New Approach to Appraisal of Rail Freight Projects in South Korea

This paper contributes to the estimation of the value of rail freight transit time savings, reliability, and service frequency for producers and transport operators by using stated preference data for short-haul rail freight shipments in South Korea. To appraise investments in freight projects in South Korea, the mixed logit model was used to determine the value of rail freight transit time savings, resulting in an estimated savings of about $2.31/h per shipment. The value of rail freight reliability (the percentage of on-time arrivals and departures) is $2.78/h of delay and $0.54/day for scheduled freight service delay. The results for freight time value for different economic agents are surprising: shippers perceived the value of transit time, transit time reliability, and service frequency to be far higher than producers did. Shippers valued rail freight transit time savings at about $235/metric ton h, whereas this same value for producers was $1.21/metric ton h. When the time benefit based on these values was added to the preliminary feasibility evaluation for 20 freight railroad infrastructure projects in South Korea, the number of projects for which benefits outweighed costs increased from four to 11.