The Demand for Intercity Motor Freight Transport: A Macroeconomic Analysis

Abstract

The objectives of the analysis underlying this paper are twofold. One purpose is to test a hypothesis that increases and decreases in the volume of goods or services demanded of an entire industry are dependent on the same factors which normally account for changes in demand for the output of a single firm, in accordance with the postulates of microeconomic theory. The second purpose is to develop a method for estimating the requirements for additional highway facilities to meet the anticipated growth of the commercial trucking industry. In pursuance of the first objective, a mathematical equation is used to demonstrate an exceptionally high dependence of demand for commercial motor freight transport in Canada on the same three elements commonly associated with microeconomic demand schedules-elasticities of price, income, and competition (cross-elasticity). In regard to the second objective, reliable forecasts of demand constitute an indispensable guide for individuals concerned with determining the amounts and types of public investments in additional transport facilities which will be needed to satisfy future expectations. With highway expenditures in the United States exceeding $18 billion in 1969, or approximately $90 per capita, and approximately $1.8 billion, or $88 per capita, for Canada in 1966, the importance of accurate predictions of requirements for additional highway capacity is evident. Since trucks represent over 15 percent of total vehicle registrations in the United States, the anticipated response of motor freight traffic volume to projected changes in levels of national economic activity and increases or decreases in levels of charges assessed by motor carriers and by alternative transport services as disclosed in this study will assist transport planners in evaluating the quantity and allocation of future investments in transport facilities.