ECONOMIC EUROPEAN RESEARCH CONFERENCE OF PARIS CENTRE MINISTERS 1994 OF TRANSPORT ECONOMIC RESEARCH CENTRE REPORT OF THE NINETY-THIRD ROUND TABLE ON TRANSPORT ECONOMICS held in Lyons on 30th June-1st July 1992 on the following topic: BENEFITS OF DIFFERENT TRANSPORT MODES EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORT THE EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORT (ECMT) The European Conference of Ministers of Transport (ECMT) is an inter-governmental organisation established by a Protocol signed in Brussels on 17th October 1953 The Council of the Conference comprises the Ministers of Transport of 30 European countries1 The work of the Council of Ministers is prepared by a Committee of Deputies The purposes of the Conference are: a) to take whatever measures may be necessary to achieve, at general or regional level, the most efficient use and rational development of European inland transport of international importance; b) to co-ordinate and promote the activities of international organisations concerned with European inland transport, taking into account the work of supranational authorities in this field The matters generally studied by ECMT - and on which the Ministers take decisions include: the general lines of transport policy; investment in the sector; infrastructural needs; specific aspects of the development of rail, road and inland waterways transport; combined transport issues; urban travel; road safety and traffic rules, signs and signals; access to transport for people with mobility problems Other subjects now being examined in depth are: the future applications of new technologies, protection of the environment, and the integration of the East European countries in the European transport market Statistical analyses of trends in traffic and investment are published each year, thus throwing light on the prevailing economic situation The ECMT organises Round Tables and Symposia Their conclusions are considered by the competent organs of the Conference, under the authority of the Committee of Deputies, so that the latter may formulate proposals for policy decisions to be submitted to the Ministers The ECMT Documentation Centre maintains the TRANSDOC database, which can be accessed on-line via the telecommunications network For administrative purposes, the ECMT Secretariat is attached to the Secretariat of the Organisation for Economic Co-operation and Development (OECD) Austria, Belgium Bosnia-Herzegovina, Bulgaria Croatia, the Czech Republic Denmark Estonia, Finland, France, Germany Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, the Slovak Republic Slovenia, Spain Sweden Switzerland, Turkey and the United Kingdom (Associate Member countries: Australia, Canada, Japan, New Zealand, the Russian Federation and the United States Observer countries: Moldova, Morocco.) Public cn francais sous le litre : LES AV ANTAGES DES MODES DE TRANSPORT TABLE RONDE 93 © ECMT, 1994 ECMT publications are distributed by the OECD Publications Service, 2, rue Andre-Pascal, 75775 PARIS CEDEX 16, France Application for permission to reproduce or translate all or part of this publication should be made to: ECMT 2, rue Andre-Pascal, 75775 PARIS CEDEX 16, France TABLE OF CONTENTS GERMANY WILLEKE, R NETHERLANDS SIMONS, J 39 SUMMARY OF DISCUSSIONS (Round Table debate on reports) LIST OF PARTICIPANTS 83 97 / GERMANY Professor Rainer WILLEKE Koln University Koln Germany / SUMMARY INTRODUCTION 1.1 The problem 1.2 The concepts 11 THE POSITION OF TRANSPORT AND THE TRANSPORT MODES IN ECONOMIC DEVELOPMENT 13 THE MAIN PERFORMANCE CHARACTERISTICS OF THE DIFFERENT TRANSPORT MODES 15 THE PERFORMANCE ADVANTAGES OF ROAD TRANSPORT 18 SOURCES OF EXTERNAL TRANSPORT BENEFITS 19 EXTERNAL BENEFITS OF ROAD TRANSPORT: CRITICISM AND COUNTER-CRITICISM 21 INTERNAL AND EXTERNAL BENEFITS OF FREIGHT TRANSPORT 25 INTERNAL AND EXTERNAL BENEFITS OF PASSENGER TRANSPORT 27 CONCLUSION 29 10 SUMMARY 29 NOTES 32 BIBLIOGRAPHY 35 Koln, January 1992 INTRODUCTION 1.1 The problem To examine the benefits and advantages of transport and the different transport modes is highly topical and relevant, but also somewhat unusual, because the impetus for interest in the subject comes from the other side, that of the private and social costs of transport The explosive expansion of passenger and freight transport has caused high and rising levels of disamenity and environmental pollution wherever there is a substantial volume of transport operations At the same time, individual and political sensitivity to the nuisance and damage caused by transport is growing This has led to critical and frequently hostile attitudes to transport and its further growth In one economic argument, this criticism often takes the form of the thesis that transport is simply too cheap, because the provision of transport services by no means takes account of all the costs and the polluter is not made to pay; the acceptance of the external costs is a hidden subsidy to transport users and has artificially encouraged the formation particularly of transport-hungry transpor-intensive settlement production structures and (suburbanisation) distribution systems and (the just-in-time concept) Although the criticism of excessive waste of resources is often directed at transport as a whole, and although major transport infrastructure projects of all types come up against opposition, the critical attitude and accusations of uncovered social costs are directed above all at road traffic and the internal combustion engine A whole series of social cost calculations have tried to prove quantitatively that motor traffic, both in absolute terms and relative to other transport modes, causes particularly high social costs that are nowhere near compensated for by special charges [1], The methodological basis for social cost calculations is still somewhat shaky, however, and the results vary enormously They nevertheless have increasing influence on the transport policy debate and opinion-forming The political and scientific arguments over the methods and results of social cost calculations have receive subsidies It is evident that, if no decision is taken to charge for external costs, these costs will continue to exist This situation renders the market inoperative A decision to internalise external costs would bring about a positive change in the payer's identity and would help to reduce the overall costs in question In urban areas, "road pricing" could be a step in this direction It would provide the resources to lower external costs and develop other modes of urban transport In so doing, it would enable the transport system to function closer to optimum level It is not possible at the present time to set a precise contribution of external benefits to overall economic growth figure on the However, the participants in the Round Table estimated it to be over 10 per cent A distinction should be made between global effects and effects that have a marginal influence only Benefits are not easy to identify with precision, and marginal changes are probably quite large It must also be asked whether a balance can be struck between negative and positive externalities, since this is an important issue Where air pollution is concerned, for example, effects cannot be offset since, although they may be felt only in the longer term, they are irreversible Perhaps steps should now be taken to ensure that external benefits are no longer turned to advantage until an assessment is made of the negative side MODES OF TRANSPORT AND EXTERNAL BENEFITS Where freight is concerned, shippers have their own specific transport requirements International road haulage has expanded greatly, adjusting to demand much better than rail was able to particularly concerned with logistical Today's transport specialists are systems which are based on the "just-in-time" principle: road transport, by responding flexibly to demand, enables enterprises to reduce their inventory levels and so improve profitability The method involves a large number of journeys at less than full load, however, and so adds to road freight traffic volume The resulting harm to the environment cannot be overlooked Once again, the question of the trade-off between positive and negative externalities arises There is a spatial aspect to the problem: in congested urban areas, external costs are heavy and can be internalised on a selective basis In the open country, where there is no substitute for road transport, a charging system would impede flows of traffic and communications whereas the aim should be to promote them This factor argues in favour of road pricing for areas saturated by car and lorry traffic 91 During the Round Table, the question of quantifying external benefits was raised, and a number of different methods are currently being tried While still only estimates, they however indicate that a substantial proportion of the growth in European economies is attributable to transport operations The broadening of markets and the elimination of obstacles to trade are largely due to flexible and reliable transport The effects are considerable What is involved in a dynamic process and a force that triggers that process In this context, detailed information is needed as a basis for valid assessments Moreover, if comparisons are to be made of positive and negative externalities, an appropriate methodology is called for Not all external costs can be expressed in monetary terms Evaluation must take account of the fact that thresholds for perceiving and accepting disamenities vary from country to country High external costs constitute a challenge to find the measures and technologies to reduce them Market mechanisms must be associated with measures for integrating technological progress It is also important to distinguish the indirect effects of transport from its external benefits Methods exist for detecting direct and indirect effects, notably by means of impact studies, but these are all of a commercial nature The external benefits of transport are not, however, specifically commercial They are global benefits by virtue of their contribution to economic growth A number of the Round Table specialists felt that there was a risk of the economic benefits of transport being ignored or, more precisely, of their being insufficiently taken into account due to pressure from ecological arguments External benefits may also extend beyond national boundaries and span a number of decades, an example being the way in which transport has contributed towards European cohesion It will therefore continue to be very difficult to assess external benefits other than on an empirical basis Many methodological hurdles remain before external costs and benefits can be measured In the meantime, the choice of modes of transport suited to needs - for example, public transport in urban areas - must be encouraged It is also important to seek to ensure that modes complement one another rather than simply compete is an integrated approach whereby the transport sector is What is called for regarded as a system made up of complementary parts From this point of view, technological progress should help to improve the performance of the entire transport system Competition must be maintained, however, as it plays an active role in keeping down costs Certain participants felt that there was insufficient competition in rail transport, and therefore welcomed the separation of infrastructure from the operational side Another problem affecting rail is the loss of capacity attributable to the use of lines for both passenger and freight traffic whereby train 92 speeds are reduced As the example of the TGV shows, specialisation of lines results in greatly increased capacity and speed Where road transport is concerned, social costs have been the subject of study for a long time, but benefits have received attention only recently There are major methodological obstacles to determining whether or not the price of transport is a source of a number of positive effects In any event, the following different effects may be noted: - A quality of service effect, insofar as a variety of services can be obtained within a very short time Road is also particularly flexible in adapting to the needs of the economy - An innovation effect based on ongoing technological progress whereby new products are made available and supplied uniformly throughout the country - Productivity gains by road haulage operators whereby cost reduction has a positive linkage effect Logistical organisation is a product of hauliers' reduced costs - Savings in macroeconomic costs; transport enables markets to expand and promotes the international division of labour These factors generate productivity gains which propagate in such a way that the economy as whole becomes more productive - - A financing effect, whereby surplus funds result from road use An employment effect, since road haulage, unlike many other sectors, continues to create jobs - A contribution to regional development, since road transport' s close-knit territorial coverage encourages a more uniform distribution of activities and so curbs excessive concentration Improvements in infrastructure lead to better distribution of goods and enable storage depots to be spaced more widely apart On the other hand, journey times and distances may become longer, and "just-in-time" service may become the rule This system leaves little margin for errors or accidents in delivery benefit may thus appear fragile The The just-in-time system cannot work where infrastructure becomes highly congested, for example 93 As regards the above-mentioned positive effects, the Round Table specialists considered that any assessment of external benefits calls for a standard procedure applicable to all modes of transport Road transport has to date shown itself to be so efficient that rail has withdrawn from certain markets Where the two have been competing, road has in many cases supplanted rail on the strength of its advantages, since rail is not flexible enough to adapt to shippers' requirements If rail transport is to develop, it will have to rely on high speed As already indicated, moreover, some specialists felt that intermodal co-operation has not been sufficiently exploited There is an excessive reliance on road transport, especially in the light of existing environmental problems and energy constraints Transport modes should be integrated more effectively into transport chains Insufficient account has been taken of interfaces, and it is now recognised that negative externalities have not been given the attention they deserve Stress has been laid on protecting the railways, notably by setting quotas on long-distance road haulage It is, however, road haulage that has increased spectacularly Whereas balanced development should have been the goal, negative effects had been allowed to flourish along with the beneficial ones It was nevertheless important to examine the operation of the transport system with discernment, since a summary analysis confined to negative externalities should not be allowed to obscure the benefits It should be borne in mind that each transport mode is defined in geographical, technical and economic terms which differ to such an extent that a particular mode may have an exclusive characteristic in some cases In the short term, not all choices are based strictly on the terms of competition since businesses and industries have their own well-established practices In the medium to longer term, however, when areas of intermodal competition appear, this is no longer the case Where the public authorities are concerned, they should weigh the advantages of each mode and act without interfering with market forces The optimum situation will be approached when external costs and benefits are internalised In this connection, it is essential to have an unbiased yardstick to measure the respective benefits of each mode of transport Only now are initial steps being taken to quantify external benefits, the aim being to define the concepts clearly and then place a monetary value on the effects identified This may well be extremely difficult in some instances, a case in point being logistics which is an innovation made possible by characteristics specific to road haulage 94 CONCLUSIONS A number of different methods of quantifying the various external benefits are conceivable and should be compared and discussed so that precise results can be obtained It is likely to be found that co-operation and competition among modes should be promoted simultaneously The spur of competition is needed in order to achieve gains in productivity, but provision must also be made for the coverage of all costs so that the sector can approach the optimum, i.e probably involving better co-operation among modes Where external benefits are concerned, however, it is difficult to compare modes, since leaving aside private rail sidings, only road hauliers can offer door-to-door service The fact that this avoids transfers of loads means that goods are carried more safely Accordingly, a whole set of criteria can be drawn up and it can be shown that road haulage offers benefits that can, if needs be, offset negative externalities It is therefore important that reliable means be found to quantify external effects relating to the transport sector 95 LIST OF PARTICIPANTS M le Professeur Maurice BERNADET Chairman Laboratoire d'Economie des Transports MRASH 14 avenue Berthelot F-69363 LYON CEDEX 04 Prof Dr J.G.W SIMONS Rapporteur Director Chamber of Commerce and Industry for Rotterdam and the Lower-Maas P.O Box 30025 NL-301 DA ROTTERDAM Prof Dr Rainer WILLEKE Rapporteur Wiillnerstrasse 140 D-5000 KOLN 41 Prof Brian BAYLISS Director Centre for European Industrial Studies University of Bath Claverton Down GB-BATH BA2 AY Prof Dr Peter CERWENKA Technische Universitat Wien Institut fiir Verkehrssystemplanung Gusshausstrasse 30/269 A- 1040 WIEN 97 Dr A DIEKMANN Geschaftsfuhrer des Verbandes der Automobilindustrie e.V Postfach 17 42 49 D-6000 FRANKFURT 17 Mme V DUGONJIC Observer Commission Economique pour l'Europe des Nations Unies Division des Transports Interieurs Palais des Nations CH-1211 GENEVE 10 Prof Dr Rolf FUNCK Institut fur Wirtschaftspolitik und Wirtschaftsforschung der Universitat Karlsruhe (TH) Kollegium am Schloss, Bau IV Postfach 69 80 D-7500 KARLSRUHE Dr P.B GOODWIN Director and Reader in Transport Studies Unit (TSU) Oxford University 11 Bevington Road GB -OXFORD 0X2 6NB Dr LarsHANSSON Swedish Rail Centralstationen S-105 50 STOCKHOLM 98 Monsieur Jack PENISSARD Responsable des Affaires Economiques Union Internationale des Transports Routiers (IRU) Centre International rue de Varemb6 CH- 12 11 GENEVE 20 Monsieur E POELVOORDE Sociaal Economische Raad van Vlaanderen (SERV) Jozef II straat 12-16 B-1040 BRUXELLES M le Professeur Marco PONTI c/o TRANSYSTEM Via Giulini 1-20123 MILANO Prof Tore SAGER University of Trondheim - NTH Division of Transportation Engineering N-7034 TRONDHEIM Prof Dr R SCHONKNECHT University of Rostock Institute of Transport and Logistics Parkstrasse D-O-2500 ROSTOCK Mme Dr Katalin TANCZOS Budapest Technical University Faculty Transport Engineering Institute of Transport Technology and Management Muegyetem rkp H-llll BUDAPEST 99 Monsieur Goran TEGNER Transek AB Solna torg 3, 2tr S-171 45 SOLNA Prof Maurits VAN WITSEN Head of Research and Development Department Nederlandse Spoorwegen postbus 2025 NL-3500 HA UTRECHT ECMT SECRETARIAT Mr Gerhard AURBACH Secretary-General ECONOMIC RESEARCH AND DOCUMENTATION DIVISION Mr Arthur DE WAELE Head of Division Mr Michel VIOLLAND Administrator Ms Francoise ROULLET Assistant Mrs Julie PAILLIEZ Assistant TRANSPORT 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225.9531/2 Telefax: (662) 222.5188 12-1993 OECD PUBLICATIONS, rue Andre-Pascal, 75775 PARIS CEDEX 16 PRINTED IN FRANCE (75 94 01 1) ISBN 92-821-1189-X- No 46945 1994 BENEFITS OF DIFFERENT TRANSPORT MODES Much research has focussed on the negative aspects of transport (emissions, noise, congestion and safety problems), particularly with respect to road traffic The ECMT decided to organise a Round Table which would consider the transport sector differently, by looking at the benefits of different modes of transport for the general community Round Table 93 considered different modes of transport and their respective contributions to economic growth, regional development, social relations and needs for mobility Given its new analytical framework, this Round Table stands out from other overly conventional approaches (75 94 01 1) HX ISBN 92-821 -1189-X co [...]... however, to a reconsideration of the benefits and advantages of transport and of the different transport modes One-sidedness in the handling of costs and benefits was admittedly noted some time ago, but there are as yet very few works that deal with and analyse the subject of the benefits of transport and the different transport modes in a way that corresponds to the handling of costs and, above all, the... has led to the question of the benefits of transport, and especially of road transport, being seen as a problem of market regulation Although there is a broad consensus on the importance of road transport in the economic expansion of recent decades, there is argument about the interpretation and imputation of these benefits The essential question is whether the benefits of transport services are fully... rail transport and shipping and the now fully developed road, pipeline and air transport technologies THE MAIN PERFORMANCE CHARACTERISTICS OF THE DIFFERENT TRANSPORT MODES Modern transport systems are extraordinarily multifaceted; they include the services of many transport modes, whose production, cost and market conditions are very different Because of their technical and economic properties the different. .. various modes possess these qualities to differing extents and in different proportions The individual modes tend to have a combination of 15 specific aptitude profiles that correspond to the requirement profiles of different buyers of transport services In the supply of transport services, it is not only the technical properties that count, but also the organisational possibilities including transport. .. arise with the possible existence of "social" or "external" benefits of transport form a substantial part of this paper In very general terms, the benefits of transport services lie in improvement in economic relations brought about by the spatial transfer of persons, goods and information [2] The provision of transport services requires the use of scarce factors of production; it is therefore desirable... systematic and critical comparison of methodologies The aim is obviously not to begin another number puzzle, but to extend and present the increasing body of knowledge in such a way that it can be used in rational reasoning INTERNAL AND EXTERNAL BENEFITS OF FREIGHT TRANSPORT As an indicator of the level of the private or internal benefits of freight transport, the earnings of transport undertakings give a... market, or whether there are external benefits as well as internal In this paper we try to demonstrate the appearance of external benefits of transport and emphasize their relevance for the allocation of the factors of production The provision of transport services creates development-promoting system benefits which, because of their nature and the dispersion of the effects, can never be fully imputed... this formulation of the concept, however, as when we talk of the benefit of mobility for individuals Generally and private households speaking, however, we shall and "consumer use a broader and surpluses" more pragmatic interpretation of the concept, notably when discussing the importance of transport and the different transport modes for the level of performance and growth capacity of economic systems... enterprises The use of own vehicles can cause problems for the full play of market forces and the calculation of costs and benefits of private cars there are underestimation of the costs often "irrational" Thus, for example, in the case benefit elements together with In the case of own-account transport, too, there are claims that the firms concerned do not take sufficient account of the economics of the operation,... temporal requirements for the delivery of goods in such a way that road transport became the dominant mode The explosive growth of road transport is an indication of new performance standards of predictability and rapidity, but also of flexible adaptation to the particular requirements of transported goods and the size of consignments, including the possibility of global logistical planning The railways