April 1, 2004 7:00 AM, EST

Opinion: Tolls Are Taking a Toll on Trucking

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B>By Alain L. Kornhauser, Ph.D.

I>Founder and chairman

LK Technologies

For the trucking companies that use our nation’s highways to carry freight, paying for those roads through a variety of fuel and other taxes is a part of doing business. Today, however, rising toll costs are also becoming a significant cost factor for motor carriers.

In many locations, according to industry news reports, tolls are becoming a preferred method for funding infrastructure building and improvement projects.

As recently as January, at the Transportation Research Board’s annual meeting in Washington, D.C., Patrick Jones, executive director of the International Bridge, Tunnel & Turnpike Association, compared the use of tolls to “a giant tidal wave that was gaining momentum. This is not an ordinary wave,” he added. “This wave represents tolling and road pricing.”

The toll question, in fact, has already been raised in these 11 states: New Hampshire, New York, Pennsylvania, Maryland, Virginia, North Carolina, Louisiana, Missouri, Texas, Oklahoma and California.

Here’s a summary of what’s been happening in some jurisdictions, according to the Transport Topics Web site, TTNews.com:

The Pennsylvania Turnpike Commission voted to raise tolls for commercial vehicles by 5.3 cents a mile — a 43% hike. The increase is expected to generate more than $100 million annually, which will be used to rebuild or replace 600 of the turnpike’s bridges over the next 10 years, as well as for road construction projects.

The Maryland Transportation Authority approved toll increases on several key truck routes. The agency plan doubles tolls on two tunnels that carry highway traffic on Interstates 95 and 895 under Baltimore’s harbor. Maryland authorities also said they might put tolls on the 12 miles of I-81 in the state.

I-81 has also been the focus of attention in Virginia, where the major truck route covers 325 miles. A proposal to expand the road includes plans to impose tolls long before the improved highway is finished. One report in TT cited highway construction firms that said the truck toll rate would rise to 27.4 cents a mile in 2006, making for a one-way cost of $89.

A pair of bills making their way through the Missouri General Assembly would put new tolls on three major truck routes and two planned bridges. The bills call for the state to establish tolls on Interstates 70 and 44 and a portion of U.S. 71, and use the money to finance planned bridges in St. Louis and Kansas City.

Southern California transportation officials have been evaluating proposals to rehabilitate an 18-mile portion of the Long Beach Freeway, some of which include adding dedicated truck toll lanes to pay for the construction.

For trucking companies, new tolls are viewed as unfair taxes, an added levy on top of fuel tax revenues that are earmarked for road construction and maintenance. In many cases, the higher cost of tolls in key freight lanes can jeopardize their businesses.

So what is the answer? As reported in TT, a survey by the Virginia Trucking Association showed that 95% of trucking companies and shippers said they would try to avoid I-81 if tolls were imposed on that highway. Is running non-toll routes the best solution?

With tolls becoming a main source of road revenue for states, avoiding them may be difficult, if not impractical.

A better answer is to employ a proven practice, one of improving vehicle utilization and productivity. For example, one reason cited for the reduction in fuel-tax revenue in many states has been the trucking industry’s effort to burn less fuel by putting better-trained drivers in more fuel-efficient vehicles.

A similarly effective approach for trucking companies with regard to tolls is to plan better routes, a capability that stems directly from the use of advanced software. Addressing toll costs, software like Alk’s tolls module can be valuable in optimizing routing, helping carriers determine whether it’s more cost-effective to take a toll route or a non-toll route with a few additional miles.

Based on accurate, comprehensive and updated nationwide toll data, such technology also enables more precise rating by utilizing true toll amounts.

ven for carriers with highly developed management information systems, the absence of an accurate point-to-point toll calculation capability has made it difficult to effectively manage this very expensive area of their operations. Lane and load profitability analyses cannot be fully realized unless true toll amounts are utilized.

Let’s look at an example: Imagine running a route for a shipper 2,000 times and being off on your toll estimate by just $6 a trip. In this scenario, your company would lose $12,000 on one customer. Even if toll costs are off by just a small percent, the potential to lose business or cut deeply into profit margins is significant.

When toll costs rise, everyone pays. Trucking companies suffer a loss of profitability, hampering their ability to invest in their businesses. When freight transportation costs increase, the cost of the goods being carried goes up. For trucking companies, addressing the growing burden that toll costs represent not only means fighting increases at the legislative level, but also employing technologies to better manage this aspect of business.

The writer is also director of the Interdepartmental Transportation Research Program at Princeton University in New Jersey.

This story appeared in the March 29 print edition of Transport Topics. Subscribe today.