Some trucking economics

The Intelligent Access Program offers heavy vehicles improved access to a wider range of Australian roads – and the ability to carry increased loads – in exchange for the vehicles agreeing to carry on board telematic devices that describe where the vehicles are as well as their self-assessed load characteristics (mass, vehicle dimensions, suspension) that need to be programmed by a driver into the device. This enables enforcement of adherence to travelling on admissible routes by collecting GPS signals sent via the telematic device to a satellite which relays the information to the IAP service provider and then to the regulator.

Over the last couple of days I have been listening to applications of this technology in NSW.  It is amazing stuff.

Trucks are inspected to check on compliance and weighing stations check on pre-stated loads. Fines are administered for severe, repeated route violations. 

This technology offers a realistic pathway into implementing user pays into heavy vehicle use of Australian roads.  Instead of binary “allowed to travel”/”not-allowed-to-travel” decisions on various routes,  fees could be set which reflect expected road damages from use of the routes.  Then trucks can assess advantage against cost and make socially optimal routing decisions.  These are important decisions given the pressure on trucking fleet operators to carry larger loads in order to realise increased scale economies.

The IAP has mainly been implemented so far on state-owned roads – even though they manage and own 80% of Australian roads local government have not embraced the approach because the extra costs they would incur from increased damages would not be funded. In NSW this is a severe issue as local councils are desperately short of funds given restrictions on council rate increases.  This is a problem for the trucking industry since they typically can’t pick up in a specific local area and transport to a specific location in another local area because they cannot access the local roads.  The widely-discussed “first (and last) mile problem” arises.

Getting away from the binary decisions by pricing access to roads and returning these revenues to the agency that owns the roads resolves the “last mile problem” in a way that is economically sound. If local councils have the potential to receive revenues from heavy vehicles they should admit these vehicles provided the value of the revenues received exceeds the expected road damage costs plus any congestion, noise or other externality costs that might impact on their local residents.

The local councils presumably should not have the ability to set the unregulated prices for access given their local monopoly power and their ability to access substantial rents for permission to travel the “last or “first” mile.   

Slowly – but surely – we will achieve a more efficient trucking industry in Australia. This will deliver productivity gains through the economy.