445 



More distant farmers would be damaged less but the degree of impact 

 depends on the competition between rail and truck-barge modes. Many 

 producers whose grain does not now move on the river have benefitted from 

 lower transportation rates in the Pacific Northwest because the competitive 

 availability of barges has caused lower rail rates in much of the Pacific Northwest. 



b. Groin terminols ond reloled companies 



Undoubtedly there will be costs to the barge-related river terminal facilities, 

 whether or not mode switching occurs. If significant mode switching occurs, 

 some elevators and terminals might need to construct new facilities, especially 

 those which no longer have direct access to railroads. Others would need to 

 expand facilities for handling increased rail or truck traffic. Firms facing 

 expansion possibilities in general would have the economic incentive to do so. 

 Those firms left with underutilized capacity because of the drawdown could 

 suffer short to intermediate term losses. If the drawdown were to extend much 

 beyond a 2 to 3-month period, some river terminal facilities would probably go 

 out of business. 



Many elevators, both on the river and in the hinterland, will store grain 

 for a shorter time and thus lose storage revenue. These organizations have 

 considerable market power. One expects that they will be able to pass most 

 of any long run cost increases or profit losses on to someone else, primarily 

 to farmers. Many firms handling grain are cooperatives owned by producers, 

 assuring that farmers will feel the effects. 



c. Borge tronsportotion componies 



Since these organizations have considerable market power (one firm controls 

 around 80% of grain barge capacity in the area), they can probably shift a 

 considerable part of any long run change in costs to inland shippers and farmers. 

 In the short run, they may find it more difficult to pass on these costs (although 

 a 30<f per ton increase ~ about 6% - occurred in mid 1991 in anticipation of 

 drawdown disruption). Effective competition between barge and rail is critical 

 to keep rates reasonable and promote efficient movement of Pacific Northwest 

 commodities. Disturbing this competition could be one of the most important 

 consequences of the drawdown. 



d. Port districts 



Port districts also might end up bearing some of the costs of drawdown. 

 Since these are units of local government, their welfare should be a special 



