This paper explains why diesel fuel is the preferred fuel in freight transportation. It identifies possible substitute fuels for motor carriers and railroads that are currently available and under development. It identifies which of these substitutes are likely to be used in the near and medium term years and the circumstances under which they will be used. The paper discusses which fuel efficiency measures have been successfully adopted by railroads and motor carriers. Finally, it suggests opportunities for transportation researchers to evaluate investment options to improve fuel efficiencies in freight transportation.

This paper reviews the literature that compares the fuel efficiencies of bulk commodity transportation modes. Most studies used net-ton-miles per gallon to compare modal fuel efficiencies. Net-tonmiles per gallon have traditionally been estimated from aggregate industry data of total net-tonmiles and total fuel consumed. More recent studies have targeted specific origins, destinations, products hauled, types and sizes of equipment, backhauls, and miles traveled to estimate total fuel consumption. This paper shows that fuel efficiency estimates based only on net-ton-miles per gallon can be erroneous. The paper identifies basic variables and measurement methods that can improve the accuracy of modal fuel efficiency comparisons.

Most transportation textbooks and articles on inland waterway navigation assume a perfectly competitive Mississippi River system barge industry. One study found the 1972 and 1977 grain barge industry to be oligopolistic. A second study of the U.S. barge industry found "intra industry competition for the barge industry on a day-to-day basis with easy entry and exit." Using the concentration ratio and the Herfindahl Index, this study found the Mississippi River barge industry to be oligopolistic. These results suggest that Mississippi River navigation infrastructure studies should not use long run marginal barge costs as a proxy for barge rates.

Steve Swanson's grain farm in Page County, Iowa, is about 40-miles east of a barge-loading terminal on the Missouri River at Nebraska City, Nebraska. This 40-mile distance is within the U.S. Army Corps of Engineers' (Corps) estimated 45-mile competitive range for corn shipped by barge on the Missouri River. Steve has never sold grain to the barge loading terminal at Nebraska City because he could always obtain higher net prices for his corn and soybeans elsewhere. In recent years, he has sold all of his corn and soybeans to his local elevator, which loads 27-car unit-trains on the BNSF railroad. This paper concludes that (1) commercial barge traffic has been declining on the Missouri River since 1977; (2) wheat shipments, over one-third of all commercial traffic on the Missouri River in 1979, have almost disappeared (3)the reasons for these dramatic declines in Missouri River barge traffic are reduced wheat production, a highly competitive railroad system, high Missouri River barge costs, and rapidly growing local and domestic markets; (4) here is little reason to believe that these trends will be reversed on a long-term basis; (5) he public cost of providing navigation on the Missouri River exceeds the benefits to shippers; and (6) an open public debate is needed to evaluate alternative navigation investment strategies on the Missouri River and other low-volume rivers. Farmers like Steve Swanson need to be involved in these debates.