Identifying the policy implications of barge shipments of grains on the US inland waterway system: the case of corn movements on the Mississippi waterway

Abstract

The Johansen cointegration analysis and a vector error correction model are used to examine the dynamic relationships among the quantity of corn shipped by barge, barge and rail rates, domestic corn production and domestic corn consumption on the Mississippi River. Results show that, in the long-run, the barge rate and domestic corn production are weakly exogenous in the model and have significant effects on the demand for corn barge transportation. This implies that these two variables play crucial roles in determining the long-run movement of barge shipments of corn, while they are not affected by other variables. In the short-run, on the other hand, the rail rate and domestic corn consumption are found to have significant impacts on changes in the demand for corn barge transportation. The results are not consistent between the short-run and long-run analyses and this further explains why it is important to incorporate both short- and long-run dynamics in the demand model for US grain barge transportation.