GPS tracking of trucks for fees is good in theory

ScreenHunter_819 Jan. 15 07.58

By Leith van Onselen

The Heavy Vehicle Charging and Investment Reform group has launched a campaign to have Australia’s fleet of 548,000 trucks charged for road use via GPS, in a move that is likely to infuriate the trucking lobby. From The Australian:

…there could be almost $22 billion in net economic benefits from radical changes.

The group warns that within seven years, and possibly sooner, the limits on revenues raised by heavy vehicle road-user charges paid through fuel excise will be reached.

When this happens, the only source for extra roads funding would be “inefficient, inequitable and lumpy” registration fees that truck owners pay to the states…

Rail companies have been pushing for trials of “mass-distance-location” pricing that would charge trucks based on their weight, distance travelled and the roads they use. But the peak body for trucking operators has demanded a halt on work to the HVCI’s proposal for mass-distance-location charges, saying it has “grossly underestimated the cost, administrative burden and practicality of rolling out and maintaining this equipment”.

The proposal “would greatly increase the cost of transporting freight in rural and regional areas, because roads in these areas are built to a lighter standard than major highways,” said Australian Trucking Association chief executive Stuart St Clair. “To meet the cost of road wear, charges for local roads in rural areas would need to be 25 times higher than charges for freeways”…

Under the existing road user charge, trucking operators receive a fuel tax credit for the difference between the charge (of 26.18c a litre) and the fuel excise rate of 38.14c/L. But because of the rate the road user charge has been increasing; it is expected to reach the fuel excise ceiling in the next five to seven years.

The debate over “mass-distance-location” (MDL) charging of trucks has been raging for more than a decade.

The rail industry has in the past claimed that current road pricing arrangements distort modal choice and promote the over use of road freight at the expense of rail. First, because there is under recovery in relation to the largest vehicles that travel the longest distances and compete with rail (e.g. B doubles used for interstate line haul). And second, because the costs of pollution, noise and trauma are typically higher for road use but are not priced to take account of the externalities associated with the provision of freight services. As a result, the level of road freight usage is above the socially optimal level.

There is also an argument that the current road pricing system is achieving sub-optimal outcomes as it provides road infrastructure owners with a perverse incentive to limit usage of the road network by more productive (heavier) vehicles in order to limit road damage. Further, from the perspective of the transport industry, there is no mechanism to choose to pay for a higher level of road consumption, irrespective of the potential productivity benefits. Moreover, under present arrangements, infrastructure owners are not directly compensated for additional road wear.

In theory, direct user pricing, through MDL charging, has the potential to create better incentives and improve outcomes by providing a direct fee for service relationship between road infrastructure providers and vehicle owners, thereby shifting the intent of heavy vehicle regulation from road asset protection to optimising its use and improving investment in road infrastructure.

Under complete MDL charging, a truck traveling with x weight on y road would be charged in real time, with money transferred electronically from a nominated account to the road agency. Charges would vary as these parameters change, for example, moving into a more/less sensitive road surface, crossing a bridge and/or loading/unloading 10 tonnes. Prices would be lowest on roads designed specifically to carry heavy freight, since the marginal damage caused on these roads would be low. By comparison, prices would be highest on thinly paved roads where heavy vehicle damage is high.

However, while there are considerable potential benefits from MDL charging, as indicated by the Australian Trucking Association above, there are likely to be adverse impacts on regional areas.

Rural areas are typically highly dependent on road transport, with the exception of a small number of locations serviced by rail, and are often located long distances away from ports and manufacturing centres. With existing cross subsidies removed, the cost of long distance road freight operations would likely increase. In addition, the roads to rural areas are often lowly trafficked and can be expected to have higher marginal costs than roads built to take advantage of economies of scale and carry heavier loads.

The combination of long distances and high marginal costs, therefore, mean that the costs of getting supplies to rural and remote areas, and costs of getting their products to market, would likely increase under MDL charging.

There are also significant technological and institutional issues to be overcome before MDL pricing for heavy vehicles could be introduced.

To the best of my knowledge, there is no MDL charging system operating anywhere in the world and there exists no established market that could provide the expertise, resources and services necessary to support such a system. International systems of road pricing, using simpler forms of technology, have also proven to be expensive to implement and maintain.

A move to MDL charging for heavy vehicles could also have a substantial impact on intergovernmental revenue flows if hypothecated. Removal of the fuel excise component would significantly reduce Commonwealth revenues. Similarly, removal of the registration component would reduce State and Territory Government revenue.

Given the significant barriers to implementing MDL pricing, a compromise solution could involve incremental pricing – a process whereby road users are charged additional fees, over and above the existing ‘base’ charges, for particular activities that are not normally permitted. For example, a logging truck might be permitted, for a fee, to use a section of road at higher masses than normal limits. The fee would be calculated to cover the truck’s contribution to road wear and tear costs, over and above that collected through the standard charges. Meanwhile, other heavy vehicles would continue to pay road charges based on the current system of registration and excise payments.

Incremental pricing has the potential to unlock significant productivity improvements while also changing the nature of the relationship between road authorities and heavy vehicle users. Importantly, it would reduce the incentive for road authorities to preclude higher mass on their roads in order to limit road wear because of the compensation they would receive for granting access.

The system could also be applied on a voluntary basis, thereby minimising the compliance and administrative burden, as well as potential opposition and political risks, associated with changing the road pricing system.

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Unconventional Economist

Comments

  1. migtronixMEMBER

    First they all already have GPS tracking the companies use it, I wrote/worked on systems for NAVMAN used by Bluescope back in 02!
    Secondly government has never seen productivity it didn’t want to tax.

      • migtronixMEMBER

        They have all that data and more trust me, they know when to get new tyres to the 100k. Awesome post by the way, caught my eye because it’s something I’ve seen first hand. Government will tax, truckies will become robots.

        EDIT : one of the modules I worked on clients could log onto a website a replay any particular trucks route back to a month – showed what was loaded, unloaded, time spent idling, fuel load at any given point. In 02! Back then drivers entered some of that data now it’s all sensors

      • That may be the case – but it has to start somewhere and refine it as it goes on.

        Edit:

        I concur Mig – I’ve got myself a little car tracker off some company in China – and the amount of data it can pull of the CAN-bus is just mind-boggling!

        The fancier ones have auxiliary data-inputs where you can feed them whatever data you want them to report back to base!

  2. Perhaps one could start off with a limited ‘opt in’ scheme, whereby, say, B double operators could gain access to routes that would normally be forbidden to them. It could also be initially used for toxic waste disposal monitoring.

    If and when the bugs are ironed out, the scheme could be extended.

  3. It is quite a novel idea – charging a fair price. If the price charged accurately reflects the wear and tear then truck operators have the correct incentive to minimise the damage they do. For example when making a delivery on a weak residential road they might decide to carry it on two small trucks instead of one big one.

    • migtronixMEMBER

      Good call something like that would work. I generally have an issue with “fair price” but I guess it would just get passed along to the consumer in this case so its up to the consumer/taxpayer/voter to keep the system trim and working.

  4. Germany has a system like this in place, I’m pretty sure. I read into it a while ago, and a couple of minutes of quick googling turned up this: http://en.wikipedia.org/wiki/LKW-Maut

    Not sure it’s as effective on weight, but it seems like you have to register the vehicle and they charge partly based on pollution class. Has been in place since 2005, apparently.

    • sounds good.. but will never happen….. 🙂

      Privacy!… if Joe visits him mistress ten times a week that is his dirty laundry and no one should know about it..

      However, I would say make it applicable to all commercial vehicles and “salary sacrificed” vehicles, then see the fun! 🙂 … here should be no privacy issue because if Joe is using office vehicle to do his dirty laundry then is he is misusing his entitlements! 🙂

    • You’re right Hector, it could be very fair if applied to ordinary cars.
      Instead of being whacked with $1000 rego and $2000 insurance per year, Granny could pay a fair rate PER KILOMETRE.

      • Mining BoganMEMBER

        I’m in. My bogue-mobile only does 4-5000k a year. Anything less than 20ks away I ride my bike.

        I’ve been subsidising the transport industry for years!

      • Me too MB! My Peugeot diesel might do a little more but I like to get out of town – surely going 50x over one mile of road does more damage than 50 miles once, that’s fair right?

        Be careful what you wish for! After all on that bicycle you are accelerating your CO2 output and surely it’s fair to pay for that over someone purely ambulatory? In fact “we’ve” actuaries that show you should really just stick to your plot and we have fair and efficient robots to deliver you everything you need. For Free! From the government! Trust us you’ll love it. And just you until you see how much better the news you’ll be getting then is! Just don’t look outside the window and believe your own lying eyes…

      • The current method of collecting revenue from heavy vehicle road users are based on fuel consumption, which increases roughly quadratically in the weight of the vehicle’s load, plus a fixed rego cost based on load rating, which is effectively the number of axles. However, road base damage (the expensive bit of road maintenance) increases with roughly the fourth power of axle weight, so the road use price parameters are set to approximate the costs of road use.

        Unfortunately, this boils down to approximating a fourth-degree function with a set of quadratic functions. Clearly, for any fixed vehicle class, the price function is not going to be a good fit of the cost function at light or heavy loads.

        In fact, this price structure produces a perverse incentive for lighter-class heavy vehicles to be overloaded, as the fuel-costs are lower relative to the step-up in fixed (rego) costs. Since these vehicles have fewer axles per unit of load, they do more damage than a larger vehicle carrying the same load, it minimises the trucking companies’ costs to do this.

        In contrast, your granny’s Micra does bugger-all damage to the road substrate, and unless she’s into drifting, bugger-all to the surface too (but if she’s like my Granny, she might do some occasional damage to agapanthus on the verge…)

    • Can’t wait till this is applied too domestic vehicles too. It’s just so… fair!

      I hope you guys who want GPS-tracking of your vehicles to reduce your registration costs are prepared to start being automatically fined for speeding every time you drift 1km/h over the limit.

      • migtronixMEMBER

        Monitoring boxes can’t testify in court so just take it to court and ask to interrogate the witness 😉
        They won’t turn up I know from experience with red light cameras

      • Monitoring boxes can’t testify in court so just take it to court and ask to interrogate the witness

        This is like saying the imagery from a CCTV that captures a picture of a bank robber can’t be used as evidence.

      • being automatically fined for speeding every time you drift 1km/h over the limit

        It is disappointing that you would use the fact that some speed limits are too low as an excuse to block the implementation of a fair, but unrelated scheme for road charging. Surely you should lobby to support the road charges, then lobby to raise the speed limits (where appropriate).
        I’m sure I could think of an analogy using Hitler and Godwin, etc. But I can’t be bothered at the moment.

      • migtronixMEMBER

        @drsmithy it can’t! It just useful in identifying the person of interest you still need evidence or real witnesses. Do you know how Common Law works?

        Now if the person admits it was them on camera (usual strategy) then that shits on them

      • migtronixMEMBER

        @drsmithy by the way I appreciated the fallacy of exaggeration. In the case you mentioned prosecution could bring the video before a jury and the jury would very likely convinct you, and so they should. In my case Compliance Victoria knows full well any jury would be in my side and I’d walk away with a right to claim damages…

      • It is disappointing that you would use the fact that some speed limits are too low as an excuse to block the implementation of a fair, but unrelated scheme for road charging.

        I’m not using it as an excuse to block anything, I’m pointing out what is all but guaranteed to happen as soon as GPS tracking of vehicles becomes “normal”.

        An equally likely – albeit dangerously moronic – proposal from the usual clueless save-the-children types would be for speed GPS-enabled speed limiters to be fitted to vehicles.

        Surely you should lobby to support the road charges, then lobby to raise the speed limits (where appropriate).

        Still wouldn’t address the issue. A 60km/h limit might be perfectly reasonable in a given area, but someone could quite easily accidentally exceed it by a small amount without endangering anyone. A 100km/h limit might be perfectly reasonable, but exceeding it for the purposes of overtaking a far safer prospect than spending a kilometre driving on the wrong side of the road (or spending many hundreds of fatiguing kilometres stuck in a long line of vehicles).

        It seems to me that most of the relevant factors could be easily estimated within a reasonable margin of error. A freight vehicle’s destinations are known, so the route could be estimated simply by plugging those points into Google maps (or equivalent). This gives the distance travelled (trivially cross-referenced/sanity-checked with the odometer and fuel consumption) and a decent idea of the proportion of time spend on urban roads vs highways. Weight is the most relevant issue, but also relatively easy to estimate based on processes that probably already exist anyway (ie: weigh stations).

      • In the case you mentioned prosecution could bring the video before a jury and the jury would very likely convinct you, and so they should. In my case Compliance Victoria knows full well any jury would be in my side and I’d walk away with a right to claim damages…

        You’d have to be fairly committed to get a speeding fine challenge in front of a jury (unless you’re going fast enough for it to be considered criminal).

        A GPS speed tracking device, much like a speed or red light camera, will be assumed correct by the court unless it can be demonstrated not to be by the offender.

        Similarly, as the owner of the vehicle, you are considered responsible for it – so if you can’t prove someone else was driving, it is assumed you were.

        So if you take it to court, a police officer will turn up and say “Yes, your honour, the device in this vehicle passed its self-test at the vehicle’s last roadworthy” and the speeding fine will be upheld unless you can demonstrate reason to believe the GPS receiver is not working correctly.

        The vast majority of people, course, will just tick the “yes I did it” box and pay up.

      • migtronixMEMBER

        @drsmithy all other courts were created from common law courts so you can always change jurisdiction but I tire of talking sense and fact with you… Assumed to be correct by whom? Bet I can make a case to the jury with Snowdens info that isn’t true! Ugh you’re painful and ignorant.
        BTW “assumed” is not beyond a reasonable doubt…

      • Assumed to be correct by whom?

        The court.

        If you try to challenge a speeding fine in court, you cannot argue the speed registered by the camera was incorrect unless you have evidence to demonstrate otherwise (eg: defective, damaged, not recently calibrated, etc). The camera is assumed to be correct.

        It will be the same with any GPS device that is made mandatory in cars.

        Bet I can make a case to the jury with Snowdens info that isn’t true! Ugh you’re painful and ignorant.
        BTW “assumed” is not beyond a reasonable doubt…

        Speeding fines are civil infractions. “Reasonable doubt” is a criminal law concept and has no relevance (unless, of course, your speeding fine is serious enough to be considered a criminal offence).

      • migtronixMEMBER

        Again civil infraction you have to be personally noticed for! In hand! Learn your stuff.

        It blows my mind you acknowledge people can make stupid laws but fail to acknowledge that stupid laws shouldn’t be complied with. Here’s an exaggeration for you, you can help fascists load Jews onto rail carts, I’ll die helping them get away.

      • Again civil infraction you have to be personally noticed for! In hand! Learn your stuff.

        So, to be clear, you think that every infraction based on a speed camera, red light camera, parking inspector, etc, is invalid because it wasn’t “personally noticed for” ?

        It blows my mind you acknowledge people can make stupid laws but fail to acknowledge that stupid laws shouldn’t be complied with.

        I’ve “acknowledged” nothing of the sort.

        I’m trying to explain that if GPS trackers in vehicles become normalised, they will shortly thereafter become de facto speed enforcement devices like speed cameras.

        You’re trying to argue that a speeding fine is treated the same as a murder and that any ticket based on evidence from an automated monitoring system is invalid.

      • migtronixMEMBER

        I don’t think that the law says that. Again learn your stuff. If you choose to contract by acknowledging the claim so be it. I was just giving you a hint of what you can do to defend yourself if they do precisely the stupid thing you warned of.
        And btw you started by equating traffic violations to bank robbery. It’s in the record above. Sigh.

      • I don’t think that the law says that.

        What ?

        Again learn your stuff. If you choose to contract by acknowledging the claim so be it. I was just giving you a hint of what you can do to defend yourself if they do precisely the stupid thing you warned of.

        I’m quite aware of the myriad technicalities one can use to avoid a speeding fine.

        And btw you started by equating traffic violations to bank robbery.

        No, I used an analogy to highlight why arguing evidence collected by an automated device doesn’t magically become irrelevant because “it can’t testify in court”.

      • migtronixMEMBER

        freeman shall not be amerced for a slight offense, except in accordance with the degree of the offense; and for a grave offense he shall be amerced in accordance with the gravity of the offense, yet saving always his “contentment”; and a merchant in the same way, saving his “merchandise”; and a villein shall be amerced in the same way, saving his “wainage” if they have fallen into our mercy: and none of the aforesaid amercements shall be imposed except by the oath of honest men of the neighborhood.

        Article 20 magna carta can’t be compelled to be arraigned unless imposed by “honest men”

        If you know myriad ways why did you say anything? I know I wish I hadn’t!

  5. “To the best of my knowledge, there is no MDL charging system operating anywhere in the world and there exists no established market that could provide the expertise, resources and services necessary to support such a system. International systems of road pricing, using simpler forms of technology, have also proven to be expensive to implement and maintain.”

    A similar scheme operates very successfully in Switzerland, charging a tonne per kilometre fee for all vehicles over 3.5 tonnes. Oregon is implementing a whole of system road user charging scheme, to pre-empt the structural collapse of fuel duties. Other schemes operate in limited ways around the world, and more and more are coming on stream. You guys are doing less and less research for your stories.

    Everything can be tailored to take care of regional areas, and all the relevant data is definitely being collected by the heavy vehicle industry anyway.

    • The Swiss scheme is based on weight rating, not actual load. This makes a big difference to the efficiency of the cost recovery scheme, for the reasons I outlined above.

      Including the actual load, not just capacity, in addition to distance is a key difference between what UE reported and your Switzerland example, so I don’t think that what he has said is incorrect at all.

  6. The issue is not technological at all; additional administrative and compliance costs (always overstated by businesses) would certainly flow through to increased charges but given the scale of this country’s largest logistics/transport companies that increase would ne negligible. The efficiency argument (vis costs related to collection and compliance) against this doesn’t really stack up when you take into account current (& likely future) technological developments.

    This seems to me to be a purely political (philosophical) issue of equity, of who collects revenue, and who pays (or is perceived to pay). That’s not to say that is a trivial impediment.

  7. “Rail companies have been pushing for trials of “mass-distance-location” pricing that would charge trucks based on their weight, distance travelled and the roads they use”

    Of course they have….

    I stopped reading after that. This has SFA to do with ‘fairness’, ‘efficiency’ or any other of those weasel words…

    History repeats itself such as railway industry protection in the 1930s which caused Ansett to operate as a greengrocer for a period of time to work around the regulatory capture.

    All this will do is drive up prices for everyone.

    • All this will do is drive up prices for everyone.
      …except regular car drivers, whose rego subsides heavy road users and give them an “unfair” advantage over freight rail.

      In this case, ‘fairness’ and ‘efficiency’ are anything but weasel words – they are completely appropriate.

      • “…except regular car drivers, whose rego subsides heavy road users and give them an “unfair” advantage over freight rail”

        RLY? ‘rego subsidies’…. pardon me whilst I PMSL.

      • subsides = subsidise

        sorry to hear about your pelvic floor weakness, and your lack of grasp of basic neoclassical microeconomic principles.

  8. The question that was raised but never really answered is what about the fact that costs will fall far more heavily on rural and regional areas?

    I will admit a vested interest here as I live in a rural area but I can’t help but feel this is going to have unintended negative consequences. I guess it comes back to whether we want to have cross subsidies between urban and country areas.

    • migtronixMEMBER

      Not at all most miles are done in the city and you just wait until they charge for congestion based on the number of seconds you’re stuck on Punt Rd.

    • The question that was raised but never really answered is what about the fact that costs will fall far more heavily on rural and regional areas?

      Costs would increase where heavy loads are trucked over weak roads. However a decent government would reduce fuel tax and rego and insurance as part of the change. This would mean that many people who live in rural areas but do not rely on heavy loads to be trucked over weak roads would be better off.

      • I think everyone in regional areas ultimately rely more on heavy transport, be it directly bringing suplies or through its effect on local farmers and business. Farmers in particular would be dramatically effected because the are heavy users of the light road network. If rates 25 times higher than the city are to be believed it would have a massive effect. Even in WA where most grain is moved by rail we still have a lot of heavy traffic between the paddock and the rail siding typically on the worst roads that would end up being the most expensive. I’m not wanting to start a discussion on farm subsidies just pointing what would seem to be a bad effect of this.

        The overall incentive of this system would seem to be more centralisation. Personsally I have always hoped that one day we might end up with a landsacpe more like the US where they have a distribution of smaller cities that are supported by local industry instead of the few massive cities we currently have and continue to expand.

      • migtronixMEMBER

        @keelo as The Claw said a decent government can do things to re mediate that, and with technology being what it is/can be the electorate could easily demand that monies collected on their roads is spent on their roads!! That would be sooooo easy. Then you country folk get better roads and the safety/productivity boon garnered from that may just exceed the cost. But that absolutely requires accountability and demand for accountability. With modern IT systems its a breeze – more or less of course.

  9. “To the best of my knowledge, there is no MDL charging system operating anywhere in the world and there exists no established market that could provide the expertise, resources and services necessary to support such a system.”

    With respect, you didn’t look far. A cursory Google search of distance based road pricing or Wikipedia search ought to have gleaned results.

    Cross the Tasman (I know Australians don’t think they can learn anything from Kiwis), look at ERoads. It is charging heavy vehicles on public roads only (it identifies location to avoid charging offroad) by mass and distance. Indeed NZ has had mass and distance charging since 1977, the location dimension to it has been more recent.

    On top of that Switzerland, Germany and Slovakia all have operating systems using GPS, and both France and Belgium are about to. Austria, Czech Republic and Poland also charge trucks by distance, but use technologies that aren’t viable for Australia.

    There are plenty of companies supplying the systems to support this. ERoad, TollCollect, Siemens, SkyToll, Autostrada, Thales. The forthcoming French system has six different competing suppliers with those using it having the choice of those companies to provided end to end billing.

    So enough of the talk about this being risky. It isn’t. It is technically feasible, the big question is the political will to do it.

    The economics can be sorted out, it isn’t difficult to get to establishing the long run costs of highway infrastructure and allocating those costs between vehicles of different weights, and also the property owners (there is a case for having the owners of remote rural properties effectively paying for their access roads which have no other purpose than to give their land value). Let that work be done so that an efficient charging structure can be established, and the winners and losers will be apparent (as will the obvious cross subsidies). However, the principle that those using the roads the most, causing the greatest damage should pay the most is difficult to reject.

    It does mean effectively scrapping taxes on owning heavy vehicles and introducing partial refunds of fuel tax.