Value of Reduced Transport Time Variability in Freight Transport



Value of Reduced Transport Time Variability in Freight Transport

Authors

A H Halse, F Ramjerdi, Institute of Transport Economics, NO

Description

The paper shows the results of a stated preference study on the values of transport time and transport time variability in freight. We compared the resulting unit values and discuss the heterogeneity in firms' preferences for transport services.

Abstract

This paper covers a recent study on the valuation of transport time saving (TTS) and transport time variability (TTV) in Norway. We have focused on the benefits of faster and more reliable transport to shippers and carriers.

In principle, the economic benefits of TTS and reduced TTV for carriers are related to the reductions of direct costs, e.g., vehicles and drivers, while for shippers the costs are related to the cargo and the payment to transport firms for carrying the cargo. Hence, the study covers both transport firms and shippers which provide transport services (hired transport). In addition, a separate survey was carried out among those shippers that transport their goods themselves (own account freight).

The firms were recruited from two e-mail databases (9826 firms, most of them in the shippers segment). Approximately 5.6 percent of the shippers and 9.1 percent of the transport firms completed the whole questionnaire, which is a similar response rate to other surveys among firms. The study was not limited to specific types of firms within shippers and carrier segments. All firms were invited to participate, regardless of firm size, type of goods or choice of transport mode, etc. This implies a very heterogeneous final sample. The main reason was to gain an overview in a field in which there has been done little research before.

The survey was carried out using a questionnaire which includes three choice experiments (CEs). In the first experiment, transport alternatives differ with respect to transport time and cost, In the second and the third experiments firms choose between alternatives where transport costs, the transport time variation or the risk of delay or risk of too early delivery vary. The choice experiments were designed using a reported actual shipment as the reference. In addition to questions about the reported actual shipment or transport, firms were also asked questions about their interpretation of TTV and its significance for them and the causes and consequences of early deliveries or delays.

Using the results from the first and the second CE, we can compare the valuation of transport time in a stochastic and non-stochastic context. Our results indicate that mean transport time, which is the mean of the distribution presented in the second CE, is valued higher in monetary terms than transport time is in the first CE. We also investigate the degree of consistency between the valuation of variability from the second CE and the valuation of delay in the third CE.

The questionnaire used in the survey includes a number of questions about firm characteristics and characteristics of the shipment or transport used as a reference. Hence we are able to address the influence of these observable characteristics on the values of time and reliability. We also discuss the challenges that heterogeneity in the freight market poses for the estimation of unit values to be used in cost-benefit analysis.

The paper will cover the design of the three choice experiments used in this study, and the estimated values of TTS and TTV using logit models based on data from the three choice experiments. The results indicate clear differences in values for carriers and shippers; hired transport and own account freight. Characteristics of the cargo/shipment have significant relevance for the values. Some of the particularities of a TTS and TTV for freight transport, such as the issues related to the unit values, will be addressed along with lessons from the study and recommendations for further studies.

Publisher

Association for European Transport