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Benefits of travel time savings for freight transportation : beyond the costs

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  • Jérôme Massiani

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Abstract

The purpose of this presentation is to investigate whether current practices in Cost Benefit Analysis do not underestimate the actual benefits accruing to the economy when transport investment reduces transport time. In a first section we define the different time related attributes of transport. We differentiate the various time dimensions of freight transportation services (time, reliability, frequency, responsiveness, etc). We decide to focus our analysis on Travel Time savings. We also investigate the meaning of the expression value of time in the specific context of freight transportation. We also recognise the variability of time perception among freight operators and between circumstances. In a second section we investigate the current practices in various European countries. We find that the overwhelming majority of countries estimate the benefits of improved network through the reduction in transport costs. However there is a strong case that the total benefits may exceed this mere cost reduction. In a third section, we show that shippers exhibit a significant willingness to pay for faster deliveries. This may have different causes like potential reorganisation of the production and distribution process, trading time consuming production technique against transport time, or increasing the time dimension of goods and services. This question should be carefully distinguished from the recurrent question about indirect effects. If direct effects are those that are captured by the supplier and consumer surplus of the market under study, then the potential extra benefit that are scrutinised in the study are part of the direct and not indirect effects. We also demonstrate that a benefit analysis based on traditional definitions of surplus should take into account these additional effects. We try to identify methods to measure these extra benefits. We review results obtained by previous attempts to measure this willingness to pay, based on RP data and SP exercises. We present the benefits and drawbacks of different measurement methods. Eventually, we show the impact of taking into account these extra benefits on projects' evaluation. and test the sensibility of Cost Benefit Ratio on a set of typical road investment projects in the U.K.

Suggested Citation

  • Jérôme Massiani, 2003. "Benefits of travel time savings for freight transportation : beyond the costs," ERSA conference papers ersa03p388, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa03p388
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/388.pdf
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    Cited by:

    1. Evangelos Sambracos & Irene Ramfou, 2014. "The Effect of Freight Transport Time Changes on The Performance of Manufacturing Companies," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 119-138.
    2. Albert, Adrian & Schaefer, Andreas, 2013. "Demand for freight transportation in the U.S.: a high-level view," 54th Annual Transportation Research Forum, Annapolis, Maryland, March 21-23, 2013 206946, Transportation Research Forum.
    3. Evangelos Sambracos & Irene Ramfou, 2013. "Freight Transport Time Savings and Organizational Performance: A Systemic Approach," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(1), pages 19-40, April.

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