ESTIMATION OF THE ECONOMIC ORDER QUANTITY MODEL
USING THE ECHO SHIPMENT DATABASE
François Combes
Université Paris Est, LVMT, UMR T9403 INRETS ENPC UMLV, France
1. INTRODUCTION.
Freight transport demand models represent in a more or less explicit manner
how shippers choose transport modes and itineraries. But when shippers
organize their transport operations, they also have to determine the amount of
another important variable: shipment size. The shipment size has a
substantial influence on the logistic costs of the shippers; furthermore,
shipment size and transport mode are very closely related decisions.
Introducing it in freight transport models is therefore expected to improve them
significantly (see e.g. de Jong and Ben Akiva, 2007, for such an attempt).
However, doing so is a complex task. Among the difficulties this approach
raises, one is critical: the lack of econometric validation of the common
microeconomic shipment size models. Some econometric attempts to
understand the relationship between shipment size and mode choice do exist
(among which Abdelwahab and Sargious, 1992; Abdelwahab, 1998; HolguinVeras, 2002) but they are not entirely satisfactory from a theoretical
perspective, and do not give astounding results on the data they are applied
to.
The microeconomics of the choice of shipment size have been explored for a
long time, and are closely related to inventory theory. In fact, the most basic
shipment size model comes from inventory theory. It is the fundamental
Economic Order Quantity model, first presented in Harris (1913), then
properly formalized by Wilson (1934); in both cases in the field of production
theory. The EOQ model can be applied to freight transport, in which vase it
models the choice of shipment size as a tradeoff between transport costs and
inventory holding costs. It is easily extended to account for - at least partially the choice of transport mode by shippers, using of hardly more complicated
models, as in Baumol and Vinod (1970), or Hall (1985).
The fact that the EOQ model, almost century old, has not been
econometrically assessed yet is due to the very specific data requirements
such an assessment has. More precisely, one would need a description of
shipments by many variables such as the weight, volume, conditioning,
commodity nature, value, etc. Furthermore, information on the shipperreceiver relationship, in particular the annual rate of the commodity flow
between them, is compulsory. Although shipment databases are not
uncommon, they most generally do not include this particular variable.
Let us now give a brief presentation of the French shipment database ECHO
(Guilbault et al., 2008). This database, available since 2005, contains
relatively few observations: only 10,000 shipments are surveyed 1 . This
© Association for European Transport and contributors 2010
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apparent small size is due to the large amount of variables describing each
shipment. One of the main advantages of this database is that the
relationships between shippers and receivers are observed. The total
commodity flow rate between the shipper and the receiver, for example, is
measured. Furthermore, the way the transport operation has been achieved is
also described with great detail. It is thus possible to assess the empirical
validity of the EOQ model with the ECHO database2: this is the object of this
paper.
The paper proceeds as follows: the EOQ specification is given in Section 2.
Section 3 then explains concretely how the ECHO database is going to be
used to assess econometrically the EOQ model. Section 4 presents the model
specification and estimation. An extended model is specified and estimated in
Section 5, before the paper is concluded in Section 6.
2. THE ECONOMIC ORDER QUANTITY MODEL
The main elements of the EOQ model are briefly reminded. Consider a firm
sending a regular commodity flow of constant rate Q from a given location to
another by a given transport mode. The transport operations being discrete by
nature, commodities are carried by shipments. We assume that all the
shipments are of the same size s , and that each shipment is dispatched as
soon as there are enough commodities at the origin. The average origin stock
level is thus s / 2 .
The choice of shipment size depends on the structure of the equilibrium prices
of freight transport. As a first approximation, the transport cost is assumed to
consist of a fixed cost b independent on the shipment size, and a variable
cost K.s proportional to the shipment size. The commodity value of time is
denoted a . The travel time is denoted t . The cost per period of time is
denoted g .
We have:
g ( s) 
as
Qb
 (at  K )Q 
.
2
s
(1)
The optimal shipment size is obtained by minimizing this cost function. It
depends only on a , Q , and b :
s
2Qb
.
a
(2)
Quite intuitively, the shipment size does not depend on costs which are
proportional to the shipment size, such as the pipeline inventory cost ( atQ ) or
the proportional component of the transport cost ( Kt ).
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This model can easily be estimated by linear regression. Indeed, by taking the
logarithm of both sides of Equation (2), we obtain:
ln s 
1
1
1
1
ln Q  ln b  ln a  ln 2
2
2
2
2
(3)
This equation constitutes the basis of the econometric analysis proposed in
the following sections. Note that this equation remains valid whatever the
transport mode used by the shipper. From this standpoint, the only difficulty
stems from the b parameter: Q and a do not depend on the transport mode
chosen by the shipper (at least not directly).
3. RELEVANT VARIABLES AND MODEL SPECIFICATION
The ECHO database describes 10462 shipments. This information can be
categorized into four groups: description of the shipping and of the receiving
firms, description of the relationship between these two firms, description of
the shipment, and description of the transport operation. In each of these
categories, questions related to economic, logistic or transport related aspects
are available. As a consequence, each shipment is described by hundreds of
variables.
Before addressing the identification of the variables which can prove useful in
this study, a word should be said about the sampling method. The ECHO
survey has been motivated by two important scientific objectives, among
others: first, investigating in deep detail the logistic choices of firms. Second,
observing in detail how shippers choose transport modes. Quite obviously,
given the average sizes of shipments sent by road or plane on one hand and
by rail on the other hand, the relative frequency of shipments sent by rail is
extremely low. In order to have a workable sample of shipments sent by
transport modes other than road, the shipments sent by rail, combined
transport or inland waterway have been strongly oversampled. However, we
identified no reasons for which this would bias the estimation of an
econometric disaggregate model.
We will now determine the relationship which will be estimated using the
ECHO database. This relationship will be based on Equation (3). This
equation strongly incites us to use ln s as the dependent variable. The
shipment size is given in the ECHO database, both in weight and in volume.
The weight is chosen as the measure of shipment size 3. Summary statistics of
s and ln s can be found in Table 1.
Choosing the explanatory variables is a little bit more complicated. Our
objective is to find the most relevant measures of the three variables of
Equation (3) i.e. Q , a and b , among the several variables available in the
ECHO database. Some of the potential explanatory variables available in the
ECHO database concern the demand-side of the freight transport market, i.e.
they describe the characteristics of shippers. Other variables concern the
supply-side of the freight transport market, such as the transport price or the
transport techniques used. They are examined separately.
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3.1. Demand-side explanatory variables
The rate Q of the commodity flow between the shipper and the receiver is not
available in the ECHO database. The closest available variable is the total
commodity flow denoted Q tot , independent of the commodity type. A
significant amount of values are missing. The shipments with missing values
are not taken into account. Using Q tot instead of Q without care will lead to
underestimating the influence of Q . Unfortunately, there are few alternatives.
There is a chance that this bias is limited. Indeed, in the ECHO survey, the
shippers and receivers are establishments, i.e. physically well delimited
components of firms. At this level of disaggregation, each establishment has
one or a few, well identified functions. Therefore, configurations such as
production units sending many different commodities to many distinct
receivers, or retail centers or plants gathering many commodity types sent by
many distinct providers are much more probable than simultaneous flows of
different commodity types between a unique pair of establishments. Although
this argument lacks numerical support, we will content ourselves with Q tot .
The value of time a , of course, is not available either. Fortunately, in this case,
there is a good candidate to replace it. Indeed, for 64.5\% of shipments, the
market value excluded tax is indicated. Combined with the shipment weight, it
is possible to calculate the value density of these shipments. The value
density is denoted a dens . Using a dens instead of a is a strong hypothesis. This
step can be improved by taking into account the fact that the opportunity cost
of capital depends on the economic sector of the shipper and the receiver,
and by taking into account the organization of the supply chain between the
shipper and the receiver (make-to-stock, make-to-order, vendor-managedinventory, etc.) Although these extensions have not been addressed in this
simple study, they may prove to be fruitful, and are, to a certain extent,
possible with the ECHO database up to a certain extent.
Note that the summary statistics provided in Table 1 already speak in favor of
a log specification: the distribution of the variables are very skewed when they
are taken without transformation. On the contrary, they are much more
symmetric after the logarithm transformation.
3.2. Supply-side explanatory variables
The vast amount of variables necessary to describe the available freight
transport alternatives from the demand's standpoint can be categorized into
two groups: technical compatibilities, and prices. Technical compatibilities are
important: transporting liquid bulk is not the same thing as transporting
foodstuff; each operation requires specific tools. However, this dimension will
not be analysed in great detail here, apart from the question of modes.
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Table 1: Basic EOQ continuous variables summary statistics
Variable
s (t)
Qtot (kt/y)
adens (k€/t)
ln s
ln Qtot
ln adens
Min.
Q1
Med.
Mean
Q3
Max
NA's
0.00
0.00
0.00
-6.91
-6.90
-0.94
0.05
1.00
1.07
-3.00
0.18
6.97
0.65
18.00
4.56
-0.43
2.89
8.43
19.58
7.8 10,800
2.12 350.00 63,000
59.37 20.00 10,400
-0.65
2.05
9
3.02
5.86
13
8.49
9.90
16
0
1,934
3,715
0
1,934
3,715
On the contrary, prices are central to the estimation of the EOQ model. Under
the assumption made earlier that prices are linear for a given transport mode,
the shipment size only depends on the fixed term b . Transport prices are
available in the ECHO database, so that b can theoretically be measured.
This is a complex task: b is not directly observed. It must be estimated by
rebuilding price schedules (i.e. prices as functions of shipment sizes), which
itself depend on the distance, the transport mode, and many other parameters.
Another strategy is chosen: by definition, b consists of all the costs that do
not depend on the shipment size. These costs typically derive from
administrative operations, loading, unloading, handling, and control operations,
which depend loosely on variables such as distances and vehicle capacities. It
is thus more relevant to consider the access cost depends on some technical
variables such as the transport mode, the number of transshipments, etc.
These variables are available in the ECHO database. The transport operation
of each shipment is described in detail. In particular, when several transport
modes have been used with transshipments between them, each stage of the
transport operation is detailed. We won't go into that level of detail. The
transport modes used will be summarized here by the main mode variable,
denoted M . The main mode is determined by a set of priority rules, generally
favoring the heavier mode, except for the case of air transport4. The modes
distinguished are: private carrier, common carrier, rail, combined transport,
inland waterway, sea, and air. Given that Equation (3) holds whatever the
transport mode, and that only b changes, b will be considered as a function
of the transport mode.
On the basis of the previous discussion, the following specification will be
estimated:
ln s   Q ln Qtot   a a dens 

mode
X mode  u
(4)
mode
where u is the error term and X mode mode dummy variables indicating the
transport mode used. Note that b plays the role of a mode-dependent
intercept.
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Table 2: Main transport mode summary statistics
M
Private carrier
Common carrier
Rail
Combined transport
Inland waterway
Sea
Air
NA's
Number Freq.
1727
6648
224
133
44
825
859
2
0.17
0.64
0.02
0.01
0.00
0.08
0.08
0.00
4. ESTIMATION OF THE EOQ MODEL
The model is estimated using ordinary least square regression. The results
are given in Table 3.
The coefficients are highly significant. The R² coefficient is close to 0.8.
Complementary analyses of the residuals, available from the author, do not
invalidate the ordinary least square hypotheses. On the whole, specification (4)
seems adequate. The estimated model is:
ln s  0.50 ln Qtot  0.44 ln a dens  1.05 X commoncarrier
 1.46 X privatecarrier  3.42 X rail  2.09 X combined
(5)
 4.37 X waterway  2.89 X sea  1.47 X air
 Q is close to 0.5, and  a relatively close to -0.5, as predicted by the theory.
It seems that the EOQ model can prove fairly efficient in explaining the
shipment size on a large and heterogeneous population of shipments. A
simple equation, such as Equation (4), explains about 80% of the variance of
the shipment sizes in ECHO for which the explicative variables are available
(i.e. about 55% of the sample). As such, it seems that despite its simplicity,
the EOQ shipment size model has a large econometric outreach. Its simplicity
and outreach, combined with its consistency with the mode choice decision,
make it a good candidate as a shipment size model in the frame of a large
scale freight transport demand model.
Strictly speaking, the EOQ model given by Equation (4) is only partially
consistent with the estimated parameters. Indeed, even if  a is close to -0.5,
the hypothesis that  a = -0.5 is clearly rejected. This can be interpreted as a
limit of the EOQ model, or as the inadequacy of the value density a dens as a
representation of the commodity value of time. In particular, commodities with
a very low value density can still have an important role in a supply chain, or a
high warehousing cost, that would explain that a  adens . In that case  a would
be underestimated. Further analysis is necessary to investigate this point
whatsoever.
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Table 3: Estimation of the EOQ model
Coefficients Estimate Std. Error p-value
Q
0.50
0.01
73.27 ***
a
-0.44
0.01
-37.57 ***
 common carrier
 private carrier
1.05
0.11
9.47 ***
1.46
0.11
12.87 ***
 rail
 combined
 waterway
3.42
0.18
19.30 ***
2.09
0.20
10.31 ***
4.37
0.33
13.05 ***
 sea
 air
2.89
0.13
21.49 ***
1.47
0.14
10.29 ***
N
NA's
R2
Adjusted R2
10,462
4,741
0.795
0.795
5. EXPLORATORY ESTIMATION OF AN EXTENDED EOQ
MODEL
There are other variables available in the EOQ survey that can influence the
shipment size. They will be described and their influence tested in this section.
They are examined separately of those identified in Section 3 because despite
their potential econometric significance, they do not fit in the economic theory
introduced in Section 2. We thus leave the field of structural econometrics.
The most striking feature of the EOQ model is that the distance between a
shipment's origin and destination does not influence the shipment size.
However, this variable always play a central role in transport modeling. Its
influence is thus tested now. Note that the distance is described by different
variables in the ECHO survey: as-the-crow-flies distances, denoted d , are
retained here5. Given the asymmetry of the distribution of d , ln d will be used.
Apart from the transport mode, many variables can influence the fixed
transport price parameter b . Among them, three will be examined: the
number of agents which intervene, physically or administratively, in the
management and the achievement of the transport operations, denoted N interv ;
the number of elementary transport operations, denoted N trips ; the fact that the
shipment is isolated or part of a round, denoted O . The two latter variables,
when available, only concern the part of the transport operation which has
been realized in the UE15 territory. Summary statistics of these variables are
given by Table 4. Variable O is summarized in Table 5.
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Table 4: Extended EOQ continuous variables summary statistics
Variable
Min.
d (km)
ln d
N interv
1.00
0.00
0.00
N trips
1.00
Q1
Max
NA's
74.00 278.00 1,253.00 611.00 18,840.00
4.30
5.63
5.44
6.42
9.84
1.00
2.00
2.76
3.00
12.00
8
8
720
2.00
Med.
2.00
Mean
2.06
Q3
3.00
8.00
720
We expect N interv and N trips to influence the transport access cost b , since
more intervenants, and more trips normally mean more transshipment
operations. On the contrary, shipments transported in bundles or in routes
should meet lower access costs. The distance should have no influence on
the choice of shipment size: this will be tested.
Table 5: Shipment organisation summary statistics
O
Number
Isolated shipment
Part of a bundle
Part of a round
NA's
7647
989
1767
59
Freq.
0.73
0.09
0.17
0.01
5.1. Model specification
In order to keep the estimation as simple as possible, and since there is no
convincing microeconomic model relating b to these variables, the following
specification will be estimated:
ln s   Q ln Qtot   a ln a dens    mode X mode
mode
  d ln d   interv N interv   trips N trips
O
O
  bundle X bundle
  round X round
u
(6)
where X iO equals 1 if O  i , 0 else; and u is the error term. Note that  isolated ,
the parameter corresponding to the case of isolated shipments, is set to zero
by convention.
5.2. Estimation
The model is once again estimated using ordinary least square regression.
The results of the estimation are given in Table 6. A basic analysis of the
residuals (available from the author) does not reject the ordinary least square
hypotheses.
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All the coefficients are significant: each of them has a real influence on the
shipment size. However, the R² is not much improved by introducing the new
variables. As it is confirmed by the analysis of covariance in Table 7, much of
the explanatory power of the model comes from ln Qtot and ln a , i.e. the core
of the EOQ model.
The model is not much modified by the introduction of the other variables. The
estimated coefficients of ln Qtot and ln a remain reasonably (although not
exactly) close to the theoretical values. The hierarchy of the main transport
modes is not deeply changed. However, one can note than whereas the
private carrier and common carrier where significantly different in the previous
estimation, this is not the case anymore with the extended model. The
difference was due to the number of trips: indeed, the average number of trips
when the main transport mode is private carrier is 1.02, while it is 2.12 when
the main transport mode is common carrier.
N interv has the expected positive effect: a larger number of agents intervening
on the chain transport seems to imply a larger ln b , thus a larger shipment
size6.
What is surprising is the negative sign of N trips , while it was also supposed to
be positive. But predicting that  trips would be positive was forgetting the
economic rationale of hub-and-spokes transport networks: such networks are
especially designed to handle efficiently small shipments. As a consequence,
the transshipment cost is smaller in a hub-and-spokes transport network than
in more direct transport organizations7. Note that this is not contradictory with
the assessment that  int erv is positive. Indeed, these two variables are hardly
related: their correlation is only 0.26.
The influence of the transport organization variable O on the shipment size is
intuitive: shipments sent in bundles and in routes certainly share some fixed
transshipment and handling costs, thus their smaller size8.
The influence of ln d is most probably the most difficult to understand. A
possible explanation is that unused vehicle capacity is more expensive on
longer distances. Motor carriers may then adjust their prices in order to induce
the shippers to choose shipment size which will optimize their loading factors.
The shippers may then send bigger shipments. A modeling approach of this
kind of phenomenon can be found in Combes (2010). It can also be an
outcome of the structure of the logistic network on the demand: if large flows
go from plants to regional distribution centers where they are then dispatched,
for example towards local retail centers, with a logistic disconnection between
both operations (meaning shipments are not targeted towards a given retail
center when they leave the plant, but only when they leave the regional
distribution center), the macroscopic outcome is that bigger shipments move
over longer distances. Coefficient  d may then result from the structure of the
demand.
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Table 6: Estimation of the extended EOQ model
Coefficients Estimate Std. Error p-value
Q
0.44
0.01
61.94 ***
a
-0.43
0.01
-37.57 ***
 common carrier
 private carrier
0.95
0.12
7.57 ***
0.97
0.13
7.26 ***
 rail
 combined
 waterway
2.78
0.19
14.56 ***
1.60
0.23
7.04 ***
3.91
0.38
10.42 ***
 sea
 air
d
 interv
 trips
1.59
0.19
8.57 ***
0.34
0.18
1.85
0.21
0.01
14.60 ***
0.16
0.02
8.92 ***
-0.40
0.02
-21.12 ***
-0.62
0.07
-9.38 ***
-0.69
0.06
-12.18 ***
 bundle
 round
N
NA's
R2
Adjusted R2
.
10,462
5,134
0.827
0.827
Table 7: Analysis of variance of the extended EOQ model
Variable
Df Sum Sq. Mean Sq.
F-value
ln Qtot
1 13,263.7
13,263.7
7452.8 ***
ln a dens
1 28,915.7
28,915.7 16,247.5 ***
M
ln d
7
1,563.8
223.4
125.5 ***
1
345.7
345.7
194.3 ***
N interv
1
95.8
95.8
53.8 ***
N trips
1
788.6
788.6
443.1 ***
2
O
Residuals 5,314
372.3
9,457.3
372.3
1.8
104.6 ***
6. CONCLUSION
In classic transport models, it is generally assumed decisions such as mode
choice or itinerary choice fully derive from the characteristics of passengers or
commodities. What is relevant in the case of passenger transport modeling,
© Association for European Transport and contributors 2010
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where passengers usually determine themselves the conditions of their trips,
is inadequate in the case of freight transport: commodities take no decisions,
shippers do. Nevertheless, the characteristics of shippers are usually not
explicitly taken into account.
One of the unfortunate consequences of this is that in general, freight
transport databases pay attention to the commodities transported but not to
the shippers sending these commodities. In the particular case of shipment
databases, characteristics of shipments (size, commodity type, conditioning,
etc.) are available, as well as characteristics of the concerned transport
operations (transport mode, etc.), whereas the shippers, and receivers, and
their relationships, are not.
It appears though that even in the case of the most simple microeconomic
shipment size models such as the EOQ model, these relationships play a
central role. If this relationship is not observed (which is the case in most
shipment databases), these models cannot be estimated.
The French shipment database ECHO describes a rather small set of
shipments with many details concerning their characteristics, how they have
been transported, their shippers and receivers, and so on. In particular, it
contains one important variable for the estimation of the EOQ model: the
commodity flow between the shipper and the receiver. Therefore, it has been
possible to estimate the EOQ model with the ECHO survey.
Given that the estimation concerned a set of shipments of all kinds
transported by all kinds of modes on all kinds of origin-destination pairs, the
estimation works surprisingly well. The theoretic EOQ model (which is valid
whatever the transport mode used) is, strictly speaking, rejected by the
estimation, but the estimated coefficients are close to the theoretical values.
The fitted model performs efficiently in explaining the choice of shipment size.
The consequence is that the main explanatory variables of the choice of
shipment size are the value density, the commodity flow rate between the
shipper and the receiver, and the fixed transport cost component.
An exploratory approach has been performed, to try to observe more complex
effect. Including the number of trips in the transport operation improves
significantly the model. We observe that a higher number of trips is associated
with smaller shipments. This can be interpreted as the result of the strong
rationalization of transshipment costs in hub and spoke transport networks.
Other variables such as whether the shipment is sent in a bundle or not, and
the influence of the distance, are also significant. However, they bring little
explanatory power. Besides, the influence of distance is quite complicated to
interpret.
The econometric approach has been kept as simple as possible. This paper
should be considered as a preliminary approach to the econometrics of
shipment size. The ECHO survey can be used much more deeply, but this
would require refining the EOQ model and applying more sophisticated
econometric methods (in particular to handle vehicle capacity constraints, and
to estimate more complicated specifications of the transport fixed cost
© Association for European Transport and contributors 2010
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component). Besides, there are many missing values: variables such as value
density are only partially available.
On the whole, the EOQ model seems to be a very good candidate as a
microeconomic shipment size model in a spatialised freight transport model
with explicit representation of the shipment. One of its advantage is that it is
strongly consistent with the choice of mode: the overall cost of transporting a
commodity flow with a given transport mode depends on the shipment size.
However, measuring this overall cost once the shipment size is available is
quite simple, and requires only classical freight transport model variables,
such as transport unit cost and travel time.
© Association for European Transport and contributors 2010
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Wilson (1934) 'A scientific routine for cost control', Harvard Business Review
13, 116-128
© Association for European Transport and contributors 2010
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NOTES
1
As a comparison, the Sweden Commodity Flow Survey contains millions of
observations.
2
In fact, the most important econometric result of this chapter, which will be
presented in the sequel, is available in Szpiro (1996). It has been indeed
obtained incidentally as the authors were studying the structure of freight
transport prices. However, the authors did not interpret their results from the
perspective of microeconomic modeling of the choice of shipment size.
3
The effect of the capacities of freight transport vehicles on the choice of
shipment size will be disregarded here, so that choosing the weight or the
volume variable should be of little consequence. However, the shipment
volume is measured in m3, with zero decimals, whereas the shipment weight
is measured in kg, with zero decimals, so that it constitutes a much more
accurate measure. As a consequence, the shipment weight is chosen as the
measure of shipment size, and is also denoted s , as no ambiguity is possible.
4
For example, if road transport and rail transport are used together, the main
mode is rail transport. If sea transport, or air transport, are used in a transport
operation, they are its main transport mode.
5
Distances by the shortest path by road are also available in the ECHO
survey. But there are many missing values (19.5%), whereas as-the-crow-flies
distances are available for almost all the shipments (only eight missing
values). Finally, the correlation between these two variables is 0.88, which is
quite high.
6
Besides the fact that more agents certainly means more administrative
operations, thus a higher cost, a second interpretation can be proposed to this
positive effect. Some shippers send large and regular amounts of freight, and
are thus a source of constant and significant revenue for carriers. Other
shippers are more irregular: they are not able to forecast how many
commodities they will send, and are a source of uncertainty of the transport
demand the carriers face. Given the operational constraints of carriers, an
uncertain demand is a source of costs. A mean for carriers to distinguish
regular shippers from irregular shippers is to bind long term contracts with the
formers, with reciprocal commitments in terms of prices and volumes, so that
the large, regular shippers have an incentive to accept such contracts. Now, if
the irregular shippers, which have no long term contract with any carrier, tend
to access to the freight transport supply through more go-betweens (such as
freight forwarders) than big, regular, shippers, that would explain why they
should face higher transport costs.
7
In fact, taking into account the number of transshipments is just a second
step into the technical characteristics of the transport operation chosen by the
shipper (the first step being the transport main mode variable). Should the
EOQ model be applied in a large scale spatialised freight transport demand
model, this should be kept in mind: the transport options should be
distinguished by mode but also by number of transshipments: this would form
© Association for European Transport and contributors 2010
14
a sound basis to simulate the respective demands for direct and hub-andspoke freight transport.
N interv , on the contrary, can certainly be disregarded in a first step. It brings
little explanatory power to the model and there is little microeconomic basis to
model it.
8
Despite the fact that this variable gives not as much explanatory power to
the model as N interv , it may prove much more interesting in a urban framework.
For example, in the FRETURB model of freight transport in urban areas
(Routhier et al., 2002), the number of stops in rounds is considered a central
variable of the organization of carriers, closely linked to the distance covered
by heavy good vehicles.
© Association for European Transport and contributors 2010
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