REACTION TO RAIL TRANSPORTATION DEREGULATION BY U.S. DRY PEA AND LENTIL INDUSTRY

Significant deregulation of transportation modes has occurred in recent times. Most studies thus far have been only theoretical or conjectural in nature. The results of an empirical study of the impact on the dry pea and lentil industry from the deregulation of rail transportation that occurred over 18 months ago are reported. Methodologically, the marketing bill was decomposed into a market effect, rate effect, and joint effect. All of the processors of dry peas and lentils were surveyed. It was found that rail rates increased to all destinations after deregulation, but to a smaller degree than anticipated by shippers. This was due mainly to railroads changing rate quotas from a per hundred-weight basis to a per car basis and shippers responding by loading cars heavier. This allowed railroads to move more tonnage with fewer cars, thus increasing efficiency. Railroads emphasized long-haul movement to the Gulf and East regions while motor and water carriers took over most of the short-haul movement. Cancellation of rail transit privileges directly impacted on those regions that had relied on this privilege for assemblying peas and lentils for processing. Finally, changes in marketing patterns had a far larger impact on the shipping bill than rate changes due to deregulation. Rates increased modestly, especially for long-distance movement. (Author)