Freight Transport Management
Increasing Commercial Vehicle Transport Efficiency
~~~~~~~~~~~~~~
Victoria Transport Policy
Institute
~~~~~~~~~~~~~~~~~~~~
Updated
23 July 2008
This chapter discusses ways of improving freight transportation efficiency by shifting improving the quality of efficient freight options (such as rail and integrated distribution services), providing incentives to use the most efficient option for each type of delivery, increasing load factors, improving logistics, and reducing unnecessary shipping distances and volumes.
Freight Transport Management includes various strategies of increasing the efficiency of freight and commercial transport. Logistics is a technical term for efficient freight management, including shipping practices (e.g., vehicle type, shipment size, frequency, etc.), facility siting, and related activities. Logistics usually focuses on minimizing shipper costs, with little consideration of social costs such as congestion or pollution impacts. Below are examples of Freight Transport Management activities:
· Encourage shippers to use
modes with lower social costs, such as rail and water transport rather than
truck for longer-distance shipping. Trucking uses much more energy per unit of
transport than rail or water (ten times as much in many situations), although
only certain types of goods and deliveries are suitable for such shifting.
· Improve rail and marine
transportation infrastructure and services to make these modes more competitive
with trucking. (Note that by reducing shipping costs this may increase total
freight traffic volumes, resulting in little or no reduction in energy
consumption, emissions or other externalities.)
· Improve scheduling and
routing to reduce freight vehicle mileage and increase load factors (e.g.,
avoiding empty backhauls). This can be accomplished through increased
computerization and coordination among distributors.
· Organize regional delivery
systems so fewer vehicle trips are needed to distribute goods (e.g., using
common carriers that consolidate loads, rather than company fleets).
· Reduce total freight
transport by reducing product volumes and unnecessary packaging, relying on
more local products, and siting manufacturing and assembly processes closer to
their destination markets.
· Use smaller vehicles and
human powered transport, particularly for distribution in urban areas.
· Implement fleet management
programs that reduce vehicle mileage, use optimal sized vehicles for each trip,
and insure that fleet vehicles are maintained and operated in ways that reduce
external costs (congestion, pollution, crash risk, etc.).
· Encourage businesses to
consider shipping costs and externalities in product design, production and
marketing, for example by minimizing excessive packaging and unnecessary
delivery frequency, and relying on more local suppliers.
· Change freight delivery
times to reduce congestion.
· Increase land use Accessibility by Clustering common
destinations together, which reduces the amount of travel required for goods
distribution.
· Pricing and tax policies to
encourage efficient freight transport.
· Increase freight vehicle
fuel efficiency and reduce emissions through design improvements and new
technologies. These include increased aerodynamics, weight reductions, reduced
engine friction, improved engine and transmission designs, more efficient
tires, and more efficient accessories.
· Improve vehicle operator
training to encourage more efficient driving.
Heavy trucks represent about 10% of total vehicle mileage, and smaller commercial vehicles represent another 5-10% of total vehicle traffic. Heavy trucks represent a major share of total traffic on some highways, particularly around major ports, rail terminals and industrial areas. Because of their size, freight trucks impose relatively high congestion, road wear, accident risk, air pollution and noise costs, so travel reductions can provide significant benefits in areas where they are concentrated.
Truck transport tends to impose the greatest congestion costs, although exact impacts depend on specific conditions, such as the route and travel time (CSPPSFT, 1996). Many goods must be transported by local truck to their final destination, and long-haul trucking tends to impose relatively modest congestion impacts. Table 1 compares average costs, fuel consumption and pollution emissions for three major freight modes.
Table 1 Comparing Freight Modes – Per
Ton-Mile (Grier,
2002)
|
|
Cost |
Fuel Use |
Hydrocarbons |
CO |
NOx |
|
Units |
Cents |
Gallons |
Lbs. |
Lbs. |
Lbs. |
|
Barge |
0.97 |
0.002 |
0.09 |
0.20 |
0.53 |
|
Rail |
2.53 |
0.005 |
0.46 |
0.64 |
1.83 |
|
Truck |
5.35 |
0.017 |
0.63 |
1.90 |
10.17 |
There are many ways to encourage more efficient freight delivery. Some strategies involve public planning and investments. For example, transportation and port authorities can improve intermodal transfer facilities, making it easier to shift loads from trucks to rail and water transport. Governments can also subsidize rail and marine transport industries if efficient pricing of road freight vehicles is infeasible (Casavant and Lenzi, 1989).
The UK government promotes increased use of rail by investing in improved track access facilities (e.g. new sidings alongside existing rail lines) and by funding track access charges for privatized rail services (DETR 1999). Local governments can encourage more efficient delivery services (Takada and Kobayakawa, 1998; Böhler and Reutter, 2006). Governments can institute Pricing Reforms such as Weight-Distance Charges and Fuel Pricing that encourage more efficient freight transport (Kågeson and Dings, 1999).
Private companies can improve their logistics. Firms can increase the efficiency of their own distribution networks, rely more on rail or marine transport for medium- and long-distance shipping, develop and use more local suppliers, find ways to reduce freight volumes, and use smaller vehicles or bicycles when appropriate for urban transport. Businesses can create cooperative distribution networks that consolidate loads, and develop services such as electric vehicle or bicycle delivery networks. Governments and public agencies can support research and education programs that improve best practices in the shipping industry. Hall (2007) recommends that port communities plan to increase sustainability and prepare for changing demands due to possible increases in future energy costs.
The potential for reducing freight traffic varies depending on location and what strategies are used.
The Price Elasticity of freight transport
(measured in ton-miles) in
Table 2 Travel
Impact Summary
|
Objective |
Rating |
Comments |
|
Reduces total traffic. |
2 |
Reduces a small portion of
vehicles, but they tend to have relatively large impacts. |
|
Reduces peak period
traffic. |
1 |
Usually reduces a small
portion of vehicles on congested roads. |
|
Shifts peak to off-peak
periods. |
1 |
Some freight management
involves shifting peak-period trips to off-peak. |
|
Shifts automobile travel to
alternative modes. |
1 |
Some freight management
involves shifting deliveries to bicycle. |
|
Improves access, reduces
the need for travel. |
0 |
|
|
Increased ridesharing. |
0 |
|
|
Increased public transit. |
0 |
|
|
Increased cycling. |
1 |
|
|
Increased walking. |
0 |
|
|
Increased Telework. |
0 |
|
|
Reduced freight traffic. |
3 |
|
Rating from 3 (very
beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Although freight vehicles represent only 10-20% of total vehicle mileage, they tend to impose large impacts. Reductions in freight traffic can provide the following benefits. See Litman (2002) and Gorman (2008) for information on freight cost studies, cost estimates and ways to calculate potential cost savings.
Because
of their large size and slower acceleration, heavy trucks impose more
congestion per unit of travel than lighter vehicles. Freight vehicles are a
small portion of total urban-peak traffic (operators tend to schedule their
trips to avoid urban-peak driving to minimize congestion delays), but heavy
trucks constitute a large portion of traffic on some corridors, such as
highways to ports and major industrial areas.
Freight
trucks cause high levels of road wear (FHWA, 1997). A heavy truck can impose
road wear costs hundreds of times greater than an automobile.
Freight transport consumes
30-40% of total transportation energy (CST, 2001). Heavy diesel trucks consume
about 22% of total roadway fuel, and produce high levels of particulate air
pollutants, which are particularly harmful to human health. Heavy trucks tend
to be much noisier than most other vehicles. Rail transport also imposes
significant noise and air pollution, and land use impacts. Freight emissions
can be a major contributor to pollution problems along major industrial
transportation corridors (ICB Consulting, 2001). Some studies estimate that
freight energy efficiency can realistically increase by 15-30% over a 10-20
year period. Transport represents a
major portion of lifecycle energy inputs in many products (Browne and Allen,
2007).
Although
crash rates for heavy trucks are relatively low, they can cause significant
damage to other road users when a crash does occur, resulting in relatively
high costs per vehicle-mile (Forkenbrock, 1999; Safety
Impacts of TDM).
Freight
traffic can degrade community livability by imposing noise, dust, air
pollution, traffic risk and traffic delay, particularly in neighborhoods near
major highways or terminals. Reducing freight traffic can reduce these impacts.
Heavy
vehicle traffic is a particular deterrent to pedestrian and bicycle travel (Evaluating Nonmotorized Transport)
Logistical
improvements that increase freight delivery efficiently can provide financial
savings to shippers.
Freight management costs may include additional facility investments (such as improved rail and port terminals), subsidies and logistic management expenses. Disincentives (such as higher fuel taxes or fees) increase shipping costs, which will have a greater effect on industries and regions that are more dependent on transport. Price changes that are sudden and unpredictable impose transition costs that are economically harmful, because producers and consumers will not be able to take them into account when making long-term decisions, such as where to locate and what equipment to purchase.
Table 3 Benefit Summary
|
Objectives |
Rating |
Comments |
|
Congestion Reduction |
1 |
Modest overall reductions
in peak-period travel. |
|
Road & Parking Savings |
3 |
Heavy trucks cause
significant roadway costs. |
|
Consumer Savings |
0 |
No direct impact. |
|
Transport Choice |
0 |
No direct impact. |
|
Road Safety |
3 |
Reduces traffic risk caused
by large trucks. |
|
Environmental Protection |
3 |
Reduces air pollution
caused by large trucks. |
|
Efficient Land Use |
2 |
Tends to encourage more
infill/cluster development. |
|
Community Livability |
2 |
Reduces traffic impacts and
noise caused by large trucks. |
Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Freight transport management has minimal equity impacts. Higher fees and taxes on heavy vehicles may disadvantage some groups (truckers and freight-intensive industries), particularly if they are sudden and unpredictable, but these usually represent an internalization of currently external costs (i.e., a reduction in current subsidies to heavy truck travel).
Table 4 Equity Summary
|
Criteria |
Rating |
Comments |
|
Treats everybody equally. |
-1 |
Impacts some groups more
than others. |
|
Individuals bear the costs
they impose. |
2 |
Reduces externalities. |
|
Progressive with respect to
income. |
0 |
No significant impact. |
|
Benefits transportation
disadvantaged. |
0 |
No significant impact. |
|
Improves basic mobility. |
0 |
No significant impact. |
Rating from 3 (very
beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Demand management can be applied to just about any freight transport activity, and is particularly appropriate in large urban areas with heavy freight traffic. It can be implemented by most levels of government and businesses. Because freight often travels across borders, freight transport management often requires international cooperation. Freight efficiency and impact reduction can be incorporated into international trade agreements and policies.
Table 5 Application Summary
|
Geographic |
Rating |
Organization |
Rating |
|
Large urban region. |
3 |
Federal government. |
3 |
|
High-density, urban. |
3 |
State/provincial
government. |
3 |
|
Medium-density,
urban/suburban. |
3 |
Regional government. |
3 |
|
Town. |
2 |
Municipal/local government. |
3 |
|
Low-density, rural. |
2 |
Business Associations/TMA. |
3 |
|
Commercial center. |
3 |
Individual business. |
3 |
|
Residential neighborhood. |
2 |
Developer. |
2 |
|
Resort/recreation area. |
2 |
Neighborhood association. |
2 |
|
Industrial centers and
terminals |
3 |
Campus. |
2 |
Ratings range from 0 (not
appropriate) to 3 (very appropriate).
TDM Program and Improved Transport Choice
Logistics improvements may be included in comprehensive TDM Programs. Least-Cost Planning, Pricing Reforms, Prioritizing Transportation and Road Space Reallocation and Smart Growth planning principles can support freight demand management. Congestion Pricing can improve truck traffic efficiency. Speed Reductions and Emission Reductions can help reduce freight vehicle impacts.
Freight planning and TDM programs can be implemented by various government agencies, and by businesses that profit from increased freight efficiency. Government policies can affect prices that provide an incentive for more efficient freight travel. Transport-intensive industries (such as those that rely heavily on raw materials), shipping firms and operators (such as truck drivers), and fleet operators all have an interest in Freight Transport Management. Businesses involved in environmentally friendly transport sectors, such as rail, waterway, and local delivery services can benefit from favorable policies and price incentives that make them more competitive.
Different freight TDM strategies face different barriers. Underpricing of freight travel (particularly trucks) and dedicated highway funding are major barriers to improved logistics since they reduce the incentive for more efficient shipping.
Best practices depend on the level of management (firm, city, region, nation, global) and the type of freight to be managed. The discipline of logistics provides a wide range of management guidelines and techniques to optimize freight transport efficiency. Below are guidelines for increasing freight transport system efficiency (T&E, 2000a; Miller, Kiguel and Zielinski, 2001; Böhler and Reutter, 2006).
1. Integration. Develop integrated freight transport networks. For example, facilitate intermodal systems that use rail and marine for longer-distance links, and trucks and human-powered delivery for shorter-distance links.
2. Objectives. Establish specific objectives for freight transport activity that support sustainability, such as reduced energy consumption per ton-mile, encouraging use of less polluting modes, and placing a limit on total freight transport impacts in an area.
3. Priorities. Give Priority to planning and investment decisions that support more sustainable freight modes. Use a bundle of management instruments to encourage more efficient freight transport.
4. Level Playing Field. Correct market distortions that favor less sustainable modes over more sustainable modes. For example, tax, pricing and investment policies should not favor truck over rail or marine transport.
5. Pricing. Implement the user pays principle, which means that prices reflect all costs unless a subsidy is specifically justified.
6. Services. Encourage competition and entrepreneurial freedom in freight transport markets by allowing open access to rail networks and minimizing barriers to competition.
7. Reduce Freight Volume. Encourage policies that reduce total freight traffic volume, including more local production, reduced product weight and packaging, reduced empty backhauls, and reduced waste production.