On a Roll with Tolling

By Keith Bucklew and Peter Ogonowski

Over the past 40 years, following the completion of the U.S. Interstate Highway System, highway capacity simply hasn't kept pace with our nation's traffic demand. In many corridors and for increasingly long periods each day, reliable goods movement has been overshadowed by costly congestion.

Some experts argue that the roads need a big boost. The American Society of Civil Engineers recently gave American roadway infrastructure a "D" grade, stating that more than 40 percent of the nation's major urban highways are congested — at a cost to the economy in excess of $100 billion per year. ASCE estimated that it will take a capital investment of $170 billion annually to improve this condition, an 87 percent increase over the current federal, state, and local agency investments of about $91 billion. Texas A&M University estimated the annual urban congestion cost in 2011 at about $121 billion — $27 billion of that total in wasted time and diesel fuel attributable to goods movement by trucks.

For national and regional freight shippers and carriers to remain competitive, the movement of goods and commodities needs to be consistently reliable. One obstacle is politics. Washington has yet to settle on one or a set of funding solutions to rebuild and enhance our highway infrastructure to accommodate 21st century travel needs. Tolling is one answer that is being actively considered or implemented by a number of state departments of transportation and (in some cases) their private-sector partners, but it is one that the trucking industry is averse to.

Why?

Two takes on tolling

Tolling is a lightning rod issue with politicians and users alike, but particularly with shippers and truckers. Toll charges are a direct operating cost for them. The freight logistics industry has traditionally viewed the use of tolled roadways as discretionary. "Why take a toll road when using a non-toll road can ensure the same delivery without the added expense?" is the general mindset.

In addition, the industry is not convinced that tolling always improves the mobility of its shipments, citing rush hour backups on major tolled corridors. It also balks at tolling facilities' frequent fee increases, which add to their operational costs.

While these perspectives may have been accurate a quarter of a century ago, the significant growth in traffic volume (both trucks and cars), the increased demand for rapid freight transport, and the lack of investment in transportation infrastructure have made toll roads a necessity to guarantee on-time delivery of goods and commodities. Tolling advocates offer a number of pro-tolling arguments that respond to the opposition's qualms:

BETTER TECHNOLOGY IMPROVES EFFICIENCY. All-electronic tolling technology has contributed to fewer delays and less congestion overall on major corridors where it has been implemented. Truckers with electronic transponders, such as those provided by E-ZPass, SunPass, I-PASS, or FasTrak, no longer have to slow down for the toll booth. Instead, they can now drive under AET gantries or through AET booths. Even if they lack the device, high-speed cameras can detect their license plates and bill the company by mail.

TOLLING FUNDS SAFETY. According to the International Bridge, Tunnel and Turnpike Association, about five billion trips are made on more than 5,400 miles of U.S. toll roads each year, with an average fatality rate (per 100 million vehicle miles traveled) at only one-third the rate for all roads in the country. With toll collection revenues appropriated to fund highway maintenance and improvements, toll roads are made faster and more reliable. The upgraded driving conditions make traffic more predictable and decrease congestion.

PAYING TOLLS BRINGS BENEFITS. The relatively better speeds and reliability of toll roads allow goods to be moved more efficiently and operating costs to stay down, which is particularly important with the growth of e-commerce among most major retailers, such as Amazon, Staples, and Walmart. Consumers now expect accurate, on-time deliveries. Tolls are a small price to pay to accommodate them.

TOLL ROADS PROVIDE AN OPTION. Truckers do not have to use toll roads habitually. They are an option with an incentive to get to a destination in a speedier fashion when needed; however, shippers can prioritize using non-toll roads for shipments that have longer delivery times.

All arguments considered, states continue to prioritize upgrades on main corridors to accommodate interstate and global trade. Along with a handful of other unique solutions, tolling is reemerging as a possible solution to facilitate better freight movement in the U.S. and beyond.

Tolling past and present

Tolling is not a recent phenomenon. Toll roads have been used throughout history, especially in Europe, to finance construction of roads, repairs, and maintenance. They have a long history in the U.S., dating to the 1700s. Toll agency growth was steady between 1950 and 1960 but then slowed because of provisions that limited the states' ability to use tolling as a viable tool for getting infrastructure built. The Federal Aid Highway Act of 1956 created the Interstate Highway System and approved tolling on existing roads and those under construction at the time, but the law restricted tolling on new capacity, which stymied tolling advancement between about 1960 and 1990.

In the early 1990s, private-sector investment and participation began increasing, and tolling restrictions were relaxed by federal transportation bills — the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, passed in 2005, and the Moving Ahead for Progress in the 21st Century Act in 2012.

Tolling has been effective in many places. The New Jersey Turnpike, Pennsylvania Turnpike, Illinois Tollway, and Florida Turnpike have all been widely used for more than half a century. These facilities are integral to the movement of freight. The many millions of trips taken on them have enabled millions of tons of freight to be moved to and from production nodes, warehouses, distribution centers, and some of the nation's largest seaports and airports to markets for domestic and international trade.

The New Jersey Turnpike — running 122 miles, from the Delaware Memorial Bridge in the southwest part of the state to the George Washington Bridge in the northeast — is a leading example of how tolling can benefit the shipping industry. This thoroughfare serves as a critical connection to Interstate-95, the eastern seaboard's main highway and primary commerce corridor, as well as to some of the country's busiest marine ports and airports around New York City, while providing access to other important metro areas in New Jersey, Pennsylvania, and Delaware, and ultimately beyond. In densely populated areas like these that have large volumes of trade, using a toll road is an easy decision to make to satisfy customer demand and guarantee efficiency and safety.

All of these tolled turnpikes have remained in reasonably healthy financial shape over their lifetimes, covering capital and operating costs, and ensuring fast and reliable roads for truckers. By assisting large volumes of commercial and passenger traffic, they have also supported the creation of many direct and multiplier-effect jobs in their respective states and beyond.

Besides tolling, states are also using other means to support freight mobility. High-occupancy vehicle lanes divert carpools, vanpools, transit buses, and other commuter traffic during peak hours. While HOV lanes are not always tolled, states including Texas, Florida, California, Indiana, and Minnesota have been innovative in converting them to high-occupancy toll lanes or express lanes. These lanes maintain free access for multiple-occupant vehicles, while single-person vehicles have the option of using them for a toll that rises and falls with congestion levels.

Truck-only lanes, which are virtually nonexistent in the U.S., are being evaluated as a way to separate trucks from other mixed flow traffic in an effort to strengthen safety and stabilize traffic flow. Because all users would benefit if large trucks were separated from general purpose vehicles, perhaps tolling could be a feasible funding source for constructing these lanes.

Finally, the recent focus on connected vehicle technology and USDOT's decision to start a vehicle-to-vehicle communication pilot program for cars, trucks, and transit vehicles has beneficial implications for truckers. In 2011, the Federal Motor Carrier Safety Administration tightened truck driver hours-of-service regulations in an attempt to improve safety. As a result, the daily legal driving time has been reduced for 3.5 million commercial truck drivers, which amounts to significant losses in hauled loads per driver.

Increasing the federal truck size and weight limits could offset some of the haul loss; however, FMCSA is cautious about recommending changes because of the potential risk to safety and increased infrastructure wear. If USDOT's light vehicle program can demonstrate the successful application of vehicle-to-vehicle communication to reduce crashes, the program might be extended to trucks, potentially further reducing safety concerns on toll roads.

Outlook

There is a business case for tolling. Tolled facilities, by their nature, provide the service needed for carriers to satisfy customer demand. While not always perfect, toll roads are one practical option for funding selected corridors of the American highway network on which commerce (both traditional and Internet-based) depend heavily.

As freight shippers search for efficient and safe alternatives to support their logistics, the nation's existing toll roads may be viewed as models. Although they are a cost of doing business, toll roads provide an option for the freight industry to consider when looking for ways to stay competitive.

As with many desirable goods and services, good roads have to be paid for and tolling is increasingly looking like a way to do it. The use of toll roads by the shipping industry mutually benefits its subset industry, trucking. Using toll roads aids with timely and safe deliveries, proper upkeep, and the quality and reliability of the roads. Nothing is really free, but some things are worth their price.

Keith Bucklew is a principal and freight practice leader at CDM Smith. Peter Ogonowski is a senior economist there.

Resources

Image: Public and private toll road agencies on the rise. Source: CDM Smith; graphic by Joan Cairney.