Effect of the Increased Fuel Price on the Rail Freight Demand and its Share in Total Road Transportation System

In this study the effect of fuel price on the share of rail freight transport to total freight transport for the years 1981 to 2007 is investigated. The authors used data including freight rates by rail,freight rates by road, fuel prices, national income and number of wagons as model explanatory variables. The method estimation was Co-integration and the result showed that fuel prices could increase the railroad’s share of total freight. Coefficient of freight rate by road showed that road and rail transport are complementary in Iran. Due to the lack of coverage in all parts of the country’s rail, in some of the routes the authors had to travel some miles to access to the railway station. It was concluded that if rail freight rate was increased, railroad share of total freight transport was decreased.