Shippers’ response to transport cost and time and model specification in freight mode and shipment size choice

Mode choice in freight transport is usually studied in isolation (or in combination with network assignment, as multi-modal assignment). However, mode and shipment size are closely linked decisions. Large shipment sizes usually coincide with higher market shares for non-road transport, whereas there is a high correlation between road transport and small shipment sizes. This paper will study whether it makes a difference for the main policy outcomes of the model (notably the transport time and cost elasticities per mode) whether the disaggregate model is specified as an independent discrete mode choice model , a joint model with discrete mode and shipment size choice or a joint model with discrete mode and continuous shipment size choice. All three models are estimated on the same data using standard regression and discrete choice model estimation software, to yield the models as they would be estimated by researchers in practice, but starting from the three different specifications above. We also examine the impact of introducing commodity-type-specific cost parameters (unobserved heterogeneity) and random taste variation in time and cost parameters (unobserved heterogeneity) into some of the parameters to investigate whether this yields further improvement in the results.