This case study is an attempt to measure the cost of congestion in the truck-to-ship intermodal transfer system at the Port of Houston and to examine the economic feasibility of removal of this congestion. The analysis reveals congestion cost to be substantial and congestion- reducing investment in labor and Capitol to be economically feasible. That is, the additional cost of congestion- reducing investments would be less than the associated reduction in congestion cost. In a competitive environment, the congestion costs would be internalized and current unloading capacity increased because of anticipated decreases in truck rates. However, with current market organization, export terminals apparently are not internalizing congestion costs because there is little inclination to alter facilities. It is hypothesized that most of the current congestion costs is borne by the farmer via lower grain prices. With current market organization, exporters appear to be price-setters and country elevators price-takers. That is, the price negotiated between exporter and country elevator is determined primarily by the exporter. Trucks will not participate in the country elevator to port terminal haul without additional compensation for waiting because noncongested hauls are available. Country elevators arrive at the farm price by subtracting their margin and the truck rate to port elevator from the exporter's purchase price. Consequently, farm price reflects the costs of congestion. The excessive congestion persists because of a market organization that allows this cost to be passed on or not internalized--a misallocation of resources. (Author)

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  • Corporate Authors:

    Southern Agricultural Economics Association

    P.O. Box 1071
    Knoxville, TN  United States  37901
  • Authors:
    • Fuller, S
    • PAGGI, M
  • Publication Date: 1979-7

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Filing Info

  • Accession Number: 00330420
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Apr 15 1981 12:00AM