A METHODOLOGY FOR DETERMINING THE FREIGHT BORDER TRANSPORTATION IMPACT OF THE NORTH AMERICAN FREE TRADE AGREEMENT

Abstract

The demand for infrastructure investment in the Texas-Mexico border region -- a demand heightened by the growth in trade resulting from the North American Free Trade Agreement (NAFTA) -- has created the need for a comprehensive freight forecasting model. Accordingly, this report presents a methodology useful in forecasting the effects of NAFTA on the demand for freight transportation at the Texas-Mexico border. In developing long-term estimates of future freight-related traffic crossing the border, the methodology employs three steps: (1) an economic analysis of the region, (2) calibration of modal choice models, and (3) an assessment of inventory practices. This methodology is designed to improve upon previous efforts by considering how NAFTA would alter the economic environment in which firms operate, as well as the decisions these firms make regarding modal choice and shipment size. By optimizing the efficient allocation of staff and resources, this methodology could be used to upgrade the operations and infrastructure of the Texas-Mexico border region.

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