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Road User Pricing Could Help Ease and Manage U.S. Traffic Congestion: New Study

November 4, 2003

It's no secret that Americans are choking on traffic gridlock. A new study from Deloitte, however, suggests a possible remedy -- pricing road use in the same way as utilities, food and other goods.The study details the success road user pricing has achieved in reducing congestion in London, Singapore and other cities around the world. Charging for road use has already made an impact within the United States in places such as Southern California, where gridlock has decreased and travel times have considerably improved. According to the study, the number of road users and motor vehicles is increasing faster than new roads are being developed and congestion is destined to dramatically increase in the next 10 years unless fundamental changes are made in how roads are priced and how drivers are charged.Costs related to congestion include unpredictable travel times, environmental damage, property damage, delays and lost production. The cost of congestion in the United States is about $150 billion or 1.5 percent GDP.Between 1982 and 2001, the proportion of peak hour travel which experienced delays has doubled from 33 percent to 67 percent, and the time drivers encountered congestion increased from 4.5 to seven hours. "Road pricing has the potential to provide tremendous economic, time-saving and safety benefits for road users whether they are commercial drivers who conduct business or commuters who travel to work," said Greg Pellegrino, global consulting leader of Deloitte's public sector practice. "A road user pricing program can prevent the overload of the road and damaging breakdowns in traffic flow, allowing businesses to move goods more efficiently, and workers arrive at the office on-time. This is a process that will greatly reduce the enormous costs associated with congestion, which everyone pays for." In February of this year, the largest and most extensive road pricing project in the world launched in London. Vehicles were electronically charged a flat fee between the hours of 7:00 a.m. and 6:30 p.m. during weekdays. Eight months after the program's inception, the London Congestion Charge project is considered a successful example of how area road pricing can effectively reduce overcrowded roads.According to the study, traffic speeds have increased 37 percent, congestion has dropped 40 percent during charging hours, and round-trip journey times have reduced 13 percent. The results have prompted Paris, Stockholm, Sydney and other major cities to explore the possibility of adopting the London model. In the United States, the 91 Express Lanes project in Southern California commenced at the end of 1995 to help relieve traffic congestion between Riverside and Orange counties and Los Angeles County. Though the variably priced toll lanes provide only a third of the highway's capacity during peak travel hours, they proved effective by regularly carrying 40 percent of the traffic at 65 m.p.h. versus an average of 20 to 35 m.p.h. in the free lanes. Other road-pricing projects are underway or are preparing to launch in states such as New York, Colorado, North Carolina and Texas. "Momentum is building in the United States to relieve traffic congestion and its associated costs," according to study author William Eggers, director of Deloitte Research for the public sector. "A number of efforts underway here and around the world show that curbing gridlock comes down to the proper pricing of road space." Interest in new projects has also increased in the United States. Recent federal and state road pricing initiatives include:
  • U.S. Congress. Congress has authorized a six-year $48-million "Value Pricing Pilot Program" as part of the Transportation Equity Act for the 21st Century and legislators have introduced the Freeing Alternatives to Speedy Transportation Act to provide states and localities with incentives to introduce electronic road pricing in order to reduce traffic congestion on some of the most crowded interstates.

  • Oregon. A state task force recommended implementing a road user fee based on the number of miles driven and congestion pricing as an option for regions with heavy traffic.

  • Washington D.C. area. A consortium led by Fluor Daniel has proposed adding two HOT (high-occupancy tolling) lanes to a 14-mile stretch of the Beltway.

  • Miami, Fla. The Florida Department of Transportation is studying the possibility of converting existing lanes into HOT lanes along I-95. The Florida Turnpike is also considering new HOT lanes for its 29-mile Homestead Extension.

    According to the study, there are four major stages of road user pricing:

  • The corridor approach. The traditional revenue-generating single road toll system. Today's electronic tolling technologies allow conventional toll roads and new HOT lanes to play a broader role in congestion management.

  • The area scheme. Charges users to drive in an area that has a closely integrated road system. In the United States, area projects are most likely to develop by transforming the HOV (high-occupancy vehicle) lanes that exist in most metropolitan areas into HOT lanes and then extending and linking them to form regional networks. In Singapore, a charge levied in a 2.3-mile restricted zone reduced traffic by 45 percent and the number of cars traveling into the city center by 70 percent.

  • National and transnational systems. Include charged areas that extend to a larger road network than just an individual zone. Austria, France, Germany, Switzerland and the United Kingdom all have or plan to implement this type of system nationwide for trucks.

  • Integration. A future stage that allows drivers to make informed choices at every step of the journey. The road user charge is meant to provide incentive for the customer to make the most efficient transportation choice.

    Deloitte said the study is the first to offer detailed lessons for successfully implementing road user pricing from London and other leading cities. Some of the recommended tips include achieving buy-in from local businesses, citizens and consumer groups, and creating convenient alternative transportation options so commuters who choose not to drive and pay the charges still have a way to get to work.For more information about the Deloitte road pricing study or to receive a copy, please visit www.deloitte.com.About DeloitteDeloitte, a professional services firm, provides audit, tax, financial advisory services and consulting through nearly 30,000 people in more than 80 U.S. cities.Deloitte has been recognized as one of the "100 Best Companies to Work For in America" by Fortune magazine for six consecutive years."Deloitte" refers to Deloitte & Touche LLP and affiliated entities. Deloitte is the U.S. member firm of Deloitte Touche Tohmatsu. Deloitte Touche Tohmatsu is a Swiss Verein (association), and, as such, neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the name "Deloitte", "Deloitte & Touche", "Deloitte Touche Tohmatsu" or other related names.The services described herein are provided by the U.S. member firm and not by the Deloitte Touche Tohmatsu Verein.For more information, visit www.deloitte.com/us.

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