Simon Fuchs and Woan Foong Wong
Working Paper 2022-13
October 2022

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The movement of goods from origin to destination takes place over multiple modes of transportation. Correspondingly, intermodal terminals play an important role in facilitating transportation over the multimodal network. This paper studies multimodal transport networks and their impact on infrastructure investments. We propose a tractable theory of transportation across domestic transportation networks with multiple modes of transportation by embedding multimodal routes into a spatial equilibrium model with endogenous stochastic route choice. We calibrate the model to US domestic freight flows using high-resolution geographic information system information and detailed data on traffic along road, rail, and international ports. We estimate the strength of intermodal port congestion from ship dwell times and its multimodal impact on railcar dwell times. We then employ the model to evaluate the welfare effects of terminal investments across the United States. We identify important bottlenecks in the US transportation system, with the reduction of the transportation cost by 1 percent in the most important nodes generating welfare gains equivalent to $US200–300 million of additional GDP (in 2012 USD).

JEL classification: F11, R12, R42

Key words: infrastructure investments, multimodal transport, spatial equilibrium

The authors thank Yuhei Miyauchi for his discussion of the paper and seminar participants at the 2022 University of Rochester Ron Jones Workshop, the Becker Friedman Institute Junior Spatial conference, the 2021 Society for the Advancement of Economic Theory conference, and the Southern Economic Association. They also thank the National Bureau of Economic Research’s and the US Department of Transportation’s Economics of Transportation in the 21st Century initiative for project support. In addition, they thank Benjamin Delgado and Philip Economides for excellent research assistance. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.

Please address questions regarding content Simon Fuchs, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309.

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