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Supply Chain News: Interesting Analysis on Highways Tolls from the American Transportation Research Institute

 

Almost One-Third of Toll Revenues Go to Collection Costs, not Roads and Bridges

March 10, 2020
SCDigest Editorial Staff
     

Tolls to use US road and highway is always a controversial topic. Consumers are hit with seemingly ever-rising toll costs often to just drive around their towns. Truckers are hit with that too, a situation exacerbated by the fact that some states have recently upped highway tolls for truckers alone.

There American Trucking Associations has consistently opposed highway tolls as a way to raise funds for improved infrastructure, favoring hikes in gasoline and diesel taxes instead.

Supply Chain Digest Says...

 

The relative inefficacy of tolls from a net revenue perspective is a key reason the ATA strongly favors use of fuel taxes.


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So new research from the American Transportation Research Institute (ARTI) on toll collection and especially what happens to all the funds they produce is both timely and interesting.

For its research, ATRI analyzed 2018 data from 21 major US toll authorities, together representing more than 80% of all tolls collected in the country.

Highlights of the research include:

• Toll Revenues are Up Significantly: Toll revenues increased 72.54 % over 10 years, with $14.7 billion in revenue collected in 2018. For comparison, the percentage age increase in the Consumer Price Index (CPI) which measures inflation for the same time period was 16.9%.


• Toll Costs for Trucks Exceed Other Industry Cost Metrics: Toll costs for commercial vehicles were $0.45 per mile, which exceeds every cost per mile metric from ATRI's 2018 operational cost survey with the exception of driver wages, which were $0.596 per mile. This is in stark contrast to the $0.146 per mile paid by trucks for federal and state transportation-related taxes and fees.


• Trucking Costs for Toll Roads are Inflationary: Toll Fees are Paid Over and Above Annual Federal and State Fuel Taxes Paid by the Industry to Travel Toll Roads. In addition to paying $4.2 billion in tolls across the 21 toll systems, trucks paid $811 million annually in federal and state fuel taxes while traveling across the study sample's toll facilities.


• Toll Facility Costs are High: Of the $14.7 billion in total toll revenue, $4.764 billion or 32.4 % of total revenue was used to cover facility costs. Of this, $2.32 billion or15.8% of total revenue was spent on toll collection costs.

 

Nearly 50 % of Toll Revenue Collected is Diverted to Uses Other than the Operation of Toll Roads and Bridges: Slightly more than 48 % (or $7.1 billion) was positive cash flow (i.e. “profit”) beyond the cost of operating the toll systems and paying interest. Of this, trucking paid $2.03 billion or 28.5 %. A reasonable question is why these facilities are operating and justifying the current toll structure if the Net Cash Flows exceed a zero or breakeven level. Given that most agencies are government or quasi-government entities, the coverage of costs should be sufficient in order to justify a user-pays model.

 

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CATEGORY SPONSOR: SOFTEON

 


• Toll Payments are Subsidizing Transit and Non-Toll Facility Related Transportation Costs: A total of $3.013 billion (20.5% of $14.7 billion) was transferred out by nine of the 21 toll systems to other government agencies that included mass transit and non-toll facility related transportation.

• Toll System Sample Received Over $1 Billion in Cash from Other Agencies: Cash provided to the 21 toll systems from other government entities totaled $1.097 billion, 17.5 % of which came from a federal interest rate subsidy known as Build America Bonds.

• Tolling Impacts Interstate Commerce: ATRI's analysis included a first-of-its-kind data analysis to better understand the relationship between interstate commerce and toll road utilization. It was estimated that 79 % of truck trips using toll roads in the study sample were engaged in critical interstate commerce, generating $3.327 billion in toll revenue.

The relative inefficacy of tolls from a net revenue perspective, as illustrated by the that fact that one- third of revenues are consumer by collection costs, is a key reason the ATA strongly favors use of fuel taxes, which carry very low overhead costs.

Any reaction to this research on tolls? Should they be scrapped due to inefficiency? Let us know your thoughts at the Feedback section below.


 
 

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