@article{Wilson:302409,
      recid = {302409},
      author = {Wilson, William W and Bullock, David and Lakkakula,  Prithviraj},
      title = {Dynamic Changes in Rail Shipping Mechanisms for Grain},
      address = {2020-02-28},
      number = {1186-2020-313},
      series = {Agribusiness and Applied Economics Report No. 794},
      pages = {148},
      month = {Feb},
      year = {2020},
      abstract = {Grain shipping involves many sources of risk and  uncertainty. In response to these dynamic challenges faced  by shippers, railroad carriers offer various types of  forward contracting instruments. An important feature of  the US grain marketing system is that there are now a  number of pricing mechanisms used by most rail carriers.  These include varying forms of forward pricing and  allocation mechanisms. In the United States, these have  evolved since the late 1980’s and have had a number of  important changes in their features over time. The  operations and impact of these mechanisms are not well  understood, but yet are frequently subject of public  criticism and studies, and at the same time revered by  (some) market participants. These mechanisms serve a number  of important functions that are critical to the grain  marketing system. These include allocating capacity across  shippers, allocating shipments temporally and seasonally,  as well as geographically, in addition to determining price  or value of the service. The purpose of this study is to  provide a comprehensive review, description and analysis of  these mechanisms. Specific objectives are to 1) Document  the evolution and operations of these mechanisms over time  and across carriers; 2) Determine and describe the impacts  of these practices on basis, both spatially and temporally,  and on trading firms and other market participants; and 3)  Summarize and assess the operations on these mechanisms  relative to alternative pricing mechanisms. Multiple  empirical models were developed and used to analyze two  important aspects of this problem. One is the role and  relationship of the shipping costs on basis values. These  results show that basis is more complicated than previously  modeled. Export basis are mostly impacted by export  competition, imports, and the seasonal characterization  varies across marketing years. In addition, the export  basis is simultaneously dependent on the origin basis.  Last, there is an important relation among rail velocity,  and the secondary car market, which is simultaneously  determined with the export basis. Other models examine the  impact of these mechanisms on shipper conduct,  specifically, how risks and rail mechanisms impact shipper  strategies. The last section provides a discussion of  summary and conclusions, and of future issues.},
      url = {http://ageconsearch.umn.edu/record/302409},
      doi = {https://doi.org/10.22004/ag.econ.302409},
}