Values of time for road commercial vehicles

INTRODUCTION The purpose of this note is to review the report of Accent/HCG (1994), referred to here as AHCG, and other sources, and make recommendations regarding future official Values of Time for road commercial vehicles. This note starts by discussing current DTLR practice, as set out in its Transport Economics Note (TEN). Section 3 presents a digest of the AHCG findings. Section 4 looks at the findings of other studies. Although these are very mixed, carried out for a variety of purposes and presented in a variety of forms, they can serve as a partial check on the AHCG work. Section 5 presents interim conclusions

Principles of valuing business travel time savings

OVERVIEW There are two approaches to valuing travel time savings to business people. The first is that which has formed the basis of UK policy for about 30 years, and which is set out in Section 2. This takes the value of travel time savings on employer’s business as equal to the gross wage rate plus an allowance for other costs that the employer saves. These might include such things as desk space, computer, tools, uniform, protective clothing, travel expenses. These were investigated in studies for the UK Department of the Environment around 1970 (Fullerton and Cooper, 1969; Rubashaw, Michali, Taylor and Key, 1969; Harrison, 1969; Harrison and Taylor, 1970; and Makrotest, 1970). The underlying rationale was that if employers were actually seen to be saving a certain amount of cost (through the gross wage and these various add-ons), then this was the value to them and, subject to any taxation related adjustments, should be the value to society. The approach is sometimes called ‘The Cost Saving Approach’, though it is also sometimes referred to as the ‘wage rate plus’ approach. Clearly, it was believed by the UK government that the economy was sufficiently competitive that average wage rates, for the employment groups concerned, reflected the value to employers. The approach can (but need not) be underpinned by appeals to the neoclassical theory of the firm and the labour market. This gives the equivalence of the marginal (revenue) product of labour to the marginal cost of employing labour, implying that a marginal minute saved will result in a marginal output increase valued at the wage rate for that minute. It is sufficient for this to be true on average, rather than for each individual employee involved. The process may also be ‘indirect’, such that employers receiving sufficiently big travel time savings, via their employees, might release resources into the labour market, where their value should be the marginal wage rate paid by employers for labour of this type. There is clearly room in this argument for small edge effects, but in general it does provide credible support for the Cost Saving Approach. However, its value is undermined by the possibilities it gives for objections to its assumptions, and this process ultimately leads most students of this area to at least wish to consider the more detailed ‘Hensher’ method to be considered in Section 3. This note then proceeds in Section 4 to review what AHCG did. Section 5 looks at the matter from the point of view of the employer. Finally, section 6 gives our conclusions

Rail privatisation in Britain - lessons for the rail freight industry

Until 1994, the rail industry in Britain – as in most of Europe – was organised in the form of a single integrated state owned company providing passenger and freight services, and the infrastructure on which they ran, throughout the country. It is true that significant reforms did take place in the 1980s, grouping rail services into a number of sectors (Inter City, London and South East and regional passenger, and trainload, distribution and parcels for freight) with their own objectives, management and accounts (Nash, 1988). Also activities such as hotels and rolling stock manufacture were hived off and privatised. However, by the early 1990s the government was determined to go further and privatise the entire rail network. After much debate about options they determined on a pattern that had come to be seen as the norm for network industries – a regulated monopoly infrastructure provider with competitive operators using it. The infrastructure was placed in the hands of a new infrastructure company, Railtrack, which levied charges to cover its costs and was subsequently privatised. Operations were divided into a number of separate companies and also privatised. However, for a mixture of good and bad reasons they were not willing – at least initially – to leave the question of what passenger services would be provided at what charges up to the market. Thus passenger services were franchised out, with franchise requirements as to minimum levels of service and regulation of some fares. In the case of freight services, the approach of the government had long been that services should be run on commercial principles, with specific subsidies for flows of traffic which would otherwise use road and where this would impose sufficient social costs that the subsidy was justified. This was essentially the approach carried through into privatisation. Thus the policy for freight was to implement complete open access for any licensed train operating company, and to seek to create a number of competing freight operating companies by splitting up and privatising the former freight business of British Rail. This paper will proceed as follows. First, the history of rail freight privatisation in Britain will be charted, sector by sector. It will be seen that there has been relatively little entry into the industry, and the reasons for that will then be explored. The particular issues of the price and availability of track access, and of the availability of government grants will then be discussed. Prospects for the rail freight business in Great Britain are then considered. Finally we draw together some lessons which may be learned for other countries embarking on the privatisation and/or deregulation of rail freight. An appendix presents detailed estimates of trends in rail and road freight in Great Britain

Freight mode choice and adaptive stated preferences

This paper presents empirical results from a survey of determinants of mode choice for freight in India. The Leeds Adaptive Stated Preference software was used for the main survey which was carried out in summer 1998 on the Delhi to Bombay corridor. The survey results show that frequency of service is an important attribute determining mode choice. Valuation of reliability is generally lower than expected. Value of time is quite similar across different product segments. Given prevailing costs, the results suggest that intermodal services can be viable for high value and finished goods

Stated Preference Experiments Concerning Long Distance Business Travel in Great Britain

Stated preference techniques are now widely used in transport economics as an experimental tool for gathering data on consumer preferences to derive, amongst other things, estimates of demand elasticities and values of travel time, service frequency, service reliability and other deteminants of travel behaviour. However, these techniques have not to our knowledge been used in research on long distance business travel behaviour. This forms the subject of this paper. In particular, results of a stated preference experiment answered by two samples of long distance business travellers are presented. Disaggregate mode choice models are calibrated with this data; and the results are used to derive estimates of the value placed by long distance business travellers on savings in business travel time. The design of the stated preference experiment means that these values can be interpreted as leisure values of time. The results that long distance business travellers place a high value on travel time savings. It is demonstrated that this can largely be explained by their high incomes and long work days, and the unsociable hours at which time savings occur. It is our view that the value of time estimates reported in this paper are not appropriate for use in forecasting exercises, rather they can be used to construct a value of business travel time for evaluation purposes

The Results of a Survey of Business Travel Policies in Greater London and North East England.

This report sets out the initial results of a telephone survey, of 311 organisations, which gathered data on these organisations' travel policies, with particular reference to how these policies affect mode choice decisions for long distance (i.e greater the 50 miles one way) business trips. This survey is one of three carried out by ITS as part of an SERC funded project to investigate Business Travel. The reported results show there are systematic differences between the travel policies of large and small, and private and public sector organisations. Public and large organisations are more likely to have formal travel policies, and mode choice decisions made by the organisation and not the individual. However, regardless of who decided the travel mode it is found that the employer plays an important role in limiting the mode choices available to the business traveller. The nature of these choices is found to vary with the seniority and income of the business traveller

Sample Size Determination to Evaluate the Impact of Highway Improvements

This paper was prepared for the Department of Transport, as a support document to a main report on the feasibility of measuring responses to highway improvements. The paper discusses the statistical issues involved, particularly as regards the determination of suitable sample sizes. Worked examples are provided, using such data on ambient variability and adjustment factors as were available to us. Some of the data is included as an appendix where it was felt to be otherwise not easily available. The note asks two sort of questions. Firstly, what is the minimum sample size to take to be a certain percent confident that a given quantity lies in a range of a given width. Secondly, what sample sizes should be taken in Before and After studies so as to be a certain percent confident that a change in a quantity by a given amount will be detected as a statistically significant difference at some chosen significance level. Three sorts of quantities are discussed: - total flows past a point, which may be counted by loops, tubes or manually; - partial flows, such as a particular 0-D flow, which require roadside interviews; - journey times over particular links

A Novel Macroscopic Dynamic Loading Model and its Properties

Existing macroscopic dynamic loading models (Linear travel time, Divided linear travel time and Point-Queue models), which are based on representation of link properties as a whole and fully comply with the requirements of the dynamic traffic assignment (DTA) procedure, are widely used in many DTA studies. This is because of their lower implementation and computational costs. DTA literature consistently suggesting alternative models but many of them do not comply with the required properties for their use in DTA and if the model fulfils these requirements, the computational and implementation issues in these models are such demanding that their general use is very limited (e.g. Cell Transmission model). This paper presents a novel model (Adnan-Fowkes model), which utilise the similar modelling framework through which Point-Queue model was developed and at the same time addresses the drawbacks exist in the Point-Queue and Liner travel time models which are due to their simple mathematical formulation. The proposed model is developed with a simple mathematical construction and it is as easy to implement as Point-Queue and Linear travel time models. The paper comprehensively discusses the properties which are desirable for the use of any model in DTA and analytically illustrates that the Adnan-Fowkes model is successfully fulfilling all these requirements. Numerical experiments are also conducted for comparison of the behaviour of the Adnan-Fowkes model along with the Point-Queue and Linear travel time models. The results of these experiments provide more useful insight for the Adnan-Fowkes model and support the characteristics of this model which are mentioned analytically in earlier sections of this paper

Valuing the Attributes of Freight Transport Quality: Results of the Stated Preference Survey

This paper presents the results of a survey of fifty firms transporting ten commodity groups, using an interactive stated preference game to obtain values of the rate reduction necessary to compensate for longer transit times, poorer reliability and the use of intermodal systems. Generally, the pattern of results is as expected, with the quality of the transport service being less important for low value products in industries with high levels of stockholding, and vice versa. Quality requirements are also generally less stringent when products are moving to depots than to customers. In a critique of the method, some reservations are expressed both about the reliability of the results, andabout the high cost and time of the survey method. Nevertheless, we conclude that overall the approach has worked reasonably well, and yielded much valuable data; we know of no alternative method which could have yielded quantitative valuations in these circumstances

The value of business travel time savings

The value of time savings for business travellers forms a sizeable part of the benefits from trunk road, rail and air transport improvement schemes. It is therefore important to possess appropiate values to place on business travel time savings for evaluation purposes. The normal approach in practice is to adopt the wage rate of the workers in question plus an increment for overheads and non-wage payments. In this paper criticisms of this approach are discssed and the implications of these criticims for the development of alternative methodologies for valuing business travel time savings are considered. Data fron two surveys of long distance business travellers and one survey of employers, which were carried out as part of an SERC financed project on business travel, is used to estimate values of business travel time savings for each of these different methodologies. Unlike previous studies considerable use is made of data obtained from stated preference experiments. Revealed preference data is also used to obtain value of time estimates. The results show that, for forecasting purposes, a value a little above the conventional 'wage rate plus' vaue may be appropriate. Although no empirical support is found for the assumptions on which present valuation conventions are based, the empirical results suggest these conventions yield values which are approximately correct, for our samples