The relative importance of factors that influence the break-even distance of intermodal freight transport systems

Abstract

The break-even distance of an intermodal freight system is a crucial piece of information for shippers as they decide whether to choose a specific freight transport system. It is also important for policy makers who want to demonstrate to shippers that the intermodal system is substantially more beneficial over a certain distance and encourage shippers to use it. However, the break-even distance is highly dependent on market situations. In other words, it is not possible to estimate the definitive break-even distance that is generally applicable. To date, the literature has addressed factors, including costs and distances, that impact the break-even distance without considering the relative importance of each of these factors. This study attempts to address this gap in knowledge by evaluating the relative importance of geometric and cost factors. The former includes drayage distances (i.e., pre- and post-haulage by trucks), truck-only distance, rail distance, the shape of the market area, and the terminal location, while the latter includes the drayage truck rate, the long-distance truck rate, the rail rate, and the terminal handling rate. Finally, by developing a Monte Carlo-based simulation model, the relative importance can be evaluated. The key finding is that the geometric factors and terminal handling costs are not more significant than the transport costs (i.e., rail costs and long-distance trucking costs) in general. Specifically, to shorten the break-even distance, either reducing the rail rate or increasing the truck rate is the most effective strategy. A 1% change in these factors is almost seven times, three times, and twice as effective as a 1% change in the handling costs at terminals, rail distance, and drayage cost, respectively. Furthermore, neither the oval-shaped market area nor a terminal relocation attracts customers to intermodal systems in general. When two options are combined, the synergic effect is significant.