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|Federal Highway Administration > Publications > Public Roads > Vol. 69 · No. 2 > Issues in the Financing of Truck-Only Lanes|
Publication Number: FHWA-HRT-05-007
Issues in the Financing of Truck-Only Lanes
by David J. Forkenbrock and Jim March
A number of questions, such as "who benefits" and "who pays," need to be addressed when considering mechanisms for funding special-purpose lanes.
For almost 40 years, transportation planners have debated the efficacy of separating traffic into lanes reserved for passenger vehicles and others kept solely for trucks. Today, two principal objectives underlie the argument for designating special-purpose or managed lanes on interstates. One purpose is to separate heavy trucks from lighter vehicles on major truck corridors. The second is to create lanes on urban freeways that are reserved for high-occupancy vehicles and exclude trucks.
With the growing U.S. economy and rapid increase in freight traffic, the question of how best to transport freight becomes more and more critical. Whatever modal options are chosen, they likely will involve major facility investments. If past trends continue, trucks will be used to haul an increasing volume of freight. But traffic on many interstates has already become congested, and in some cases large trucks constitute a significant portion of this traffic. Under these conditions, would it make sense to separate this growing truck traffic from lighter vehicles with truck-only lanes Several States, in fact, are considering truck-only lanes, but the costs could run into the billions. Where might the funding come from, and who ultimately should pay the cost? More precisely, how should the costs of constructing and operating those lanes be distributed among the users of special-purpose and general-purpose lanes?
The Argument for Truck-Only Lanes
The debate over whether to construct additional lanes along certain interstate highways has been receiving attention recently. In part, this interest is due to the steady increase in heavy truck traffic as the U.S. economy grows and trucking commands an increasing share of freight shipments. In The Freight Story: A National Perspective on Enhancing Freight Transportation (FHWA-OP-03-004), the Federal Highway Administration (FHWA) estimated that freight truck vehicle miles traveled will increase by more than 70 percent by 2020. The Transportation Research Board (TRB) in its 2003 report, Freight Capacity for the 21st Century, called on the U.S. Congress to study the cost and market potential of exclusive truck lanes.
Trucking advocates contend that truck-only lanes would increase the opportunities for significant improvements in the effectiveness of this freight mode, especially if longer, multitrailer trucks were allowed, as was recommended in a recent study by the Reason Foundation, Corridors for Toll Truckways: Suggested Locations for Pilot Projects. In addition, R.W. Stokes and S. Albert in Preliminary Assessment of the Feasibility of an Exclusive Truck Facility for Beaumont-Houston Corridor and F.L. Mannering in Truck Restriction Evaluation: The Puget Sound Experience argued that the benefits of truck-only lanes go beyond operational gains for trucking firms and include traffic safety improvements, reduced conflicts, and lower maintenance costs on general-traffic lanes. Moving heavy trucks to separate lanes could also improve the comfort and convenience of those traveling in passenger vehicles.
The Southern California Association of Governments recently conducted a study of the conditions under which truck-only lanes would be most feasible (see http://www.dot.ca.gov/hq/traffops/trucks/ops-guide/truck-lanes.htm). Specific conditions that would signal a possible need for truck-only lanes include:
In Corridors for Toll Truckways: Suggested Locations for Pilot Projects, Robert W. Poole, Jr., and Peter Samuel used similar parameters: average daily traffic of 40,000 in each direction, with 20 percent accounted for by heavy trucks. Most rural interstates are unlikely to meet those conditions, suggesting that truck-only lanes are likely to be a cost-effective solution only when traffic volumes are comparatively high, with a sizable presence of heavy trucks.
Types of Truck-Only Lanes
Proposals for the construction of truck-only lanes vary in design and capital cost, but three general designs have been discussed most often.
Proposals also vary in terms of the configuration of entrance and exit ramps. The most extensive designs minimize interactions between heavy trucks and other vehicles, implying the need for constructing special entrance and exit ramps. They probably would be spaced farther apart than current general-purpose ramps are spaced.
Cost and Financing Of Truck-Only Lanes
In principle, the concept of truck-only lanes has fairly broad appeal, but such lanes would be expensive to construct. Poole and Samuel estimate that, in general, constructing a truck-only facility alongside an existing rural interstate would cost approximately $2.5 million per lane-mile (about $10 million per route-mile for two lanes in each direction), plus land acquisition costs, if applicable. The cost would vary considerably, depending on right-of-way availability, topography, the need for overpass reconstruction for heavier gross vehicle weights, number of entrance and exit ramps needed, and a host of other factors. Costs in densely developed urban areas could be much higher.
Highway cost allocation studies, such as FHWA's 1997 Federal Highway Cost Allocation Study, provide some basis for analyzing the issue of how much of the cost might be paid by various vehicle classes. Those studies estimate the cost responsibility of different vehicle classes, including the relative infrastructure wear-and-tear that each vehicle type occasions per mile traveled on various classes of roads and each vehicle's relative contribution to the need for new capacity. Cost allocation studies have not addressed the issue of truck-only lanes and do not capture all the issues that should be reflected in decisions on how to share improvement costs among the different users.
Regarding financing, truck lane proposals generally have assumed that the new lanes would be paid for through tolls. This is true for truck lane proposals in California, Virginia, and the Trans-Texas Corridor in Texas.
Many questions arise about the appropriate level of tolls, which users should pay those tolls, and the extent to which tolls can cover the full costs of the facilities. A central issue in considering financing options for truck lanes is the relative portion of costs that should be paid by trucks that use the special-purpose lanes and by other vehicles that continue to use existing lanes. Some studies have assumed that only trucks using the new truck lanes would pay a toll, others have assumed that all vehicles would pay a toll, and yet others have left that question open, recognizing the controversial nature of the issue. A recent study of the feasibility of adding truck lanes to S.R. 60 in the Los Angeles area concluded that "even if tolls were optimally applied to the truck lanes, less than 30 percent of the project costs could be recovered from project revenues."
Countering arguments that only trucks using the new truck lanes should pay for those lanes, Darren Roth, director of highway operations for the American Trucking Associations (ATA), argues, "Truck operators helped pay the capital costs of current lanes and so have an equity position in them." To the extent that this is true, a credit for this equity could be applied to their cost responsibility for the additional lanes to be constructed.
However, if during the time since the existing lanes were constructed trucks have not paid their share of the costs of wear-and-tear, it could be argued that this underpayment should be deducted from any equity credit. A rather complex accounting of costs and credits would be required to determine how much, if any, credit for trucking firms should be applied.
Another argument against charging only trucks for the costs of constructing new truck lanes is that those lanes provide additional capacity to move both people and goods in the corridor. Even though only trucks would be using the new lanes, vehicles using the existing lanes would face less congestion.
One method for estimating the share of the new capacity costs that should be assigned to trucks and to other vehicle classes is based on their passenger car equivalencies. The concept of passenger car equivalents is used by traffic engineers to estimate the relative use of highway capacity by different classes of vehicles. Because trucks are longer and have poorer acceleration than automobiles, their contribution to congestion is greater than that of automobiles and other passenger vehicles. The 1997 Federal Highway Cost Allocation Study used passenger car equivalents as a factor in assigning new capacity costs to different vehicle classes.
Rather than attempting to apply a cost-based approach to the issue of the share of truck lane costs that should be paid by various vehicle classes, a more workable basis for estimating the relative cost burdens of truck-only lanes might be to consider the nature and magnitude of benefits that the two groups of users would be likely to derive if truck-only lanes were constructed. These benefits influence the willingness to pay on the part of each group.
Benefits to Trucking Firms
The key potential benefits of truck-only lanes to trucking firms would be fourfold. First, the firms would be far less exposed to the risk of car-truck crashes, many of which result from errors on the part of passenger-vehicle drivers. In 2001, according to the National Highway Traffic Safety Administration's Fatality Analysis Reporting System, 631 fatalities resulted from collisions involving combination trucks on noninter-change sections of rural interstate highways. According to FHWA, in 71 percent of two-vehicle fatal crashes involving a large truck and another vehicle, police reported "one or more errors or other factors" related to the behavior of the passenger vehicle driver and none for the truck driver. Reduced involvement in serious crashes would be an economic benefit to the trucking industry.
Second, with lower traffic volumes in the lanes they would occupy, trucks could operate more efficiently Reduced need for braking, accelerating, and overtaking would decrease per-mile operating costs. If longer combination vehicles (LCVs)-longer twin-trailer or three-trailer combination trucks with gross weights of up to 68,100 kilograms (150,000 pounds)-were allowed in truck-only lanes, as has been proposed by Poole and Samuel in their Reason Foundation report, the total number of trucks required to carry a given quantity of freight could be reduced. The reduction in potential truck travel would depend on a number of factors, including how extensive a truck lane network was in place, what regulations were imposed on LCV use off the truck lanes, and the toll rates charged for LCVs and other trucks operating on those facilities. The U.S. Department of Transportation's (USDOT) Western Uniformity Scenario Analysis: A Regional Truck Size and Weight Scenario Requested by the Western Governors' Association estimated that allowing uniform LCV use throughout a group of Western States could result in a 25-percent reduction in truck travel, but travel reductions on a smaller network of truck-only lanes would not be expected to result in as great a travel reduction.
Third, the added capacity would help alleviate congestion, thereby reducing travel time and the uncertainty of arrival time. In The Freight Story: A National Perspective on Enhancing Freight Transportation (FHWA-OP-03-004), FHWA estimated in 2001 that of the Nation's 53,117 kilometers (32,992 miles) of rural interstate highways, 842 kilometers (523 miles) or 1.6 percent were "severely congested," and another 2,091 kilometers (1,299 miles) or 3.9 percent also were congested, albeit not as severely. With projected growth in vehicle miles traveled on rural interstates, congestion will grow, absent capacity increases, and trucking firms' costs will increase. It should be stressed, however, that it is unlikely congestion will be widespread on rural interstates in the foreseeable future, according to an article by W.G. Waters II, Cary Wong, and Kevin Megale, "The Value of Commercial Vehicle Time Savings for the Evaluation of Highway Investments: A Resource Saving Approach," which appeared in the Journal of the Transportation Research Forum in 1995.
Timely and reliable trucking is essential to an economy in which businesses keep inventories low and use just-in-time delivery to keep costs down and maintain responsiveness to customers. This explains in part why the value of time for trucks is much higher than for passenger travel. The value of time used by FHWA is $25.24 per vehicle-hour for large trucks, compared to $15.71 for small cars. In other studies in the United States and Europe, estimated values of time for trucking range as high as $193.80, with a median value among the studies of $40 and a mean of $51.80. The value of reliability (that is, the cost of unexpected delay) is another 50 to 250 percent higher than these values of time. The effects of recurring and nonrecurring delay discussed in Chapter 21 of the FHWA report to Congress, Status of the Nation's Highways, Bridges, and Transit: 2002 Conditions and Performance Report, are thus greatly magnified for trucking and therefore for the role that trucking plays in the economy.
Fourth, the argument for greater use of LCVs would be strengthened because they would not need to operate in the same lanes as passenger vehicles. Most States and USDOT currently oppose more widespread use of LCVs on existing highways, but if such vehicles were restricted to exclusive truck lanes, some of the basis for this opposition might be eliminated. For trucking firms, the benefits are related to productivity improvements, although the gains are net of the cost of acquiring LCVs. "Various authors contend that longer combination vehicles have considerable potential for improving the productivity of the trucking industry," says ATA's Roth.
Benefits to Passenger Vehicles
In general, passenger vehicles could benefit from truck-only lanes in three ways. First, safety would improve. According to the Federal Motor Carrier Safety Administration's Large Truck Crash Facts 2003 (FMCSA-RI-04-033), published February 2005, of all crashes involving large trucks and passenger vehicles, 84 percent of the fatalities in 2003 were passengers in vehicles other than the large truck. The great differential in size and mass generally places the occupants of the passenger vehicle at a major disadvantage in such collisions. Thus, separating trucks from passenger vehicles could substantially improve the safety of passenger vehicle travel because approximately 12 percent of all passenger vehicle occupant fatalities occur in crashes with heavy trucks.
In addition, the quality of the traveling experience would improve. Large trucks can intimidate motorists traveling in passenger vehicles. It is not unusual for relatively small passenger vehicles to be boxed in by trucks in front, behind, and alongside them. If all vehicles in the general-traffic lanes were roughly the same size, there would be less stress on those motorists who are nervous about sharing the road with large trucks.
Truck-only lanes also would help improve speeds. Because the acceleration and braking performance of trucks is much lower than that of most passenger vehicles, removing trucks could substantially improve the flow of segments with heavy traffic. According to TRB's Highway Capacity Manual 2000, one combination truck takes up approximately the same road capacity as 1.8 to 8.0 autos, depending on the terrain and traffic conditions. A caveat is that in some instances improved traffic flow may induce additional traffic.
Estimating Willingness to Pay
Somewhat different approaches are needed to estimate the benefits to occupants of passenger vehicles versus operators of heavy trucks. For passenger vehicles, the issue is willingness to pay to enjoy the aforementioned benefits of driving on highways without trucks.
In "Measuring the Non-Pecuniary Costs of Triple Trailer Operation in Oregon: A Contingent Valuation Approach," published in 1996 in the Journal of the Transportation Research Forum, Anita Bambe and B. Starr McMullen explored the amount that operators of passenger vehicles would be willing to pay to have trucks moved to separate lanes. Using contingent valuation analysis, a method for estimating nonmarket prices, they found that motorists would be willing to pay about $35 (1995 dollars, equating to approximately $41 in 2004 dollars) annually to remove triple-trailer combination trucks from Oregon's highways. Contingent valuation is an especially appropriate approach for gauging benefits because it involves asking participants about their willingness to pay for changes in goods or policies.
The Bambe and McMullen analysis has the advantage of not being hypothetical because triple-trailer trucks are allowed in that State, so respondents were familiar with the circumstances addressed in the study. The nonhypothetical nature of the study is important. As a practical matter, it usually is difficult to accurately estimate willingness to pay for goods or services that are not currently available because there is no functioning market. In hypothetical situations, there can be a tendency for people to misstate their willingness to pay either because the situation is not one with which they are sufficiently familiar or because it may not be in their best interest to express their full willingness to pay. Also, there is no consequence of making a statement about one's preference because of the hypothetical nature of the situation.
The New Jersey Turnpike is a potential case study of revealed preference regarding travel choices by operators of passenger vehicles in auto-only and auto-truck lanes. This facility has barrier-separated lanes that are available only to autos and other lanes that are open to autos and other types of vehicles, including heavy trucks.
Improvements in Trucking Productivity
An analysis by Herbert Weinblatt for FHWA in a 1991 working paper titled "The Effect of Size and Weight Limits on Truck Costs" concluded that on a cost-per-ton basis in comparison to a standard 16-meter (53-foot), five-axle combination truck with a gross vehicle weight of 35,412 kilograms (78,000 pounds):
In The Feasibility of a Nationwide Network for Longer Combination Vehicles, published by USDOT in 1986, D.J. Maio estimated that for volume-limited cargo, a national LCV network would allow 23 to 42 percent productivity gains, while for weight-limited cargo the increase in productivity would be about 17 to 32 percent.
"Although a national network of highways on which LCVs would be permitted would produce maximum productivity gains given financial, political, and engineering constraints, this is neither possible nor desirable," says ATA's Roth. "Constructing truck-only lanes in a limited number of locations is far more realistic, and although productivity increases would be more modest, substantial benefits are possible on a regional basis."
Estimating the potential benefits to users of general-traffic lanes and to operators of heavy trucks provides one basis for assessing the relative amount that users of those lanes should contribute toward the cost of new truck lanes. A related issue is how these costs should be paid. As noted above, most States that are considering truck-only lanes are assuming those lanes would be paid for at least in part by tolls. Once a decision is made to pay for the new lanes through tolls, a further question is whether existing lanes carrying passenger vehicles also should be tolled or should only the truck lanes be tolled? Answers to this question will in part determine the extent to which tolls can cover the full cost of the added lanes or whether other revenue sources will have to be tapped as well.
Another question related to the use of tolls is whether a credit should be given for fuel taxes paid on travel that is also tolled. Whether such a credit is applied or not, the amount paid via a toll and/or through the fuel tax should total the amount determined that various users should pay based on the benefits they receive. "If both methods of collection are used simultaneously, some may regard it as double taxation," says ATA's Roth.
To raise the necessary capital for constructing the truck-only lanes, a State probably would choose to issue revenue bonds, which would be secured mainly by future toll revenues. Or, as Virginia is considering, the State could allow a private-sector firm to finance part of the improvement cost and collect toll revenues to repay private debt and equity contributions. Regardless of whether public or private financing was used, if tolls were levied, they would still apply to some or all users of the facility. Two alternative scenarios can be examined. The first would involve toll payment only by large trucks, and the second would entail payment of tolls by passenger vehicles as well.
Scenario 1: Tolls Paid Only by Large Trucks
In this scenario, it is assumed that bonds would be issued to cover the share of the capital cost to be defrayed by tolls paid by large trucks. The share of capital costs to be covered by passenger traffic would be paid from the State's road-use tax fund. The road-use tax fund in most States depends on general-user charges (primarily motor fuel taxes and registration fees). General-user charges paid into the road-use tax fund by large trucks would be used for operation and maintenance (O&M) of the truck-only lanes. An alternative not examined in detail in this article would be to have truck tolls cover not only trucks' share of capital costs, but also their share of O&M costs. Depending on the nature of the project, it might also be possible to cover part of the cost from other private-sector beneficiaries that own and develop land adjacent to the new truck lanes, but current truck lane proposals are not looking at such options.
Scenario 2: Tolls Paid By All Vehicles
Another scenario would require passenger vehicles traveling in the general-traffic lanes to pay tolls, just as large trucks operating in the truck-only lanes would. Tolls paid by passenger vehicles would be justified on the basis of motorists being able to travel with faster and more consistent speeds, without the safety risks due to heavy trucks operating in the same traffic stream, and with the more relaxed environment made possible by the elimination of large trucks from passenger vehicle lanes.
In short, the occupants of the passenger vehicles would be offered a higher quality service with the addition of truck-only lanes, and they would be asked to pay a premium for this higher quality service. Motorists have been very reluctant to pay tolls on lanes that previously were not tolled, and it may be difficult to obtain support for this scenario unless motorists are willing to pay for having trucks shift to the new truck lanes.
Setting Toll Levels
As discussed, the cost of truck-only lanes could reasonably be assigned to passenger vehicles and to large trucks based on the relative benefits each group of road users would derive. Estimates of toll rates are possible through analyses of the benefits and by application of approaches such as contingent valuation analysis, which are aimed at gauging how much various road users would be willing to pay for the separation of heavy trucks into different lanes.
A practical issue arises, however, in setting the level of tolls on road users to finance the construction and O&M costs of truck-only lanes: the issue of diversion. If a trucking firm believes that the economic benefits of traveling on a highway with truck-only lanes are not commensurate with the magnitude of the toll for using the facility, the company will search for an alternate route that entails lower overall costs.
The likelihood of diversion depends on the following factors:
Potential Traffic Diversion
In a 2004 study for the Virginia Department of Rail and Public Transportation, The Impact of Tolls on Freight Movement for I-81 in Virginia, Reebie Associates estimated the likely diversion if truck-only lanes were established on I-81. Their modeling effort led them to conclude that to a point, the numbers of heavy trucks that would divert from a truck-only facility are approximately linear with the cost of tolls per mile. Reebie estimated that toll levels above $0.20 per mile would bring about sufficient diversion that such tolls would be counterproductive. Rather, the researchers concluded that toll levels in the range of $0.15 to $0.20 per mile probably would produce optimal results.
Their analysis, of course, applies to circumstances where diversion is possible. The exact toll rates that would be optimal would vary from case to case depending on the proximity and quality of alternative routes and the other factors noted above. Diversion of traffic from truck-only lanes on the interstate system to other routes could have undesired impacts on those other routes. The magnitude of these impacts would depend on the characteristics of the diversion route(s) and the surrounding land uses. In general, diverting truck traffic from interstate highways to lower order roads will increase potential safety problems, pavement wear, and traffic disruption.
The Reebie analysis did not consider the potential for LCV use of the truck lanes since LCVs were not part of the Commonwealth of Virginia's plan. If LCVs were being considered, another potential type of diversion that could be a concern is diversion of rail traffic to LCVs. The extent of potential rail diversion would depend on many factors, but railroads can be expected to raise concerns about rail diversion if LCVs were allowed on truck-only lanes.
Truck Tolls That Are Commensurate with Economic Gains
As noted above, operators of heavy trucks stand to gain economically from truck-only lanes. One way to estimate a reasonable toll rate would be to estimate total gains that typical trucks realize from use of the toll lanes, to allow operators of those trucks to keep a certain portion of that gain, and to require that they pay the remainder to the public- or private-sector organization that constructed the improvement.
Increased productivity for trucks traveling in truck-only lanes would stem from two separate but related sources: reduced costs due to traveling on the improved facility and the possible use of LCVs, which can enhance trucking productivity. In a 2002 report for the Reason Public Policy Institute, Toll Truckways: A New Path Toward Safer and More Efficient Freight Transportation, Peter Samuel, Robert W. Poole, Jr., and Jose Holguin-Veras estimated productivity gains to trucking firms that could be attributed to allowing LCVs to operate on a national system of highways. Using a specific set of conditions, Samuel and his colleagues estimated gains from operating on a truck-only facility that allows axle loads 50 percent higher than those currently allowed in the United States. Under those conditions, the authors concluded, a $3.04 per vehicle-mile increase in productivity could result for an LCV that is 37 meters (120 feet) in length with a maximum gross weight of 79,450 kilograms (175,000 pounds) and an average cargo weight of 29,964 kilograms (66,000 pounds).
Samuel and his colleagues further suggested that the toll assessed to LCVs operating in truck-only lanes should be half of the productivity gains experienced by the trucking firm by virtue of their being allowed to operate LCVs in the relatively unencumbered truck-only lanes. Their reasoning is that a 50-percent productivity gain is a reasonable return to trucking firms, given that in many instances new rolling stock would have to be procured, and because LCVs would have to be broken down into shorter rigs once off the special facility. Within a given firm, multiple varieties of trucks would be required to operate on these and other facilities.
The authors' analysis of potential productivity gains led them to conclude that a per-mile toll of up to $1.50 would be possible, which would amount to half of the productivity gain. Whether the toll for heavy trucks should be set at half of the productivity gains or at some other level is an open question. More information is needed on the productivity gains likely in various segments of the trucking market, both with and without LCVs being allowed; the trucking industry's response to the option of operating on truck-only lanes and the associated option of using LCVs on these routes; capital, operating, and maintenance costs of adding truck-only lanes; and passenger vehicle occupants' willingness to pay for a higher quality traveling environment and therefore the tolls that could be assessed to them.
Not all States would want to allow LCVs on truck-only lanes. Furthermore, the LCV freeze instituted in the Intermodal Surface Transportation Efficiency Act of 1991 currently prohibits expanded LCV operations. The same kind of productivity analysis could be carried out assuming that only standard-sized trucks would be allowed on the truck lanes. Productivity gains would be lower and thus the maximum toll that could be charged would be lower, but such a scenario still might be feasible in some locations.
Adding truck-only lanes to existing highways would be expensive enough that State and local DOTs are unlikely to find sufficient resources to fund them using traditional sources, such as a State's road-use tax fund. Therefore, tolls would likely be assessed on users of the improved facility. In terms of financing, the central policy questions are who should pay these tolls and how high the tolls should be.
For each potential truck lane project, a feasibility analysis could be carried out that takes into account the following:
The above analysis suggests that truck operators would receive the majority of benefits from truck-only lanes and ideally should pay the preponderance of costs. Unless the traffic stream contained a sufficient number of heavy trucks, the toll levels for these special-purpose lanes may be high enough to prompt significant diversion of truck traffic to nontolled facilities. Allowing LCVs to use the truck-only lanes, as has been proposed by Poole and Samuel, could enable public- or private-sector operators to charge higher tolls while limiting the diversion of truck travel to alternative roads. There are many obstacles, however, including legislative and environmental issues, to allowing LCV use, even if those vehicles were limited to dedicated truck lanes.
David J. Forkenbrock is the director of the Public Policy Center at the University of Iowa, where he also is a professor of urban and regional planning and of civil and environmental engineering. His research interests include methods for estimating the economic effects of transportation investment options and approaches for financing transportation facilities and services.
Jim March is leader of the Industry and Economic Analysis Team in FHWA's Office of Policy. He manages a multidisciplinary team of economists, engineers, and transportation specialists who conduct a broad variety of transportation policy studies on topics such as public-private partnerships, highway finance, highway cost allocation, the Federal role in surface transportation, strategic multimodal freight analysis, and impacts of highways on economic productivity.
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