Truck Toll Lanes, Not Higher Fuel Taxes

Truck Toll Lanes, Not Higher Fuel Taxes

The 17th annual State of Logistics Report found that business logistics costs increased by $156 billion in 2005. That raised logistics costs from 8.9 percent of GDP to 9.5 percent, a sharp reversal of what had been a long, steady down-trend. In short, America's just-in-time logistics system is seriously at risk, thanks to growing congestion due to bottlenecks and sheer lack of capacity.

So it's not surprising that various trucking industry leaders have started calling for an increase in the diesel fuel tax to provide increased funding for much-needed capacity additions. Others are renewing the call for increases in truck size and weight - including expanded use of LCVs -- to increase trucking productivity. I'd like to suggest that neither of these courses will produce what America's logistics system needs.

Instead, what America's truckers and shippers should be working for is a national network of truck toll lanes, configured to handle LCVs completely separate from conventional highway lanes. Let me address the two key elements of this recommendation.

First, even if a meaningful increase in fuel taxes can be achieved (and that's a very big if), it's unlikely the additional funds will be targeted to new goods-movement infrastructure. Federal highway funds are redistributed among the states, generally shifting monies from high-growth states (which generate lots of revenue) to rural and low-growth states.

That's the exact opposite of targeting the funds to where the need for new capacity is greatest. Add to that the growing proportion that is earmarked for projects state department of transportations rank lower than Congress. Factor in the 25 percent of so of highway user revenue that is diverted to an ever-growing number of non-highway purposes.

It's no wonder an array of studies over the past two decades finds the return on investment of highway capital spending has declined, over time, to the low single digits. Anti-highway people claim this proves it no longer makes sense to invest in new highway capacity.

But what it really shows is that the highway trust fund system (both federal and state) has become less and less able to target new investment to projects that produce real economic gains.

But that is precisely what the toll funding mechanism does. In order to finance a toll project - say, to add toll truck lanes to Interstate 75 - proponents have to be able to demonstrate project revenue will cover the costs of the investment.

That provides a very workable mechanism to filter out "bridges to nowhere."

The historic rationale for toll roads has been time savings. And there certainly are portions of the National Highway System where congestion is so bad that some categories of trucking companies would willingly pay for time savings. But research that we've done at Reason Foundation suggests that a much bigger advantage of truck-only toll lanes could be large productivity increases. The key to increased productivity is tailoring such lanes to handle LCVs - especially the long-double and short-triple rigs that are banned in most states. Some of these rigs could consist of two 40-foot containers or three 20-foot containers, respectively.

The principal argument against lifting the federal freeze on truck size and weight, especially on LCVs, is highway safety. I don't believe Congress will agree to allow LCVs in general purpose lanes in most states - but there's a serious chance they will make an exception for barrier-separated truck-only lanes. When the Reason Foundation first proposed this approach in 2002, the National Safety Council endorsed it (as did the American Trucking Associations).

We could start building a national network of LCV toll lanes by advancing three types of projects:

? Urban port connectors (e.g., Los Angeles, Oakland, Miami) aimed at drayage operations from ports to intermodal and/or distribution centers;

? Urban bypasses (e.g. Atlanta) to get trucks past the most heavily congested metro areas;

? Long-haul corridors (e.g. I-75, I-15 in California, I-70) that connect with existing routes where LCVs are legal.

The U.S. DOT's national congestion-reduction strategy includes two programs focused on goods movement. The Corridors of the Future Program aims at multi-state corridors, while their program on freight bottlenecks focuses on urban areas and border crossings. Each could be a vehicle for LCV toll lanes projects - but only if shippers and truckers join forces to urge Congress to grant exceptions to the LCV freeze for such projects.

Obviously, there are many details to be worked out. Would toll revenues be enough to fully finance such truck lanes, or would some fuel tax monies also be required? Should these projects be done as long-term public-private partnerships? Do we need new mechanisms to pass through tolls to shippers?

Instead of focusing their efforts on expanding a failing status quo (by increasing fuel taxes), truckers and shippers should re-focus their efforts on funding and building the 21st-century goods-movement infrastructure America really needs.

Poole is director of Transportation Studies at the Reason Foundation. In 2004-05 he was a member of the Transportation Research Board's committee on the long-term viability of fuel taxes for highway funding.