretic models from a microeconomic perspective explains a lot about the preferences of shippers regarding freight transport. This chapter reminds some simple models from inventory theory, including the fundamental economic order quantity model of optimal shipment size. Then, the theoretical consequences of these models on freight transport economics and demand modelling are examined. Investigating potential synergies between inventory theory and freight transport modelling requires specific databases; the few available surveys are briefly presented. Afterwards, the empirical impact of integrating concepts from inventory theory in freight modelling practice is discussed on the basis of a number of recent studies, which focused mainly on mode choice, or joint choice of mode and shipment size. The chapter concludes on future research directions and challenges.

Empirical Analysis of Freight Transport Prices Using the French Shipper Survey ECHO

This article presents an empirical analysis of the prices’ structure in the road freight industry. For that purpose, we use the French ECHO survey that provides detailed information on the characteristics of shippers and transport operators. First, we show that road freight prices are not a simple linear function of shipments’ attributes. Second, the main determinants of these prices are related to “technical” attributes of the transport services (load weight, travel duration, distance) but also to the characteristics of the shipped goods (density value, commodities constrains). Lastly, the influence of “non-traditional” factors (intensity of the shipper-operator relationship, size of the shipper, intra-group shipments) is highlighted.