Posts Tagged ‘trucking’

What is the Cost of Truck Delay?

Friday, March 11th, 2011

There are many different ways to consider time regarding freight transportation.  One can look at the total supply chain, as shippers are looking at days, weeks, or months to plan delivery cycles and to assess the associated costs.  This may include such items as inventory carrying costs or other operational expenses.  These choices are normally determined by the shipper or logistics firm, such as a 3PL when selecting a mode or carrier.  (Normally, the top three issues that determine transportation choices include various factors of service, time, and costs.)  However, for local planners and those considering freight investment needs, knowing that shipments are moving from to various markets are being planned at a very gross level does not influence the traffic along a specific roadway.  For those analysis, the real question is what are the costs to the system (shippers, carriers, etc.) when delays occur once the cargo is actually moving.
(Some of these points were raised in a paper by Glen Weisbrod and Stephen Fitzroy, but they did not estimate any costs!)

Here are some studies that have tried to estimate some of those costs:

1.       An Initial Assessment of Freight Bottlenecks on Highways

FHWA Office of Freight policy commissioned a study that looked at the associated bottlenecks for freight movement.  The study concluded that bottlenecks resulted in 243 million hours of delay in 2004. “At a delay cost of $32.15 per hour, the conservative value used by the FHWA’s Highway Economic Requirements System model for estimating national highway costs and benefits, the direct user cost of these bottlenecks is about $7.8 billion per year.”  This was based on 100 bottlenecks across the country.

2.       The FHWA’s “Freight Story” = Economic Costs of Freight Transportation

There is a nice writeup about the associated costs of congestion:  “At a delay cost of $26.70 per hour, the conservative value used by FHWA’s Highway Economic Requirements System model for estimating national highway costs and benefits, these bottlenecks cost truckers about $6.5 billion per year.”

3.       American Trucking Research Institute, 2008

“The analysis of operational costs was based on marginal cost data that accrue from operating a truck for a mile or an hour in a standard operating environment.  Fixed costs were not included since they are generally unaffected by system impacts such as congestion or external factors such as fuel price fluctuations.  The research, which generated data from detailed carrier surveys and interviews, isolated dozens of cost centers for for-hire and private fleets.  The data that is being made publicly available includes marginal operational costs that are differentiated by major sectors, fleet sizes and geographic regions.  Within those groupings, marginal costs are broken out by expense categories that include driver compensation, maintenance, fuel/oil, vehicle purchases/leases, tires, taxes, credentials and particular types of insurance, among others.  Total aggregate mean costs generated an average cost per mile of $1.73 and an average hourly cost of $83.68.” (download the one page pdf here or request the full document here)

4.       Antidotal evidence

This has occurred in several large markets, such as New York, where delivery schedules try to be made previous to the early morning peaks.  Thus, carriers’ surcharges to deliver during peak periods reflect the monetization of recurring delay in the system.  However, the question about unrecurring delay (see yet another FHWA Study) remains more problematic to access as route choices may be significantly altered.

This leads to questions about performance measurement and congestion pricing, but also, what is the role of transportation infrastructure – is it to provide all passengers with equal access to facilities, to promote interstate commerce, or national security?  Are we properly costing these facilities to the user community, especially if infrastructure spending will remain more constrained in a politically charged, high fuel priced future?

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