Research Team: Mark Hansen (lead), Josh Seeherman, Juan Caicedo, and Jae Esther Jung
UC Campus(es): UC Berkeley
Problem Statement: The movement California goods is one of the largest employment generators within the state and is critical to both the structural health of the economy and the physical health of its citizens. However, the goods movement sector is subject to market failures that may result in suboptimal modal shares, in particular an excess of truck traffic some of which would ideally be diverted to rail. While opportunities for modal shift are limited within the state, there are significant possibilities for California exports. Examining the agricultural sector, California is one of the largest producers of perishable produce in the world and a majority of this produce leaves the state on a truck, despite the fact that rail dominated the market through the mid-1970’s. Significant inertia exists today among the grower-shipper-buyer network that has frozen in place the domination of the trucking industry among perishable produce, even though rail movement would reduce social cost in many cases. While the private sector is unlikely to invest in a modal shift given the historically low fuel prices, it is possible that there is an opening for a public-private partnership (PPP) that could provide a gentle push for change.
Project Description: This project builds on the initial work from the “Rail and the California Economy” project by examining the potential of shifting the movement of perishable produce in California from truck to rail. The final report provides a review of the state of the California rail system in terms of perishable produce transport and where there have been recent increases in rail modal share; analyzes and discusses the societal costs of trucking; outlines how PPPs can relate to rail and provides examples of rail PPP in California such as the highly successful Colton Crossing project; and proposes a location in Monterey County where government support through a PPP could result in lasting beneficial changes. In summary, although rail is currently a very small player in the transport of California perishable produce exports, increasing its modal share would be beneficial to the citizens of the state by reducing a number of negative externalities. Public entities should consider different ways, such as PPP, to encourage this growth. In areas where the private sector has already invested significant moneys, some modal shifts for certain crops have already occurred.