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Truck Tolling: The Role of Freight Markets and Industry Characteristics in Decision Making


TRUCK TOLLING:  THE ROLE OF FREIGHT MARKETS AND INDUSTRY CHARACTERISTICS IN DECISION MAKING

Problem Statement:

As road pricing concepts and projects become more prevalent among road operators and Departments of Transportation as a solution to today’s infrastructure expansion and transportation financing challenges, there is a growing need to ensure that such projects are responsive to user needs and acceptable to stakeholders.  In striving for this objective, a clear focus on the value generated from a priced facility is essential.  The value proposition is particularly critical with respect to the goods movement industry in the U.S.  Business practices in this industry are well established, and changes to the cost structure are likely to have intended and unintended consequences.  The uncertainty of the outcome will be a particular concern. 

The overall objective of the proposed research is to identify the value that goods movement businesses seek from the transportation system and their willingness to pay for that value.  In order to effectively address this high-level objective, more detailed research is needed into the financial and decision-making frameworks for the various freight markets and submarkets.  The proposed research would look across the spectrum of freight markets and their sub-sectors to address the questions of who pays the tolls, how the tolls relate to other operating costs, whether these costs can be passed on to the customer, and who makes routing decisions.  The research would draw conclusions and distinguish differences in decision-making and value by length of the haul and type of operations (i.e., fleet operators vs. owner-operators, private vs. common carriers, truck-load vs. LTL), as well as by industry sector and commodity.  The proposed research is intended to be expansive with regard to freight markets, exploring not only those that move the goods, but the shipping community as well.  The effort would also seek to assess shippers’ willingness to pay more for solution to highway congestion.

Key Words:

Congestion Pricing; Value Pricing; Tolling; Transportation Finance; Goods Movement; Trucking; Freight Economics; Logistics; Freight Distribution

Urgency/Priority:

Road pricing projects have made great strides over the past decade in advancing an economic rationale to allocating scarce roadway capacity among users and achieving an array of other policy objectives.  The results of such projects have improved traffic flow along congested corridors and facilities, and raised new revenue for investment in transportation infrastructure and services.  Many pricing projects have gained public acceptance from both users and non-users of the priced facilities. 

Nonetheless, significant skepticism remains among key stakeholders and users of the nation’s highways concerning the value proposition underlying road pricing, both in concept as well as at the project level.  The trucking industry represents some of the most ardent critics of road pricing as a solution to the nation’s congestion and transportation finance needs.  As the national discussion of transportation investment and financing needs progresses, particularly in light of SAFETEA-LU commissions to address such issues, this level of detailed research is essential to understanding the benefits and impacts of user-fee financing and congestion pricing on the trucking industry.  Recent forums that brought advocates and analysts of road pricing together with trucking industry representatives highlighted the gulf in understanding of the analysts in the business of trucking.  Research into the actual economics of the decision processes in the trucking industry are crucial so that analysts can accurately and effectively consider the potential benefits and impacts of road pricing.  The urgency of this need rests with future global competitiveness and economic strength of the nation. 

Estimated Cost: 

The estimated cost to conduct and report this research is $500,000.


Sponsoring Committee:ABE25, Congestion Pricing
Funding:0
Source Info:User Community and Information Sources:
State Departments of Transportation; Toll Road Operators; Private Transportation Investment Interests; Trucking Companies; Shippers; Logistics and Distribution Firms; Industry Associations (AASHTO, IBTTA, ATA, OOIDA); Private Consulting Firms; Universities and Academic Institutions.
Date Posted:08/14/2007
Date Modified:08/14/2007
Index Terms:Road pricing, State departments of transportation, Financing, Transportation, Transportation departments, Freight traffic, Trucks, Tolls, Decision making,
Cosponsoring Committees: 
Subjects    
Highways
Motor Carriers
Transportation (General)
Finance

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