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APPENDIX B
Details on Impacts of Selected Policies
For a subset of the policies considered as part of this re- tances, which helps truck drivers avoid accidents. However,
search, the research team performed a more in-depth explo- there is also a relatively strong consensus among researchers
ration of freight system impacts. In some cases, this involved and practitioners that a higher variance in vehicle speeds (i.e.,
original analyses; in others, the research team merely syn- speed differential) increases the risk of accidents by increas-
thesized and reported on impacts analyzed by others. This ing the number of vehicle interactions.2 There is no clear con-
appendix presents this information for the following five pol- sensus as to whether the net impact of these factors is positive
icy examples, all of which were introduced in Section 4. or negative.
Analysis of crash data has provided mixed evidence on the
· Truck Speed Limits and Governors safety impacts of lower speed limits for trucks. In a 1991 report,
· Truck Size and Weight Rules NHTSA found that more than 90 percent of combination-unit
· Inland Waterway Infrastructure Investment truck crashes and 95 percent of single-unit truck crashes oc-
· Highway Tolls and Other User Charges curred on roadways where the speed limit was less than 65 mph
· Lockage Fees for Inland Waterways and where the incidence of truck speeding in excess of 65 mph
was low.3 This analysis, although dated, suggests that speed
governors could help prevent only a small portion of truck
Truck Speed Limits
crashes.
and Governor Rules
In the United Kingdom, all large combination trucks were
Efforts to rein in the top speeds traveled by heavy trucks on speed limited after 1993. Between 1993 and 2005, the accident
U.S. highways have taken two approaches: differential speed involvement rate for this vehicle class fell from 40 to 30 per
limits and truck speed governors. The use of differential speed hundred million vehicle-kilometers. During the same period,
limits has been driven largely by concern for public safety, the accident involvement rate for all heavy goods vehicles
whereas the use of speed governors on trucks has been moti- increased slightly from 18.5 to 18.8 per hundred million
vated by both public safety and an interest in achieving better vehicle-kilometers.4 Although this data does not isolate the
fuel economy. The two approaches have similar impacts in that effect of mandatory speed governors, it supports the hypoth-
they result in trucks traveling more slowly and usually at speeds esis that they improve highway safety.
lower than those of the cars around them. TRB's 2008 synthesis found a lack of relevant published
research on how speed governors affect safety and instead
Safety Impacts
The safety impact of creating differential speed limits for
1TRB. CTBSSP Synthesis 16: Safety Impacts of Speed Limiter Device Installations
cars and trucks (either through lower posted speed limits for
on Commercial Trucks and Buses. 2008.
trucks or the use of speed governors) has been the subject of 2Johnson, Steven L. and Naveen Pawar. Cost-Benefit Evaluation of Large Truck-
much debate among researchers and policymakers. Research Automobile Speed Limit Differentials on Rural Interstate Highways. For the Research
clearly finds that lower vehicle speeds reduce the severity of and Special Programs Administration, U.S. DOT. November 2005.
3NHTSA. Commercial Motor Vehicle Speed Control Safety. Report # DOT-HS-
crashes and the incidence of fatalities. This is because impact
807-725. May 10, 1991, p. ES-1.
force during a vehicle crash varies with the square of the ve- 4TRB. CTBSSP Synthesis 16: Safety Impacts of Speed Limiter Device Installations
hicle speed.1 Lower speeds also improve truck braking dis- on Commercial Trucks and Buses. 2008.
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Table B-1. Estimated cost of vehicle retrofits for mandatory speed governors.
Non-Recurring Vehicle
Cost Per Truck
Manufacturer Cost
Use existing electronic control module (ECM) $100 $0
Modify and deploy ECM software to make maximum road
speed a factory password-protected feature $300 $100 million
Replace ECMs with ones that are "hard wired" to prevent
tampering with maximu m road speed $2,000 $400 million
Install mechanical speed governors on older trucks $1,000 - $1,500 $0
Source: TMA.
conducted a small survey of fleet safety managers. For those control systems. Hard wiring the ECM to make tampering
fleets using speed governors, safety was selected as the primary even more difficult would entail the design of both new hard-
consideration for selecting the maximum speed, followed ware as well as software. Trucks built from 1990 to around
by fuel economy. Roughly 56 percent of those surveyed said 1995 do not have the same type of programmable ECM as
that the use of speed governors had reduced the frequency of newer trucks. According to TMA, if these trucks were subject
crashes; 27 percent indicated that speed governors had had to a speed governor requirement, they would have to be out-
no impact, and 14 percent said that they could not deter- fitted with a mechanical speed governor at a cost of $1,000
mine whether governors had had any impact. This response to $1,500 per truck.5
was not as conclusive as the responses fleet managers provided The USDOT has reported that in 2002 there were about
regarding the impact of speed governors on fuel economy and 2.6 million Class 7 or 8 trucks in the U.S. fleet.6 If, as men-
number of speeding violations. tioned previously, 75 percent of those trucks already have
maximum speed settings in place, that would leave at least
Operational Impacts 0.6 million trucks without speed governors. In its submission
to the NHTSA docket, TMA provided data on the maximum
By limiting the top speed at which trucks travel, speed gov- speeds set for a sample of truck purchasers in 2005. Of the
ernors can affect many aspects of a carrier's operations. For vehicles sold with maximum speed limits that year, roughly
example, a lower maximum speed improves fuel economy 45 percent had maximum speeds set at 69 mph or higher.7
and likely reduces truck maintenance costs. At the same time, Assuming this proportion holds true for the entire fleet, an-
however, a lower maximum speed can result in trucks travel- other 0.9 million trucks would need to have their maximum
ing fewer miles per day, which can affect revenues and labor speed limit adjusted downward if the Federal government
costs. This section explores the impact of truck speeds on var- were to set the maximum truck speed at 68 mph (as requested
ious aspects of a carrier's operations. by ATA and the other petitioners). Therefore, at a minimum,
a speed governor mandate could cost $150 million (1.5 mil-
Vehicle Modification Costs lion trucks at $100 per truck).
This cost could be reduced by grandfathering older vehi-
Obviously, trucks do not need any new equipment to com- cles. For example, the nine large U.S. carriers that petitioned
ply with posted speed limits. However, to comply with a speed the Federal government for a mandatory speed governor rule
governor mandate, owners of late-model trucks (mid-1990s requested that the rule apply to trucks of model year 1990 or
or later) would, at a minimum, need to access the engine's elec- newer. In its petition, ATA requested that the rule apply only
tronic control module and change its maximum speed setting. to new trucks, which would eliminate the need to retrofit the
Fleet maintenance personnel would be able to do so with the existing fleet.
correct electronic service tool. In a submission to a NHTSA
rulemaking docket, the Truck Manufacturers Association
(TMA) estimated the cost of this operation at $100 per truck. 5Robert Clarke, President, Vehicle Manufacturers Association, submission to
As shown in Table B-1, TMA also estimated that making Docket No. NHTSA-2007-26851, March 27, 2007.
it harder for the maximum speed setting to be changed by 6U.S. DOT, BTS, National Transportation Statistics, Table 1-21: Number of
drivers or vehicle owners would increase the cost per truck. Trucks by Weight, http://www.bts.gov/publications/national_transportation_
statistics/html/table_01_21.html
It would also require vehicle manufacturers to redesign and 7Robert Clarke, President, Vehicle Manufacturers Association, submission to
redeploy ECM software for approximately 40 different engine Docket No. NHTSA-2007-26851, March 27, 2007.
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Effect on Fuel Efficiency Driver Retention
There is consensus that reducing the top speed of trucks im- The common perception is that truck drivers are strongly
proves fuel economy, but the estimated amount of savings opposed to the mandatory use of speed governors, especially
varies. The research team used EPA's Physical Emission Rate when they are paid by the mile or by the trip. A 2007 OOIDA
Estimator (PERE) model to estimate fuel consumption rates of survey of 3,400 members who are company drivers found
motor vehicles under different driving conditions. Modeling that 82 percent would prefer to work for a company that does
of a "typical" tractor-trailer produced a fuel-efficiency penalty not use speed governors, all other things being equal. Only
of about 0.08 mpg for every mph increase above 55 mph. 4 percent said they would choose a company using speed
Johnson and Pawar estimated that each mile-per-hour increase governors.13
in speed beyond 55 mph decreases fuel efficiency by 0.03 to In contrast, in a 2008 survey of fleet safety managers, 64 per-
0.08 mpg, depending on the type of road and the speed vari- cent said that driver attitudes toward speed limiters were
ance of traffic flow.8 ATA's 1996 estimate of the fuel efficiency largely neutral, and 23 percent said driver attitudes were pos-
penalty of higher speeds was slightly higher. ATA estimated a itive. Seventy-seven percent of the managers said that the
penalty of 0.10 to 0.14 mpg for each mile-per-hour increase in impact of speed limiters on driver hiring and retention was
speed beyond 55 mph.9 Another study estimated that reducing neutral.14 It may be that driver opposition is softening as the
the freeway driving speed of a typical long-haul combination voluntary use of speed governors becomes more widespread
truck from 70 mph to 65 mph would reduce fuel use per truck among carriers.
by 972 gallons per year, a 6 percent savings.10
Driver Compensation
Effect on Equipment Maintenance Costs
Because some drivers are paid by the number of miles they
A 1996 ATA publication indicated that operating equip- drive, reducing the maximum speed of trucks could result
ment above 55 mph generally decreases component service in loss of income for those drivers. The amount of reduction
life and shortens preventive maintenance intervals.11 How- would depend on what percentages of miles were driven at
ever, in 2005, Johnson and Pawar found no support for more speeds exceeding the new limit. Drivers who log many miles
frequent maintenance intervals. Regarding tires, Johnson and in western states where speed limits are higher would stand
Pawar found no objective research data related to the effect of to lose more income than other drivers.
speed on tire wear at the speeds commonly traveled on rural In its rulemaking petition to NHTSA and FMCSA, ATA
interstates. However, the majority of maintenance managers suggested that, because of the chronic shortage of long-haul
surveyed by the authors said that tire wear increases beyond drivers, carriers would need to compensate drivers for any
a 65 mph operating speed. Several studies also attributed lower loss of income.15 However, there is very little in the literature
brake maintenance costs to lower maximum speeds. about how the voluntary adoption of speed governors has
affected driver compensation thus far.
Insurance Costs
Profitability
Studies found that when setting premiums, insurers do not
offer "front-end" premium discounts to carriers using speed Johnson and Pawar found that the profitability of oper-
governors. Rather, insurers look only at a company's experi- ating a fleet at higher truck speeds (specifically, 70 mph vs.
ence ratings.12 Instead, insurers will reduce premiums for car- 65 mph) was highly dependent on the characteristics of the
riers with the best demonstrated safety records. Therefore, it fleet and various external variables such as the price of fuel.
is possible that speed governors eventually generate insurance The authors were able to construct a plausible scenario in which
savings for carriers that use them, but there is no data avail- operating trucks at the higher speed of 70 mph increased
able to estimate the amount of savings. profits, but fuel was assumed to cost $2.00 per gallon.16 At
higher prices, it would presumably be more difficult to con-
struct scenarios where operating at higher speeds actually
8Johnson and Pawar, pp. 128129. increased profits.
9ATA (The Maintenance Council). 55 vs. 65+: An Equipment Operating Costs
Comparison. 1996, p. 13.
10Jeffrey Ang-Olson and Will Schroeer, "Energy Efficiency Strategies for Freight
Trucking: Potential Impact on Fuel Use and Greenhouse Gas Emissions," Trans- 13TRB, 2008, p. 14.
portation Research Record 1815, 2003. 14TRB, 2008, p. 33.
11ATA, 1996. 15ATA, rulemaking petition to NHTSA and FMCSA, October 20, 2006.
12Johnson and Pawar, p.127; TRB, 2008, p. 32. 16Johnson and Pawar, p. 119.
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Table B-2. Hours of delay per heavy vehicle Truck Size and Weight Rules
crash, 2000.
The regulations of truck size and weight have a multitude of
Property impacts on the truck industry as well other modes. Truck size
Road Class Injury Fatality
Damage Only
Urban and weight regulations can also affect overall highway safety,
Interstate 2,260 7,344 21,749 traffic operations, fuel consumption, and emissions. When
Other Freeway 1,766 5,737 16,990 the first Federal limits were imposed in 1956, a grandfather
Major Arterial 949 1,929 9,127
clause allowed states to retain any truck size and weight lim-
Rural
Interstate 814 2,646 7,835 its exceeding the Federal limits as long as these limits were in
Other Freeway 416 1,350 3,999 place at that time. As a result, the current size and weight lim-
Major Arterial 255 829 2,454
its reflect a patchwork of Federal and state limits, with many
Source: NHTSA, 2002.
situations in which equipment acceptable in one state cannot
be used in neighboring states.
In 2000, the USDOT completed a 6-year, comprehensive
Given the highly competitive nature of the trucking indus- study of truck size and weight policy options. This study in-
try, one could reasonably conclude from the widespread vol- cluded modeling of a "uniformity scenario" (later referred to
untary adoption of speed governors that they probably increase as the "Federal uniformity scenario") in which the grandfather
profits and, at worst, have no impact at all on profits. provisions in Federal law would be revoked and states would
be required to adopt the Federal weight limit of 80,000 pounds
on all Interstates and National Network highways.19 In a
Other Types of Impacts follow-on study published in 2004, the USDOT analyzed a
Two other potential impacts of lower speed limits for trucks "western uniformity scenario" in which the maximum gross
are worth mentioning. First, lower speed limits could affect the vehicle weight limits of the grandfathered western states would
amount of congestion experienced on the nation's highway be harmonized at 129,000 pounds. (This limit is near the high
system. Second, how the truck speed limits are applied and end of the range among the grandfathered states.) Thus, the
enforced could affect competitiveness. USDOT has looked at the likely impacts of harmonization at
the high end and low end of the range of possible choices. The
impacts modeled by these two studies are compared below.
Traffic Flow In comparing the impacts of the two studies, one should
note that the two studies did not use the same time periods for
Lower speed limits for trucks have a mixed effect on con-
their analyses. For its 2000 comprehensive study, the USDOT
gestion, and it is not yet clear whether the net impact is posi-
used 1994 as the base year and compared policy impacts in
tive or negative. On the one hand, some studies suggest that
the year 2000. For the later study of the western uniformity
lower speed limits for trucks can increase congestion, because
scenario, the USDOT used the year 2000 as the base year and
trucks end up clustering together and impeding the flow of
compared policy impacts in 2010. Despite this disparity, it is
traffic.17 On the other hand, if differential speed limits or
worth comparing the direction of policy impacts (increases
speed governors reduce the frequency and severity of crashes
vs. decreases) and the percentage changes projected.
involving trucks, then they also reduce the hours of delay asso-
ciated with such crashes. A 2002 study for NHTSA estimated
the hours of delay caused by heavy vehicle crashes in the year Changes in Freight Distribution
2000. The results are shown in Table B-2.18 by Type of Truck and Mode
The study valued hours of delay at $13.86 in urban areas
and $16.49 in rural areas; the difference is due to the differ- As shown in Table B-3, in the Federal uniformity scenario,
ences in average vehicle occupancy in the two settings. Using the imposition of the Federal size and weight rules on the
these estimates of dollar values and hours, a fatal crash on an grandfathered states would result in a projected increase in
urban interstate causes more than $300,000 in time delays, total truck VMT of 3.5 million miles. This increase in over-
while an accident with property damage only on a rural major all VMT is caused by shifting freight traffic from longer and
heavier vehicles to 5-axle tractor semitrailers. More of the
arterial causes $4,200 in time delays.
19
A few states have weight limits below Federal limits on non-Interstate portions
17Johnson and Pawar, p. 93. of the National Network. Under the uniformity scenario, those states would be
18NHTSA, The Economic Impact of Motor Vehicle Crashes 2000. May 2002. required to bring weight limits up to Federal limits on those highways.
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Table B-3. VMT by vehicle configuration: Federal uniformity
scenario versus policy baseline, 2000 (national level).
Base Case Federal Uniformity Scenario
Vehicle Configuration VMT
VMT Percent
(millions)
(millions) Change
5-axle Tractor Semitrailer 83,895 91,205 +9%
6- or 7-axle Tractor Semitrailer 6,605 3,660 -45%
5- or 6-axle Double 5,994 5,986 --
5- or 6-axle Truck Trailer 2,358 2,455 +4%
7-axle Double 632 290 -54%
8- or more axle Double 759 198 -74%
Triple 126 54 -57%
Total 100,369 103,848 +3.5%
Source: USDOT Comprehensive Truck Size and Weight Study Final Report, Vol. 3, Ch. 4.
smaller vehicle combinations are needed to transport the same size and weight rules affect safety in several ways. First, these
amount of freight. rules affect the total number of miles traveled by trucks, which
For this scenario, the USDOT did not attempt to estimate in turn affects the exposure of the overall truck fleet to crashes.
the diversion of freight from truck to rail. Second, these rules affect vehicle performance, such as mini-
In the western uniformity scenario, total truck VMT in the mum braking distance and the propensity to roll over. Many
region is estimated to decrease by 4.8 million (25 percent). other aspects of truck trips also affect safety, including driver
Currently, LCVs are not often used for shipments for which performance, roadway design, vehicle maintenance, traffic
one or both trip ends are outside the 13-state region. About conditions, and weather. Because of the many factors, isolating
half the VMT within the region for such shipments is pro- the effect of truck size and weight rules has proven difficult.
jected to shift to LCVs. This shift would require carriers to as- In its 2000 comprehensive study, the USDOT did not
semble and disassemble the twin and triple trailers for travel present quantitative assessments of the safety impacts of the
outside the region. Despite the extra cost this would impose various scenarios that it analyzed. Instead, the agency pre-
on carriers, the USDOT concluded that the net cost savings sented data on the crash rate history of different vehicle
would still be attractive to carriers. types and findings from engineering studies of vehicle safety
For shipments entirely within the region, the percent performance. Regarding crash rates, the agency compared
of VMT in LCVs was projected to increase from about 9 to the fatal crash rates of single-trailer combination trucks and
78 percent. Less than one-tenth of 1 percent of rail traffic multi-trailer combination trucks during the period 1995 to
in the region was estimated to divert to LCVs. 1999. As shown in Figure B-1, for most roadway classes, the
fatal crash rates for single-trailer and multi-trailer combination
trucks did not differ greatly. The one exception was the road-
Safety Impacts
way class of "other rural roads," on which multi-combination
The issue of safety is probably the most studied and most trucks had a much higher fatal crash rate.20
controversial aspect of truck size and weight policy. Truck The 2000 study did not draw clear conclusions regarding
the safety impacts of each scenario under scrutiny. However,
from the information presented, one can conclude that, all
Table B-4. VMT by vehicle configuration--western other things being equal, the increase in heavy truck VMT
uniformity scenario versus policy baseline, 2010 resulting from the Federal uniformity scenario would result
(13-state level). in more fatal truck accidents. At the same time, the shift of
freight traffic from multi-combination trucks to single-trailer
trucks might reduce the number of fatal truck accidents. The
net impact is unclear.
Like its predecessor study, the USDOT's 2004 analysis did
not offer a quantitative assessment of the net safety impacts
20It is worth noting that only 5 percent of the VMT by multi-combination trucks
was accumulated on that type of road. U.S. DOT Comprehensive Truck Size &
Source: USDOT, Western Uniformity Scenario Analysis, Table ES-2. Weight Study, Vol. 3, Ch. 8, p. VIII-4.
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Figure B-1. Fatal crash rates by vehicle type and road type, 19951999.
of the western uniformity scenario. Instead, the agency con- For the western uniformity scenario, truck VMT was pro-
cluded that the fatal crash and travel data did not allow a jected to decrease by 4.8 million miles (25 percent) because the
detailed examination of LCVs separately from the 28-foot use of longer, heavier trucks would translate into fewer truck
double trailers currently allowed on the National Network trips. The 25 percent reduction in truck VMT was estimated
under Federal rules. According to the USDOT, the measure- to result in a reduction in fuel consumption of 613 million gal-
ment problem was threefold: (1) fatal accidents are rare occur- lons (12 percent). Fuel savings were not directly proportional
rences, (2) there are few LCVs currently operating, and to the reduction in VMT because fuel economy decreases as
(3) there is only limited travel data collected on them. Regard- vehicle weight increases.23
ing this last point, the agency noted that there is no Federal For both studies under consideration, the U.S. DOT assumed
requirement to collect data for specific types of multi-trailer that total truck emissions would vary directly with changes
combination vehicles and, at the time of publication, only 2 in fuel consumption. DOT did not attempt to quantify how
of the 13 states actively collected separate VMT for different changes in emissions would translate to changes in air quality.
types of multi-trailers.21 In the end, the agency concluded that, The research team calculated the change in greenhouse gas
even though the reduction in VMT by heavy trucks would (GHG) emissions, shown in Table B-5. Total U.S. GHG emis-
lower crash exposure, there were too many other uncertain- sions from heavy trucks are approximately 386 million metric
ties regarding other safety impacts of LCVs to reach a firm tons of CO2-equivalent. So the Federal uniformity scenario
conclusion on the net safety impact of the western uniformity would increase this total by 1.6 percent, while the western
scenario.22 uniformity scenario would decrease U.S. heavy-truck GHG
emissions by 1.5 percent.
Fuel Consumption and Air Emissions
Traffic Operations
Under the Federal uniformity scenario, truck VMT was es-
timated to increase by 4 million miles, because more truck Because of the shift of freight from heavier and longer vehi-
trips would be required to move the same amount of freight. cles to 5-axle semitrailer combinations at 80,000 pounds, the
This increase in VMT translated into increased fuel consump- Federal uniformity scenario was projected to increase traffic
tion of 635 million gallons. congestion and associated costs in the year 2000 by 100 mil-
lion vehicle-hours (0.4 percent).
21 Western Uniformity Scenario Analysis, p. VII-20.
22 Western Uniformity Scenario Analysis, p. ES-6. 23 USDOT, WUSA, p. ES-8.
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Table B-5. Impacts of scenarios on fuel consumption and GHG emissions.
Federal Uniformity Scenario Western Uniformity Scenario
Fuel Consumption +635 million gallons -613 million gallons (-12%)
GHG Emissions 6.2 million metric tons CO2-eq 6.0 million metric tons CO2-eq
Table B-6. Impacts of scenarios on traffic operations.
Federal Uniformity Scenario Western Uniformity Scenario
Traffic Delay +100 million vehicle-hours (+0.4%) Small decrease
Congestion Costs +$1.9 billion Small decrease
Table B-7. Impact of scenarios on shipper costs.
Federal Uniformity Scenario Western Uniformity Scenario ($2000)
Shippers Using Trucks +6.4 billion (+3%) -$2 billion (-4%)
Shippers Using Rail Not estimated -$30 million (<1%)
Unfortunately, the congestion model used in the compre- provisions in Federal law would affect more than the 13 west-
hensive study published in 2000 was not applicable to the west- ern states analyzed in the USDOT's 2004 study.
ern uniformity scenario because the model does not allow for For the Federal uniformity scenario, the USDOT did not es-
analysis at less than a national level. In its analysis of the west- timate the impact on rail shippers, but the agency surmised
ern uniformity scenario, the USDOT made only qualitative that the impact would be small because most of the potentially
assessments of the likely impacts on traffic flow. The agency affected freight trips were of relatively short distances.24 For
concluded that because of the shift of the reduction in total the western uniformity scenario, the USDOT was able to esti-
truck VMT, one could expect a slight decrease in delay in the mate savings for shippers using rail. The agency estimated that
13 western states. the increased competition of the longer, heavier trucks would
generate minor savings of about $30 million per year for ship-
pers using rail. Of this amount, $3 million in savings would
Shipper Costs and Railroad Revenues accrue to shippers who actually switch from rail to trucking;
Changes in truck size and weight regulations affect the trans- the rest would accrue to rail shippers through lower rates.25
portation costs incurred by freight shippers. If the regulations
become more restrictive, then amount of payload per truck Level of Investment in Inland
will decrease and the cost per ton-mile of transportation will Waterway Infrastructure
increase. Conversely, if the regulations become more permis-
sive, then the amount of payload per truck will increase and Lack of investment in inland waterway infrastructure in-
the transportation cost per ton-mile will decrease. Changes creases the probability of a lock or dam failure. There is no
in truck size and weight regulations affect rail shipper trans- information to reliably estimate how this policy decision affects
portation costs as well, because some shippers will divert their the probability of failure. But the research team can estimate
freight to trucking or will obtain reduced rates from the rail- the cost of a failure.
roads as they compete with lower truck rates. Complete quantification of the cost of a lock or dam failure
As shown in Table B-7, in the Federal uniformity scenario, would require data on the actual delay and the value of the
the USDOT estimated that the transportation cost for shippers particular goods being moved. In the case of a total failure and
using trucks would increase by $6.4 billion per year, or about a forced mode shift, one would need to know the actual reduc-
tion in transit time and the difference between barge and rail
3 percent. For the western uniformity scenario, the USDOT
rates for the specific cargo involved, as well as the value of that
estimated savings to shippers of about $2 billion annually, or
cargo. Given that the research team is examining a hypotheti-
about 4 percent of total shipper costs for moves by truck in
cal case, we rely on the average value of goods moving by barge
and through the region.
These additional costs estimated for the Federal uniformity
scenario are higher than the projected savings in the western 24 USDOT, Comprehensive TS&W Study, p. XII-3.
uniformity scenario, because the removal of the grandfather 25 USDOT, Western Uniformity Scenario Analysis, p. ES-9.
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and the difference between average barge rates and average rail Table B-8. Cost of a lock failure.
rates. We also know tonnage moving on the Upper Mississippi
Nature of cost Possible range of cost
and the Ohio Rivers. This allows us to say something about
Cost of delay $300,000 to $1.5 million
the potential magnitude of the costs of a structure failure.
Cost of mode shift $12 million to $60 million
Delay Costs
Average value per ton for shallow-draft, domestic water Missouri.30 We assume a lock fails at or near the mid-point
carriage is $250.26 Delays, as opposed to complete stoppages, between the mouth of the Missouri and Minneapolis and that
are far more likely to occur on the Ohio River than on the it affects half the total tonnage, or 35.5 million tons. Assum-
Upper Mississippi, because all the Ohio River locks are ing, again, 2 months for lock repairs, affected tonnage would
be approximately 6 million tons (35.5 ÷ 6 = 5.9).
doubles. In 2006, 241.5 million tons moved on the Ohio.27
There could be various responses to the blockage. Blocked
Thus, the total value of this traffic was $60.4 billion. For sim-
traffic could move between a point downstream from the
plicity in developing an approximation, we assume that the
failed lock and origins and destinations to the north by rail
traffic was evenly distributed over the 20 locks on the Ohio.
or truck. Some traffic could be transferred to rail or truck
Thus, the value of the annual traffic moving through any one
for portage around the blockage and put back on the river.
lock was also $60.4 billion.
To offer some rough sense of the magnitude of impact, we
All but three of the locks have 1,200-foot main chambers;
assume a scenario in which traffic moves 100 miles by rail
of these, all but one has 600-foot auxiliaries. A 15-barge tow
when it would otherwise have been on the river, and we assume
can pass through a 1,200-foot lock in about 30 minutes.28
no change in distance, only change in mode.
With a 600-foot auxiliary, the tow has to be broken up, moved In 2007, average rail rates were $0.03 per ton-mile and
in two passes, and put back together. We assume this proce- barge rates were $0.014 per ton-mile, a difference of $0.016.31
dure adds 1 hour to the time for locking through. There are For our scenario, we assume a greater difference for several
often queues at locks, so waiting time would also increase. We reasons. A rail carrier might be in a strong bargaining posi-
assume an average of 3 hours of extra waiting time, so 4 hours tion because of the blockage. Also, extra costs for transload-
is added to the transit time for each tow. We now assume that ing would be spread over a relatively short move. It is reason-
it takes 2 months to repair the failed lock (1/6th of a year). able to use a difference of $0.02 per ton-mile. Thus, shipping
Assuming no seasonal variations, $10.1 billion worth of goods cost for each ton would increase by $2.00. Given that 6.0 mil-
will experience a 4-hour delay (60.4 billion ÷ 6 = 10.1 billion). lion tons are affected, the total cost is $12 million ($2.00 ×
We assume the owners of the cargo are paying annual inter- 6.0 million = 12 million).
est at 6.5 percent.29 The result is a delay cost of $300,000
((0.065 ÷ 365 ÷ 6) × $10.1 billion). This value is offered strictly
to give a rough sense of order of magnitude. If, as is likely, Cost Summary
we have underestimated the effect of queuing, the value would These cost estimates are clearly rough and are intended only
be greater but still not large. An increase by a factor of 5 would to give a sense of the order of magnitude of impact. If any-
bring the amount to $1.5 million. This reflects the low value thing, they are probably low. For example, the assumption of
per ton of traffic moving on the rivers. 2 months to fix a failed lock could be optimistic. It may be use-
ful to think of a range in which the above estimates are the low
Forced Mode Shift end and the high estimate is greater by a factor of five. This is
shown in Table B-8.
A total blockage, forcing a shift of cargo to rail or possibly
truck, could occur from a lock failure on the Upper Missis-
sippi where only 3 of 29 locks are doubles. In 2006, 71 mil- Highway Tolls and
lion tons moved on the Mississippi above the mouth of the Other User Charges
Tolls affect which roads truckers use, because tolls change
26Calculated from 2007 Commodity Flow Survey, Preliminary, December 2008,
the relative costs of the roads available for a given move. The
Table 1. most direct impacts on the freight system are the costs to
27Waterborne Commerce of the United States, USACE, 2006, Part 2, p. 61.
28Michael Bronzini, "Inland Waterways: Still or Turbulent Waters Ahead?" Annals
of the American Academy of Political and Social Science, Vol. 553, p. 70, Septem- 30Waterborne Commerce of the United States, USACE, 2006, Part 2, p. 203.
ber, 1997. 31Rail rate from AAR, Railroad Facts, 2008, p. 30. Barge rates calculated using a rev-
29Federal Reserve Board, data on business lending in November 2007. http:// enue amount extrapolated from the 2002 Economic Census to 2007 and ton-miles
www.federalreserve.gov/releases/e2/200712/default.htm from the CFS, Preliminary, December 2008, Table 1.
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trucks diverting to alternate routes to avoid tolls. These are some traffic from highway to rail but not a large amount.
the costs and operating problems of switching to different ATA supports a fuel-tax increase to improve highways and
roads or different times from those otherwise preferred. But is not concerned about possible loss of traffic. Regarding
these are not the only impacts. Other users of the roads to tolls, our discussions with rail executives suggest they do not
which trucks divert may be affected by the increase in truck expect much of an impact on mode share simply because
traffic on those roads. Also, reduction in truck traffic on the tolls only apply to a small portion of traffic. Higher fuel taxes
tolled road may affect, positively, other users of that road. or a general VMT-based tax would have a stronger effect in
Highway tolls can also affect railroads. All charges to truck- this view.
ers affect the total cost of highway freight carriage and, there- There is a widespread view among rail managers, rail-
fore, the relative costs of highway and rail carriage. The relative industry analysts, and shippers that the quality, especially
costs of these modes determine, in part, their relative shares of reliability, of rail service is a far more important factor than
freight traffic. This affects the revenues and earnings of truck price in determining shipper choice of mode in markets where
and rail carriers. there is significant rail-truck competition. In particular, these
Beyond that, the efficiency of the freight system is affected markets are rail-intermodal service and carload service. (Rail
if freight movement on highways is mispriced. If truckers are carload service is movement in shipments of one or a few cars
paying less (or more than) marginal cost, the freight system at a time, as opposed to shipments that require a full train.) It
will not function at maximum efficiency, and the effects will is also worth noting here that some large truckload carriers
be felt throughout the economy. that offer rail intermodal service are making a deliberate effort
Accordingly, the following are the four principal areas of to shift more of their long-haul traffic (over 1 day's drive) to
impact from highway pricing: rail intermodal.
· Costs to trucks that divert from a tolled road
· Impacts on trucks that stay on a tolled road Wider Impacts on the Freight System
· Impacts on mode share between highway and rail and the Economy
· Effects on the whole economy and society from an ineffi- As a matter of economics, there is no question that the
cient freight system freight system would be more efficient if the inputs used for
providing freight service were correctly priced. Where inputs
Potential for Quantification of Impacts are purchased in open markets, and there is no monopoly
power, we can assume relative prices of inputs accurately re-
Diversion Effects flect their relative costs, and there are no significant distortions.
Regarding costs to trucks that divert to alternate roads, Highway use is not priced in an open market, and the providers
there is enough information to permit estimates of changes of highways, the Federal and state governments, have monop-
in crash rates, fuel consumption, and speed. This allows us oly power. There is no alternative to buying fuel and paying the
to estimate crash costs, fuel and other operating costs, and Federal tax, and the same is true for many state taxes. Although
delay costs per diverted truck VMT. Two available estimates trucks and other motor vehicles can switch to alternate routes,
of diversion rates, one based on an actual tolled road, give toll authorities have a high degree of market power.
us a basis for making a plausible approximation of total There is consensus among economists and others who study
costs to diverted trucks from similar roads. Details on these transportation that use of highways is not optimally priced. To
cost estimates are presented below. We cannot make com- our knowledge, there are no usable data or analyses that would
parable estimates of the effects on other traffic on the roads provide a basis for estimating the value of the efficiency gain
to which trucks divert or the roads from which they divert. that would ensue if highways were correctly priced. We know
We can, however, offer some speculation as to whether such there would be gains, possibly significant gains, but we have
impacts would be noticeable. No data support a national no way for making a plausible estimate of their magnitude.
aggregate estimate of the costs (or benefits) of diversion. The same observation applies to any benefits from congestion
pricing, whether to trucking or to the wider economy.
Effects on Truck/Rail Mode Share
Estimate of Costs to Diverted Trucks
We are not aware of any useful data or analyses that would
permit a quantitative estimate of revenue impact on rail car- Although we cannot establish a national estimate for costs
riers related to a given change in the overall price of high- to diverted trucks, we can estimate a range of costs for what
way carriage. The prevailing view in both the trucking and might be a typical tolled highway. In order to do this, we need
rail industries is that higher costs for truckers would shift to estimate diversion rates and the changes in crash, fuel,
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and other operating costs, as well as speed and delay costs that Table B-9. Estimate of truck diversion on I-81 in
trucks would incur from taking sub-optimal routes. response to tolls.
We focus the analysis on combination trucks, which account
Toll (dollars per mile) Percentage of truck VMT diverting
for almost all of non-local highway carriage. Five-axle truck- 0.05 09.0
trailer combinations with 18 wheels are, by far, the preponder- 0.10 14.0
0.12 16.0
ant configuration. We are looking at inter-city traffic, so we 0.15 23.0
concentrate on rural roads. Diversion rates will be much lower 0.18 31.0
for short, urban trips where switching to alternate routes may 0.20 36.0
0.30 67.0
cause a disproportionate increase in distance and where alter- 0.40 81.0
nate roads in a feasible distance are unlikely to be Interstates Source: Bryan, J., et al., Reebie Associates and Atherton, Mease & Company.
or high-quality freeways. "The Impact of Tolls on Freight Movement for I-81 in Virginia"; prepared for
Virginia Department of Transportation, 2004.
Diversion Rates
There have been two recent systematic attempts to esti- manufacturing state with several large metropolitan areas, it
mate the degree of diversion of truck traffic from a road after is likely that higher proportions of moves have either origins or
a toll is imposed: a study of potential diversion from a toll on destinations in Ohio or are entirely intrastate. Longer moves
I-81 in Virginia and an empirical study of the diversion im- are more likely to divert than shorter ones, because more alter-
pact of tolls on the Ohio Turnpike.32, 33 The I-81 study was nate routes are feasible.
based on estimating costs to truckers of diverting from I-81 There is no reason to expect that these two studies would
with estimates for various classes of traffic, including varying yield closely similar results; they used different methods applied
lengths of haul. For this study, the authors assumed truckers to quite different traffic. It is reasonable to suppose, however,
would compare costs of staying on I-81 with costs of diverting that the very high diversion rates for I-81 at $0.20 per mile and
and choose the least-cost alternative. The authors of the Ohio higher would not often be found on short tolled segments with
Turnpike study used data on Class-8 truck VMT nationally, higher percentages of local trips.
for Ohio, and for the Ohio Turnpike to estimate a demand To get a sense of actual toll rates in addition to the Ohio
curve as a function of the toll rate and speed. Turnpike, we looked at rates for 5-axle trucks imposed in Indi-
These two efforts led to somewhat different results, but we ana and Illinois. For the Indiana Toll Road (157 miles), the rate
can use them together to establish a plausible range for diver- is $0.17 per mile.36 Rates are higher on the Illinois toll roads.37
sion effects. The I-81 study yielded toll division impacts The low end of the range is $0.21 for night rates and $0.28
shown in Table B-9.34 The results of the Ohio Turnpike study for day rates on the longer segments--I-90 (76 miles) and I-88
are shown in Table B-10. (96 miles). The high end is day rates of $0.42 to $0.53 on the
We have already noted the difference in method between shorter segments--I-94 and I-355 (both 30 miles).
these studies. The I-81 diversion estimate is based on estimates In summary, this gives us the following per mile truck toll
of comparative costs between a tolled I-81 and alternate routes rates in these states:
for loads with various origins and destinations. The Ohio
study is based on an empirical demand curve applied to rates · Ohio: $0.13
and speeds. The Reebie estimate of diversion is much higher · Indiana: $0.17
than the one offered by Swan and Belzer. One reason is that the · Illinois: $0.28$0.53 (day rates)
trips are probably longer on I-81. The Reebie study states that
average length of haul for trucks on the Virginia segment of Toll authorities, whether public or private, do no set prices
I-81 is 1,000 miles.35 This is through freight moving between at levels that lead to high diversion rates; they lose revenue if
the Southeast and the Northeast. We do not know average trip they do that. The Reebie study suggests that the maximum
length for the Ohio Turnpike, but, given that Ohio is a major revenue rate for I-81 would be in the range of $0.12 to $0.15.38
Reference to the above table with the Reebie results suggests
maximum diversion rates, at these prices, of 15 percent to
32Bryan, J., et al., Reebie Associates and Atherton, Mease & Company. "The
25 percent. The Ohio case shows that toll authorities will not
Impact of Tolls on Freight Movement for I-81 in Virginia"; prepared for Virginia
Department of Transportation, 2004.
33Swan, Peter, Pennsylvania State University, and Michael Belzer, Wayne State
University, "Empirical Evidence of Toll Road Traffic Diversion and Implications 36Indiana Toll Road website, https://www.getizoom.com/index.jsp
for Highway Infrastructure Privatization," 2007. 37Illinois Tollway toll calculator, http://www.illinoistollway.com/portal/page?_
34Values in table are from Bryan, et al., p. 9. pageid=133,1397406&_dad=portal&_schema=PORTAL
35Memorandum from Reebie to VDOT, February 11, 2004. 38Bryan et al., p. 10.
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Table B-10. Estimate of truck diversion on Ohio turnpike
in response to tolls.
Year Actual toll (dollars per mile) Percentage of truck VMT diverting
2001 0.18 13.62
2002 0.18 13.68
2003 0.18 13.56
2004 0.18 13.00
2005 0.13 05.01
Source: Swan, Peter, and Michael Belzer, "Empirical Evidence of Toll Road Traffic Diversion and
Implications for Highway Infrastructure Privatization," 2007.
Note: The speed limit on the turnpike was raised from 55 mph to 65 mph in early September of 2004.
always price to maximize revenue. This suggests that we can als and urban "Other" facilities are also very close: 2.1 and 1.8,
think of $0.15 to $0.25 as a likely range for tolls on longer respectively.41 Crash rates on rural "Other" are much higher,
roads; and we can think of 5 percent to 25 percent as a plau- 4.4, but only 17.0 percent of rural VMT for combination
sible range for diversion rates. trucks is on "Other" roads.42 For these reasons, we believe that
these data on divided and undivided highways give us a plau-
sible approach to an estimate.
Crash Costs
FMCSA's definition of large trucks includes all trucks over
Estimating crash costs requires values for 10,000 pounds. Thus, the FMCSA data on large-truck crashes
include many vehicles in addition to the combination vehi-
· Cost per crash for 5-axle trucks and cles doing most of the hauling of highway freight. (FMCSA
· Increment in crashes per VMT for shift from Interstate to puts out data on combination trucks' fatal crashes but does
lower quality roads. not relate them to type of road.) This is a potential distorting
factor, but we note that trucks over 26,000 pounds account
We assume the cost per crash for combination truck (trac- for a disproportionate share of large-truck crashes, espe-
tor and one trailer) to be $164,000.39 This is the average over all cially the more severe ones. Crashes involving trucks over
crash types: fatality, injury, and property-damage only (PDO). 26,000 pounds are 89 percent and 58 percent, respectively, of
Estimating change in crash rate due to diversion poses some large-truck fatal and injury crashes.43 (This particular data set
difficulty, because of the nature of the data. FMCSA reports does not provide full information on PDO crashes.) We con-
fatal crash rates for large trucks by FHWA road class but clude that using data for large-truck crashes will not unduly
not rates for other crashes. (This is because available data distort our estimates.
on fatal crashes are better than data on other crashes.) One The divided highways should be roughly comparable to
way to deal with this problem is to find a way to scale up Interstates and Non-Interstate Principal Arterials in FHWA's
from fatal crashes to all crashes. FMCSA does provide data classification of rural highways, and the undivided highways
on all large-truck crashes broken out by crashes on divided should be comparable to rural "Other" roads. Therefore, we
highways and on highways not divided.40 These data show can use fatal-crash percentages of all crashes on undivided
that fatal large-truck crashes, as a percentage of all large- and divided highways, 1.3 percent and 1.4 percent, respec-
truck crashes, are virtually the same on these two road types: tively, as the basis for scaling up to all crashes. For this pur-
1.3 percent on undivided highways and 1.4 percent on divided pose, we take the reciprocals of 0.13 and 0.14 as scaling fac-
highways. tors to obtain rates for all crashes from the reported rates for
These data do not separate rural and urban crashes. This fatal crashes. These factors are, respectively, 77 for undivided
diminishes their accuracy for our purposes but does not elim- roads and 73 for divided highways.
inate their usefulness. For one thing, fatal crash rates on rural We apply these factors to FMCSA's reported fatal crash
and urban Interstates are almost the same: 1.3 and 1.2, respec- rates per 100 million VMT for three classes of rural roads:
tively, per 100 million VMT. Fatal crash rates on rural arteri- Interstate, Non-Interstate Principal Arterials, and Other.44
Table B-11 shows the results.
39Eduard Zaloshnja and Ted Miller, "Unit Costs of Medium and Heavy Truck
Crashes," prepared for F MCSA, December 2006, p. 8, Tables 3 and 5. The value
in Table 3 for quality of life (QALY) was adjusted using the number in Table 5 41Fatal crash rates are from FMCSA LTCF, Table 19.
for QALY when value of a statistical life (VSL) is $5.75 million. DOT's estimate 42VMT data are from FHWA, "Highway Statistics," Table VM-1.
of VSL was increased to $5.8 million in a directive from OST of February 5, 2008. 43FMCSA LTCF, Table 39.
40FMCSA, "Large Truck Crash Facts 2005," (LTCF), 2007, Table 30. 44FMCSA LTCF, Table 19.
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Table B-11. Estimated crash rates by rural road type Table B-12. Combination-truck
per 100 million VMT. VMT by rural road type.
Road Type Fatal Crashes Scaling Factor All Crashes Road Type Percent of VMT
Interstate 1.3 73 95 Interstate 52.2
Non-I-S Principal Arterials 2.1 73 153 Non-I-S Principal Arterials 31.0
Other Roads 4.4 77 339 Other Roads 16.8
Table B-13. Road types used by diverted trucks.
Road Type I-81 Percentage of VMT Ohio Turnpike Percentage of Trucks
Interstate 69.0 55.9
All Non-Interstate 4-lane 2-lane
Non-Interstate 31.0
44.1 22.8 21.3
Source: I-81 values calculated from Bryan et al., p. 14; data in Figure 6. Ohio Turnpike values calculated
from Swan and Belzer, p. 18, Table 10.
To estimate change in crash rates due to diversion, we have trucks is the average of the crash rates of the three road types
to know the distribution of diverted truck traffic over road weighted according to the distribution of the diverted traffic.
classes. The current distribution of combination-truck VMT The diverted crash rate is 155, so the change in crash rates is
over rural road types is shown in Table B-12.45 60 crashes per 100 million VMT. (Diverted crash rate is cal-
In the I-81 study, Reebie estimated the percentage of VMT culated as: 0.6 × 95 + 0.2 × 153 + 0.2 × 339 = 155.)
diverted to Interstates and to all other roads and found 69 per- With a cost per crash of $164,000, this yields a crash cost of
cent diverted to Interstates. Swan and Belzer estimated num- approximately $10 million per diverted 100 million VMT
ber of trucks diverted by road type. The findings are shown in (164,000 × 60 = 9,840,000).
Table B-13.
The high percentage of diversion to Interstates from I-81
Fuel and Other Operating Costs
surely reflects the long average length of haul on I-81 in
Virginia. The estimated truck diversions from the Ohio Turn- Fuel, maintenance, and tire costs will vary directly with the
pike show percentages by road type not dissimilar to the actual change in road types. To estimate fuel costs of diversion, it is
VMT percentages from FHWA data. (If average length of haul necessary to make assumptions about average speed of com-
for combination trucks on the Ohio Turnpike is close to the bination trucks by road type and to obtain data on variation
national average length of haul, the percentage of trucks divert- in fuel consumption with truck speed.
ing is an acceptable proxy for percentage of VMT.) It is reason- Discussions with people in the trucking industry suggest
able to assume that the 4-lane non-Interstate is roughly that large trucking firms tend to set governors in the 60 to
comparable to non-Interstate arterials and the 2-lane non- 65 mph range, so their trucks average less than 60 mph on
Interstate is roughly comparable to "Other" roads. Both of Interstates. Owner-operators and small firms that do not use
the estimates suggest that truckers choosing alternate routes governors would have somewhat higher speeds. We assume
do not use 2-lane roads if they can possibly avoid it. From speeds by road type as shown in Table B-15.
these estimates we may infer that diverted combination-truck Because of the lower speeds and our focus on rural roads,
VMT will be distributed over road types, with some adjust- fuel consumption per mile drops for the diverted trucks.
ment, in essentially the same way as all combination-truck Given the assumed distribution of diverted traffic over road
VMT. For purposes of this analysis, we assume the following types, fuel consumed per mile is 0.157 gallons (0.6 × 0.172 +
distribution of diverted-truck VMT (see Table B-14). 0.2 × 0.146 + 0.2 × 0.126 = 0.157). We assume $2.50 per gal-
We assume, for all cost-estimation purposes, that the tolled
road is an Interstate or a freeway of comparable quality. There-
fore, the pre-diversion crash rate is 95 per 100 million VMT as Table B-14. Assumed distribution of
shown in the above table of crash rates. The rate for diverted diverted truck VMT.
Road Class Percentage of VMT
Interstate 60.0
Non-I-S Principal Arterials 20.0
45 "Highway Statistics," Table VM-1. Other Roads 20.0
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Table B-15. Assumption for speed and fuel economy by road type.
Road Class Average Speed46 Miles per Gallon47 Gallons per Mile
Interstate 62 5.83 0.172
Non-Interstate Principal Arterials 50 6.83 0.146
Other 40 7.95 0.126
lon for the price of diesel fuel.48 The result is a reduction in Table B-16. Summary of annual cost
fuel cost of $.035 per mile. changes per 100 million diverted VMT.
Costs of maintenance and tire wear are currently a little less
Cost Component Cost (million)
than 20 percent of fuel cost per mile.49 We assume that ratio Crashes $10.0
to hold for this analysis; therefore, we can increase the change Fuel and operating costs $-04.2
Delay $12.0
in fuel cost by 20 percent to obtain an estimate of $0.042 as Total $17.8
the reduction in operating cost per mile. This is equal to Total adjusted for added distance $18.0
$4.2 million per 100 million VMT.
Delay Costs hours is $11,590,307, which we may round to $12 million for
We estimate delay costs with the same average speeds as- our estimate.
sumed above and the same distribution of diverted trucks
over road types. The result is an average speed of 55.2 mph Cost Summary
for diverted trucks (0.6 × 62 + 0.2 × 50 + 0.2 × 40 = 55.2). This
leads to an increase in trip time of 0.002 hours per mile (pre- Table B-16 summarizes the annual cost changes per 100 mil-
diversion mile).50 This yields approximately 200,000 addi- lion diverted VMT. Some of the alternate routes chosen will re-
tional hours per 100 million VMT without allowing for any sult in longer distances. The Reebie paper estimates the increase
additional miles. at 1.1 percent.52 This yields the adjusted total of $18 million per
For cost per hour of delay, we look at the revenue that 100 million VMT.
tractor and driver generate in an average hour. If it takes a Table B-17 shows the amount of VMT diversion esti-
load an extra hour to reach its destination, the firm has lost mated for I-81 and the Ohio Turnpike under different pric-
an hour's use of the tractor and, hence, the revenue it would ing scenarios. For I-81, tolls of $0.12 and $0.15 were cho-
generate in an average working hour. Approximately a year sen because the Reebie paper suggested that these are the
ago, industry executives in private conversations with us indi- maximum-revenue toll rates. For the Ohio Turnpike, diver-
cated an average revenue per day for a tractor in truckload sion amounts for 2004 and 2005 were chosen because of the
service of about $700 to $725. In today's market, that could change in toll rates: $0.18 in 2004 and $0.13 in 2005 and the
be somewhere from $600 to $650. Current market condi- change in the speed limit in September of 2005 (55 mph to
tions are not typical, however, so we assume $700. Available 65 mph).
data tells us that 12 hours is an acceptable estimate of the av- This cost estimate does not include increased mainte-
erage working day of a long-haul driver.51 On this basis, lost nance costs on roads to which trucks divert. It is based on
revenue is $58.33 per hour. The cost of 200,000 additional some reliable data and some plausible assumptions based
on reliable data. It could be adjusted up or down to some
degree. Nonetheless, it gives a rough sense of the magnitude
of the direct costs from diverted trucks in some typical toll
46Speeds are based on ICF team's own expertise and e-mails from two trucking
scenarios.
executives. One executive stated that his company expected an average speed The estimate does not include impacts on other traffic on
of 45 mph off the Interstate. Thus, we assigned 50 mph to higher-quality non-
Interstate roads and 40 mph to other non-Interstate roads. roads to which trucks divert and from which trucks divert.
47ATRI data. We do not have sufficient data to estimate quantities for such
48Transport Topics, March 23, 2009, gives current price just over $2.00, but these
impacts. It appears, however, that impacts on other traffic
are abnormal conditions. One year ago, the price was $3.97, and that may have
been an extreme. We assume $2.50, for this estimate.
could be significant, at least for some segments. The Reebie
49ATRI, "An Analysis of the Operational Costs of Trucking," December 2008, estimate for I-81 suggests 15 percent to 25 percent of truck
p. 21, Table 4.
50Change in time per mile is the difference between time required to travel one
mile at new speed and one mile at old speed. (1÷55.2) - (1÷60).
51FMCSA Field Survey. 52 Bryan et al., p. 13.
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Table B-17. Truck VMT diversion and associated annual cost.
Toll Rates VMT Diverted (millions) Annual Cost (millions)
I-81 $0.15 82 $14.8
$0.12 56 $10.0
Ohio Turnpike $0.18 133 $23.9
$0.13 54 $09.7
VMT diverting at revenue-maximizing tolls. Depending on a factor of 1.19.56 This leads us to an estimate of 2007 rev-
the amount of other traffic on a segment, this could have enue of $2,356 million.57
some effect on level of service. The Swan and Belzer estimate It is desirable to estimate industry revenue for three refer-
for the Ohio Turnpike shows 13 percent of VMT diverting ence years: 2004 and 2013 in addition to 2007. Industry tax
at the toll of $0.18 per mile. This could be noticeable on burden in 2004 is relevant because that was the last year in
some segments but would likely have little impact on most which the full deficit-reduction tax of $0.043 per gallon was
segments. Regarding roads to which trucks are diverted, levied on towboats. The Office of Management and Budget
Swan and Belzer present data showing that some segments (OMB) has projected revenue from the proposed lockage
could see increases of several thousand trucks per day.53 fee out to 2013. We can therefore compare total tax payments
That is certainly enough to degrade the level of service on to industry revenue in 2004, 2007, and 2013. Industry revenue
some segments. declined from 2002 to 2007 at an annual rate of 1.63 percent.
Assuming a constant rate of decline over that period, revenue
in 2004 would have been $2,474 million.58 In projecting fuel-
Lockage Fees for Inland Waterways tax revenue out to 2013 (as a baseline), OMB assumes that the
There have been recent proposals to phase out the fuel tax decline in barge traffic in recent years stops and fuel tax revenue
to towboats and replace it with a lockage fee. The most signif- grows at a very slight rate from 2007 to 2013: 0.36 percent.59 We
icant impact of such a policy would be the increase in the tax use this growth rate to project from 2007 revenue and obtain
burden on inland towing, which might cause an increase in 2013 revenue of $2,407 million.60
barge rates and have some effect on mode shift. We estimate We obtained tax payments data for 2004 and 2007 from the
the change in the tax burden on the inland towing industry Congressional Budget Office, Tax Analysis Division. Estimated
that would result from the proposed lockage fee. For this pur- tax payments for 2013 are available from the FY 2009 Presi-
pose, we compare projected revenues from the lockage fee dent's Budget, cited above. Table B-18 shows the relative bur-
with current and projected payments on the fuel tax. We can den of tax payments in the three reference years, assuming the
then compare the new tax burden and the change in tax bur- implementation of the lockage fee in FY 2009.
den with projected towing-industry revenue. We see that the highest burden is for the lockage fee in 2013,
The latest published estimate of towboat revenues is from 5.2 percent of industry revenue. (The burden is actually higher
the 2002 Economic Census: $2,557 million from inland in 2012, but the fee does not stay at the 2012 level; it drops
towing.54 Published data from the 2007 Economic Census do back because of the balance in the trust fund.) The second
not yet include revenues from inland towing. Available data highest burden was in 2004 when the industry was still paying
from the Commodity Flow Survey (CFS) do, however, include the full deficit-reduction tax of $0.043 per gallon in addition
ton-miles of shallow-draft water carriage in 2007. By compar- to the user tax of $0.20 per gallon. The burden was lightest in
ing this figure with ton-miles carried in 2002, we obtain the 2007 when the deficit-reduction tax was zero.
change in the amount of freight carriage sold. Over this period, The most meaningful measure of the increase in burden is
ton-miles decreased from 212 billion to 164 billion, by a the tax increase as a percentage of revenue. This tells us how
factor of 0.77.55 If we also adjust for the change in the price much the industry would have to increase its prices in order
of inland carriage, we can obtain a reasonable estimate of to recover fully the tax increase. And this, in turn, tells us
2007 revenue from inland towing. Price indices for water
transportation show a price increase from 2002 to 2007 by
56BEA, Gross Domestic Product by Industry, indices for water transportation
http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=94425&table_
id=23984&format_type=0
53Swan and Belzer, p. 18, Table 10. 57Calculation: 0.77 × 1.19 × 2,557 = 2,356
542002 Economic Census, Product Lines, Transportation and Warehousing, 58Calculation: 2,557 × (1-0.0163)2 = 2,474
Table 1, p. 7 (NAICS 483211 [coastal and inland freight, product codes 44010, 59Calculated from OMB projections in FY 2009 President's Budget, Analytical
44030]). Perspectives volume, Table 17-3 (p. 266) and Table 17-4 (p.269).
552002 CFS, Table 1a, p. 1; 2007 CFS, Preliminary Release. 60Calculation: 2,356 × (1.0036)6 = 2,407
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Table B-18. Inland waterway towing revenue and tax payments.
Fiscal year Industry revenue Tax payment Tax % Change in tax as
(million) (million) of revenue % of revenue
2004 fuel tax with $0.043 $2,474 $110.0 4.4% NA
2007 fuel tax without $0.043 $2,356 $87.3 3.7% NA
2013 fuel tax projected $2,407 $93.0 3.9% NA
2013 lockage fee projected $2,407 $126.0 5.2% 1.4%
Change in tax as a percentage of revenue is only relevant for 2013; we do not have an estimate of what the
revenue from the lockage fee would have been in the earlier reference years.
the degree to which the tax increase would have an impact although it is not likely a large share of total movement. Let
on mode share and on total movement of freight. It cannot us assume as an upper bound that one-third of the total rev-
be assumed, of course, that the towing industry would, or could, enue would come from non-lock traffic. If one-third of the
raise rates by enough to fully offset the tax increase. But the traffic pays no tax, the percentage of revenue coming from
amount of a 100-percent passthrough shows us the maximum lock-using traffic would be 1.5 times the percentage coming
possible effect on mode share. from all traffic.
As shown in Table B-18, the 2013 tax increase ($33 mil- So the extreme case would be that the lockage fee would
lion) is 1.4 percent of total revenue. For the traffic using locks, mean a tax increase of 2.1 percent of the revenue of lock-using
the tax increase would be more than 1.4 percent, because traffic. A 2.1 percent increase in average rates of lock-using
the traffic not using locks would not pay the fee at all. The barge traffic is unlikely to have a significant impact on mode
Economic Census data on revenue from inland towing show share between barge and rail. It is not likely that all of the
a very small share, less than 10 percent, coming from coastal increase could be passed through, so the real effect would be
carriage.61 Some inland river traffic also does not use locks, a slight increase in barge rates and a slight decrease in earn-
ings from carriage using locks. The aggregate impact would
61 2002 Economic Census, cited above. likely be negligible.
