52 of freight, and geographical considerations, including the relatively short distances across South Korea, which makes road travel attrac- tive. Another significant reason for the decline of rail’s share of freight is capacity constraints for railroad operations, as railroads in South Korea are operating close to their maximum capacity. To increase railroad capacity, the physical capacity must be increased. This can be done by expanding the railroad network by adding new routes and additional tracks and extending electrified lines. From 1997 to 2007, of the $169 billion of public investment in the transportation infra- structure, about 50% was spent on roads, whereas only 15% was spent on rail, including high-speed passenger rail projects. The practice of carrying out preliminary feasibility studies was introduced in 1999 to encourage the use of a cautious approach to new large-scale projects (those costing over about $50 million) meant to enhance the efficiency of public investment by verifying the feasibil- ity of projects from the viewpoints of economic feasibility, policy objective, investment priorities, timing, and financing methods. One basis for such preliminary feasibility studies was general research on large-scale development projects. Article 38 of the National Finance Act of South Korea provides the legal basis for each preliminary feasibility study and stipulates that projects requiring not only the approval of the Ministry of Planning and Budget but also that of the National Assembly must undergo inspection and verification to corroborate the results of the preliminary feasibility study. Unfortunately, most preliminary feasibility studies of rail freight projects required by South Korean law have not accurately assessed economic feasibility, as their cost–benefit analyses (CBAs) are flawed. This is also true elsewhere in the world. Except in rare cases, CBAs do not take into account the time value of rail freight and the result- ing benefits of better transit time, its reliability, and service fre- quency. The main reasons are the lack of a theoretical background and limited data. For example, the government of the United King- dom does not endorse the use of such freight time benefits and is specifically opposed to consideration of the value of freight time sav- ings for transportation project appraisal; instead, it simply considers traditional operating cost savings (1). As the physical distribution system has taken shape and with the development of just-in-time sup- ply chain management and intermodalism, research has begun to focus on the value of freight time as an important benefit. Studies have been confined, however, to European countries and Australia. The CBAs carried out by the World Bank and Eurobank consider only the operating cost of freight vehicles and the cost of labor. Swe- den includes the value of freight time as a benefit that can help justify projects of the National Road Administration and the National Rail Administration. In the case of roads, freight time cost is considered in the CBA. In the case of rail, the value of service reliability is included and applied. In these schemes, freight is classified along simple lines. New Approach to Appraisal of Rail Freight Projects in South Korea Using the Value of Freight Transit Time Savings Kyungwoo Kang, Anne Strauss-Wieder, and Jin Ki Eom This paper contributes to the estimation of the value of rail freight tran- sit 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 per- ceived the value of transit time, transit time reliability, and service fre- quency to be far higher than producers did. Shippers valued rail freight transit time savings at about $2.35/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. The total route length of roads in South Korea has been growing rapidly at a rate of 2,000 km/year over the last 30 years, resulting in an annual growth rate of 4.2%. However, the route length of the rail- road network in South Korea stayed fairly constant over the same period until 2004, when the South Korean high-speed rail network, the South Korea Train Express (KTX), began operations. The number of kilometers traveled by passengers has been increas- ing substantially by about 2.8% per year by rail and 4.5% per year by road over the past 30 years. Rail’s share of passenger transporta- tion stayed fairly constant until 2004, at which point there was a rapid increase because of the start of high-speed rail operations. The modal split of freight transportation between road and railroad has changed substantially, with the share of freight tons carried on the road increasing from about 60% in 1980 to almost 77% in 2007, whereas rail’s share of freight carried decreased from 28% in 1980 to only 6% in 2007. The reasons for rail’s declining share of freight transportation include supply chain management, which requires the timely delivery K. Kang, Department of Transportation Engineering, Hanyang University, Sa-3- dong, Ansan 425-791, South Korea. A. Strauss-Wieder, A. Strauss-Wieder, Inc., 330 South Chestnut Street, Westfield, NJ 07079. J. K. Eom, Railway Transport and Logistics Research Department, South Korea Railroad Research Institute, Uiwang, Kyonggi 437-757, South Korea. Corresponding author: K. Kang, kyungwoo@hanyang.ac.kr. Transportation Research Record: Journal of the Transportation Research Board, No. 2159, Transportation Research Board of the National Academies, Washington, D.C., 2010, pp. 52–58. DOI: 10.3141/2159-07