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COST ANALYSIS OF THE COMMERCIAL VEHICLE INFORMATION SYSTEMS AND NETWORKS (CVISN) PROGRAM
A BENEFIT/COST ANALYSIS OF THE COMMERCIAL VEHICLE INFORMATION SYSTEMS AND NETWORKS (CVISN) PROGRAM Daniel Brand, Thomas E. Parody, John E. Orban and Vincent J. Brown ABSTRACT This paper describes a comprehensive benefit/cost analysis that was performed based on the results of model deployments of CVISN (Commercial Vehicle Information Systems and Networks) systems that provide electronic credentialing and electronic screening of heavy trucks to improve their safe and efficient operation. CVISN is intended to make a regulatory system operate at lower cost and increased effectiveness to both its users and to society. Benefit/cost analysis is a public sector evaluation tool that compares all of a project’s benefits to society to all of the project’s costs to society. The question to be answered in undertaking such an analysis is: Do these benefits exceed the costs? In the case of the CVISN programs evaluated in this paper, it is clear that considerable public benefits can be expected, and that the benefits greatly exceed the costs. Based on the results of several representative CVISN deployment scenarios examined, it is prudent to proceed with full deployment of such systems.
Economic Impacts of Intelligent Transportation Systems: Innovations and Case Studies Research in Transportation Economics, Volume 8, 379–401 Published by Elsevier Ltd. ISSN: 0739-8859/doi:10.1016/S0739-8859(04)08016-3
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1. INTRODUCTION Beginning in the mid-1990s the Office of Motor Carriers in the Federal Highway Administration (now the Federal Motor Carrier Safety Administration), established the Commercial Vehicle Information Systems and Networks (CVISN) program to examine and facilitate the use of various information systems and communication technologies to improve commercial vehicle operations (CVOs). The CVISN Model Deployment Initiative (MDI) began in 1996 in Maryland and Virginia and was later extended to eight additional states (California, Colorado, Connecticut, Kentucky, Michigan, Minnesota, Oregon, and Washington). The objective of the MDI was to demonstrate the technical and institutional feasibility, costs, and benefits of intelligent transportation system (ITS) programs aimed at improving the safety and operational characteristics of CVOs. In essence, the initial, or what has been referred to as Level 1 functions of CVISN, can be grouped into the following three activities: (1) Safety Information Exchange – technologies that permit the collection, rapid dissemination and easy review of motor carrier safety information at the roadside. (2) Electronic-Credentialing – the capability to allow motor carriers to apply, pay for, and receive various credentials electronically, as well as provisions for electronic tax filing, and the payment of certain taxes and fees. (3) Electronic-Screening – the ability to detect, identify and weigh commercial vehicles at highway speeds, and, if all certificates and weights are in order, give the vehicles a green light to bypass static weigh and inspection stations. Additional background material on the early phase of the CVISN program can be found in Richeson (2000). An important objective of the CVISN MDI was to conduct a rigorous benefit/cost analysis (BCA) to determine the net economic benefits that could be expected from a nationwide CVISN program. In the public sector, BCA helps maximize economic efficiency, or the total net benefits to the public from an investment. The safety information exchange, electronic credentialing and roadside enforcement elements of CVISN can make commercial vehicle credentialing and operations less costly, and safety inspections more effective. The electronic screening of commercial vehicles can also be expected to save transit time for trucks with good safety compliance records by enabling them to bypass inspection stations at highway speeds in most cases. It is also hoped that this benefit will motivate carriers to improve their safety compliance behavior.
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Trucks bypassing inspection stations will not only experience time savings for themselves and their cargo, but also they provide energy savings and air and noise pollution benefits for the public. Of most importance to the public, however, are the cost savings and productivity increases of electronic credentialing to the states and carriers, and the improved targeting for inspection of unsafe vehicles enabled by the new information systems that make up the roadside enforcement element of CVISN. The benefits of crashes avoided by removing unsafe trucks from highways include the value of lives saved, injuries avoided, reduced property damage to trucks, their cargo, and to other vehicles, and reduced delay to all vehicles from congestion due to crashes. These public benefits from CVISN are obviously important in justifying the expenditures needed to implement and operate these systems. The question to be answered by a BCA is whether all the benefits exceed all the costs. This means that all the benefits and costs input to a BCA must have some inherent value to society. It is important for government to consider all such impacts, even if the private sector does not. And, while the actual summing of the benefits and costs in a BCA is straightforward, identifying the right inputs and observing or estimating their values is not. Once identified and quantified, the benefits and costs in a BCA can be discounted to a present value over the economic life of a project (Brand et al., 2001). For the CVISN MDI, benefits are assumed to begin immediately with the one-time startup costs in the year 2000, and extend for a 25-year period through 2025. This allows 25 years of economic returns for the project, which will include one or more replacement cycles for equipment and software at appropriate intervals.
2. BENEFITS AND COSTS OF CVISN The CVISN benefits and their measures included in this BCA consist of: (1) Roadside Enforcement (including safety information exchange and electronic screening) Crashes avoided; Truck transit-time savings; Air and noise pollution reductions from trucks bypassing inspection stations at highway speeds. (2) Electronic Credentialing Operating cost savings to states; Operating cost savings to carriers; Inventory cost savings to carriers.
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Similarly, the principal costs associated with these two elements are: (1) Roadside Enforcement One-time startup cost to state; Replacement capital costs to states; Increased operating costs to states; Increased operating costs to carriers; Increased out-of-service (OOS) costs to carriers. (2) Electronic Credentialing One-time startup cost to states Replacement capital costs to states in future years Where possible, all of the benefits and costs included in the BCA were derived from a series of on-site, in-person interviews with state agencies and with motor carriers participating in electronic credentialing programs. Because this was the first study of CVISN systems as actually deployed, the data collection effort was limited to the few states that had sufficient experience with the deployment and operation of these systems. Most of the credentialing cost data came from two states, Kentucky and Maryland, and the majority of the cost information for CVISN electronic screening and safety information exchange services came from Connecticut, Kentucky, and Virginia. Each participating state has unique characteristics and policies, so the cost data underlying the BCA should be viewed as a limited, early sample of the costs that later adopting states may incur. To supplement the cost data collected, a literature review was conducted. CVISN may alter the administration of commercial vehicle enforcement and regulatory processes in various ways, but the net economic benefits cannot be assessed until the impacts are translated into the measures listed above. These impacts are the result of changes in accidents, administrative and compliance costs, motor carrier behavior, and other changes in commercial vehicle regulatory administration and transportation activities. These evaluation measures determined the type of data to be collected and analyzed in the CVISN evaluation. The process of identifying the benefit measures listed above is described below for each of the five traditional ITS goal areas (safety, efficiency, productivity, mobility, and energy/environment). Since the five ITS goal areas double count some benefits, and include benefits that make no contribution to economic efficiency (and, thus, have no economic value), only four of the five ITS goal areas include potential benefits (or disbenefits) that should be input to the CVISN BCA. The reasons for this are explained below under efficiency benefit measures.
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2.1. BCA Safety Benefit Measures The anticipated safety benefits of CVISN from increased motor carrier compliance with state safety regulations are extremely important. The benefits consist primarily of reductions in truck-related crashes caused by violations of vehicle or driver safety regulations. The crashes are avoided either because additional trucks or drivers are placed out of service due to more efficient enforcement practices or the number of violations is reduced in response to enhanced enforcement (the indirect effect). The safety benefit will take the form of decreased fatalities and personal injuries, and decreased property damage costs from accidents. Note that in quantifying this benefit, the total cost to society of crashes, including the losses and delays to other motorists due to these accidents, is considered. Amounts reimbursed by insurance are not deducted from the cost savings since the cost savings will lower insurance premiums for everyone. Thus, all the accident cost savings should be included as a benefit to CVISN.
2.2. BCA Efficiency Benefit Measures A major source of confusion on the proper inputs to an ITS BCA stems from the fact that economists and engineers sometimes use the same term to mean different things. Most importantly, in economics, efficiency means maximizing total net benefits from an investment or policy. This means that the economic efficiency goal includes all the ITS goals that have (a dollar) value to society. However, engineers use the term efficiency much more narrowly to mean more output per unit of input (engineering efficiency). The efficiency goal that is well accepted as one of the five major ITS goals is the engineering efficiency goal, not the economic efficiency goal. Measures of achievement of the engineering efficiency goal do not enter into a BCA. This is because increased output per unit of input is best measured in transportation as increased throughput or capacity (e.g. vehicles per hour, inspections per hour, inspections per person-hour, etc.). Converting this benefit to a dollar value to society falls under the productivity goal in the form of cost savings.
2.3. BCA Productivity Benefit Measures Productivity means lower costs to produce a given level of output. Cost savings are an important measure of achievement of the CVISN productivity goal (e.g. cost
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per vehicle registration, reduced truck transit time, etc.). This benefit includes the savings to motor carriers and government agencies that result from CVISN. These cost savings certainly have value to society and enter into a BCA to calculate the net benefit of CVISN investments. With regard to roadside enforcement, the productivity-related cost savings to compliant motor carriers results from saving time by bypassing inspection sites at highway speeds. The time to inspect each truck selected for inspection is assumed to remain the same. Further, it is assumed that the number of truck inspections will not change. Rather, CVISN can be expected to result in a better targeting of truck inspections since more of these trucks will have been prescreened for violations using the real-time access to timely and accurate data for targeting high-risk carriers provided by CVISN. Therefore, rather than a cost savings to states, the benefit to the states is increased numbers of OOS violations and improved compliance resulting in fewer crashes. Cost savings to states are forgone for the benefit of increased output from the inspection process in the form of increased safety as measured by fewer crashes. This increased output provided by CVISN is an important benefit. With regard to electronic credentialing, the benefits of CVISN to both states and motor carriers consist mainly of cost savings. States can change their credentialing requirements (i.e. output) only as a result of legislative changes. Such changes are exogenous to the CVISN MDI and, therefore, they are not included in this BCA. Similarly, motor carriers can benefit from the cost savings that electronic credentialing’s speed and increased operating flexibility provides them (e.g. with IRP and IFTA credentialing). The benefits include both direct operating cost savings and increased fleet utilization from the increased speed with which carriers can get their trucks on the road due to faster credentialing. With regard to the latter, this BCA assumes carriers can register new trucks faster and, thus, save on truck inventory costs. Registration renewals are assumed to be scheduled, with or without electronic credentialing, to keep existing truck fleets in service. Also, oversize/overweight (OS/OW) permits were not included in the electronic credentialing portions of the CVISN MDI, so no benefits for faster credentialing of these permits were included in the BCA. Finally, significant or measurable levels of increased revenue to motor carriers from goods shipped are not anticipated as a result of the CVISN program. (This is discussed in the mobility section below.) Another potential productivity cost savings to states is pavement cost savings (increased pavement life or productivity) from fewer un-permitted overweight trucks on the road. This is a savings that can be expected to materialize over the long term, well beyond the term of the CVISN MDI. For this reason, it was excluded from the quantitative results of this BCA. However, a discussion
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of this issue with some very approximate benefit estimates is included in (Battelle, 2002). Other productivity-related outcome measures may have economic value to some, but should be excluded from a BCA because they represent transfers of benefits. For example, CVISN may increase the fee revenue “production” from more effective regulatory enforcement and compliance with CVISN. However, this should not be treated as a net benefit that enters into a BCA, since it is really a transfer from the carriers to state government. Finally, as explained under the mobility and energy/environment goal areas below, certain benefits that fall under other goal areas are included in the calculation of productivity benefits due to the way unit costs are calculated in the available literature. Examples of these are: (1) Reduced delay to the motoring public from CV accidents (mobility goal area benefit included in the literature review based valuation of the accident cost savings). (2) Gallons of fuel saved by motor carriers (energy goal area cost included in the valuation of truck transit-time operating cost saving).
2.4. BCA Mobility Benefit Measures Mobility can be measured by the net benefits to travelers or other transportation consumers from a transportation improvement. To avoid double counting, one of the most important measures of achievement of the mobility goal is purposely omitted as an input to this BCA. This is the portion of the CVISN motor carrier productivity cost savings benefit that is passed on to the shipper/receiver (e.g. a value-added manufacturer, wholesaler, retail store), or to the final consumer. The very difficult problem of obtaining data on some elusive cost savings passed on to customers can be avoided by including in the BCA the entire direct CVISN productivity benefit (the cost savings to motor carriers). Whether these cost savings are passed on to customers is immaterial for the BCA since the total benefit to society is the same. Three non-motor carrier cost saving mobility measures are valid inputs to a CVISN BCA: (1) Reduced highway delays to the public due to reduced motor carrier (truck) crashes; (2) Reduced time in transit that reduces shipper/receiver inventory costs; and (3) Increased shipper/receiver satisfaction with carriers (e.g. use of safety rating data).
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The first measure impacts the public in a different way than the CVISN productivity measure (i.e. it impacts public benefits differently from the costs of the shipped goods). It is included in the accident cost saving benefit since it is oftentimes included in the values reported for cost of accidents. Similarly, the value to shippers/receivers of decreasing time in transit to reduce inventory costs is included in the motor carrier value of truck travel time. With regard to the third measure, to the extent that shippers are willing to pay separately for (i.e. that they value) the safety rating data, this benefit is additive to the carrier cost savings from reduced accidents. However, it fails the quantifiable and thus monetized criterion of a BCA. Also, the third measure can affect the volume of carrier business and, therefore, revenues. However, additional revenues are presumably mostly transfers, not increases in output or total goods shipped. Therefore, they do not provide net benefits for input to a BCA. (To the extent that additional revenues accrue to more efficient, profitable, compliant carriers, there is a net benefit to society. However, evaluating the relative profitability of different carriers is beyond the scope of this evaluation.)
2.5. BCA Energy and Environment Benefit Measures Energy savings in the form of decreased fuel use come from bypassing inspection stations and are included in the value of transit-time-related operating cost savings to motor carriers. Similarly, the values of air and noise pollution reductions from CVISN are attributable to trucks bypassing inspection stations and not having to decelerate, idle (in the inspection station) and accelerate again to highway speed. Again, while individually calculated, these benefits are included in the transit-time-related benefits input to the BCA.
3. ESTIMATION OF VALUES FOR CALCULATING CVISN BENEFITS Table 1 summarizes the evaluation benefit measures (i.e. metrics) for input to the CVISN BCA along with the customers who benefit. States and motor carriers are the primary beneficiaries of the most important productivity (cost saving) benefits. Shippers/receivers and the public benefit as well from these and the safety impacts of CVISN. However, the BCA needs to value these benefits in the aggregate in order to assess the total net worth of a project. The three major benefits of CVISN’s roadside enforcement (RE) listed in Table 1 are:
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Table 1. Classifications of Benefits and Their Incidence. Benefit Description
Customer Impacted State Carriers (and Shippers) Public
Roadside enforcement Safety Crashes avoided Productivity/Mobility Cost savings Transit-time savings (including O&M) Increased output (included in safety benefit) Energy/Environment Fuel use (included in transit-time savings) Air/noise pollution (included in transit-time savings) Electronic credentialing Productivity Cost savings Faster credentialing New truck inventory
√
√
√ √
√ √
√
√
√
√ √
(1) Safety: Crashes avoided through improved inspection, plus reduced accident costs, including delays to the motoring public from fewer truck accidents. (2) Productivity/Mobility: Cost savings to motor carriers from electronic screening transit-time savings, including operating and maintenance (O&M). Reduced delays to the motoring public from accidents. Increased output from more productive inspections measured by crashes avoided with benefits (again) to motor carriers and the public. (3) Energy/Environment: Energy/fuel savings to motor carriers included in value of transit-time savings. Air and noise pollution savings from transittime savings are calculated separately, but included in the value of transit-time savings. The benefits of CVISN’s electronic credentialing (EC) element include only measures of cost savings to both the state and to motor carriers. These savings result from the lower costs of the credentialing process itself, and improved carrier fleet utilization from faster credentialing of new trucks. However some of the above benefit measures are in natural units other than dollars. They can be converted to dollar values (monetized) for input to the BCA by using the following values.
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3.1. Valuation of Truck Crashes Based on a review of the literature, there are only a handful of studies that have attempted to calculate the cost associated with a truck crash. For example, one analysis of the cost of crashes by vehicle type (Miller, Spicer, Lestina & Levy, 1999), developed an overall estimate of $72,000 per crash (in September 1995 dollars) for “other single trucks.” This average value appears to reflect very logical differences in definitions of what constitutes a crash. That is, the universe of truck crashes in the database used is reported to be four times as large as other truck-related crash databases. This suggests that it includes many more minor accidents. A continuation and further refinement of this work was reported in a very recent study for the FMCSA (Zaloshnja, Miller & Spicer, 2000). In particular, costs for police-reported crashes involving trucks with a gross weight of more than 10,000 pounds were computed to be $75,637 each (in 1999 dollars). Great care was taken in this study to adjust the various input databases for known anomalies. Unfortunately, differences in cost categories examined make it difficult to compare truck accident figures reported elsewhere (Federal Motor Carrier Safety Administration, 2000). However, the approximately 320,000 annual truck accidents included in the study means that the database is more consistent with the latest FMCSA data, which has been used in this paper to calculate the number of truck accidents avoided by CVISN. When disaggregating their findings, however, the authors noted that the value of “delays to other traffic” increased markedly when compared to earlier studies. As an alternative hypothesis, therefore, the authors elected to constrain (i.e. reduce) the values for the delay component of truck crashes to those reported in (Miller et al., 1991). After doing so, the average value of a large truck crash was reported to be $64,985 (in 1999 dollars). This more conservative value of the benefit of a reduced truck crash was adopted for use in the current study.
3.2. Valuation of CV Transit Time There is a small but growing body of literature on the value of time (VOT) associated with intercity auto trips (Brand, 1996). However, there is very little published on the VOT of trucks, perhaps because these are private costs in a competitive market. Truck VOT should include driver wages, truck operating and maintenance costs (including depreciation), and the time value of the freight being transported. Typically, the values of truck travel time in the CVISN literature have been limited to the cost of the driver of the truck.
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In a recent study (Forkenbrock, 1999), truck O&M cost (including depreciation) for truckload (TL) carriers was estimated as $1.25 per vehicle-mile or 8.42 cents per ton mile (in 1994 dollars) based on operating and financial data compiled by the American Trucking Associations (American Trucking Associations, 1995). At an average speed of 50 mph, this implies a variable cost of $62.50 per hour (in 1994 dollars) or $70 (in 1999 dollars). Inventory costs are available from a study that presented an innovative method of estimating the effects of carrier transit-time performance on logistics cost and service (Tyworth & Zeng, 1998). That study estimated that for just-in-time service delivery, an average shipper is willing to expend $310 to reduce transit time by 24 hours (i.e. from 3 to 2 days). This implies an average unit cost of $12.90 per hour. It is well known that just-in-time service implies a higher VOT, and that higher value goods are more likely to be transported by air (Federal Highway Administration, 1998). Still, over all modes (i.e. but not including local package carriers and multiple mode goods), trucks represent the overwhelming majority (87%) of the value of all goods shipped (U.S. Department of Transportation, 1999), with about 63% of the value of trucking and courier service being truckload shipments (U.S. Department of Commerce, 1997). Thus, it is reasonable to use $10 per hour to represent the time value of goods shipped by truck. This is the same as an earlier value cited in the literature (Brand, 1994). Adding this to the $70 presented above yields a value of $80 per hour for the total value of time savings of a truck.
3.3. Valuation of Air Pollutants With regard to the air pollution costs that are to be applied to the time savings per truck, it is important to note that the amount of air pollutants emitted from trucks is dependent on a variety of factors such as engine size and design, vehicle condition, speed, frequency of acceleration and deceleration, temperature, etc. In almost all instances, unit costs in the literature for amounts of air pollution are expressed either as a function of (1) vehicle miles traveled or (2) weight times distance traveled. Emission rates are usually provided for heavy trucks in motion (Transportation Research Board, 1996). However, for heavy-duty diesel trucks that are idling (e.g. waiting for an inspection), U.S. EPA (1998) (http:/www.epa.gov/oms/consumer/ f98014.htm) has estimated the following average values (i.e. over summer and winter conditions) in grams per hour for a heavy-duty diesel vehicle: NOx = 55.8, CO = 94.3, VOC = 12.6, and PM10 = 2.57. Fuel consumption for a typical truck that is idling has been estimated at 0.5 gallons per hour (Commercial Carrier Journal, 1994).
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Others have calculated emission rates for heavy-duty diesel trucks that are comparable to those above, but they add carbon dioxide (CO2 ) in a separate category – “greenhouse gas (GHG) emissions” – since some do not view CO2 as air pollution. Recognizing the great uncertainty of the cost to society of GHG emissions, Forkenbrock (1999) has estimated a GHG (only) emissions value due to truck operations of 0.15 cents per ton-mile based on the amount of CO2 discharged for each gallon of diesel fuel used (22.8 pounds), the fuel economy of an average truck (5.2 mpg), and the GHG value of CO2 ($10 per ton). Given the earlier data on emission rates, we can combine these with the air pollution values and the separate estimate of the value of CO2 emissions. Using the emission values for rural areas, a heavy duty diesel truck traveling at 60 mph emits air pollutants (including GHG) at a rate of 0.262 cents per ton mile or $2.33 per hour (in 1999 dollars) assuming an average truck load of 14.8 tons (Forkenbrock, 1999) Conversely, an idling heavy-duty diesel truck emits air pollutants with a value of $0.099 per hour (in 1999 dollars). This idling value, while not zero, is much less than the $2.33 figure. since no energy is being expended to move the truck and its freight.
3.4. Valuation of Noise There is general agreement that transportation is a major cause of noise pollution, and that trucks typically have significantly different noise patterns compared to automobiles because of engine size, number of axles, and vehicle weight. Similarly, there is agreement that the value of noise pollution is greatly influenced by factors such as traffic characteristics, roadway geometry, vehicle type, speed, and land use/density. There is less agreement, however, on the cost that should be attributable to noise levels produced by truck travel. Based on the types of trucks providing intercity freight service, Forkenbrock (1999) estimated a value of 0.045 cents per ton-mile (in 1994 dollars). Given the overall uncertainty associated with this estimate, this value is used in the CVISN evaluation without a further adjustment for CPI changes.
3.5. Summary of Unit Cost Values to be Used For Roadside Enforcement Benefits Table 2 presents the unit cost values that have been presented above for use in the estimation of benefits for roadside enforcement CVISN scenarios. They are consistently reported in 1999 dollars.
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Table 2. Summary Values of Truck-related Benefit Measures. Item
Unit Amount (in 1999 Dollars)
Truck crash (total) Truck VOT (total) Air and greenhouse gas (in motion) Air and greenhouse gas (idling) Noise
64,985 per incident 80 per hour 2.33 per hour 0.099 per hour 0.00045 per ton-mile
4. COSTS ASSOCIATED WITH CVISN SCENARIOS The five ITS goal areas focus only on benefits (including cost savings). For the purpose of this BCA, the costs associated with the implementation and operation of CVISN consist of the one-time startup costs and the on-going costs of CVISN programs, including equipment replacement at appropriate intervals. More specifically, these CVISN costs include the incremental capital and operating costs of the hardware and software, including computers and electronic data communications, and labor and administrative overhead costs for performing the functions associated with CVISN. In contrast to defining the cost saving benefits of CVISN, defining the incremental expenditures of resources on CVISN is relatively straightforward. Table 3 disaggregates CVISN’s costs by who bears the costs. For both roadside enforcement and electronic credentialing, there are startup and replacement capital costs in future years to both the states and carriers. Table 3. Classification of Costs and Their Incidence. Cost Description
Roadside enforcement CVISN startup costs Equipment/housing/training CVISN replacement capital costs CVISN operating costs
Customer Impacted State
Carriers (and Shippers)
√ √ √
√
(Increased) costs of compliance Out-of-service (OOS) Electronic credentialing CVISN startup costs Equipment/housing/training CVISN replacement capital costs
√
√ √
Public
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However, for roadside enforcement, it is assumed that a vendor will charge $45 per year per truck (based on NORPASS annual charges to carriers). This represents all costs, including in-truck equipment required for electronic screening, thus eliminating startup or replacement capital costs for carriers. The $45 is treated as an annual operating cost of electronic screening. And, for electronic credentialing, it can be assumed that essentially all carriers have PCs, and, therefore, that the startup and replacement capital costs are essentially zero for carriers. States, on the other hand, need to install, operate, and maintain the equipment and software to enable electronic credentialing to take place. Finally, there are costs to the carriers from improved roadside enforcement. These will take the form of increased OOS violations for high-risk carriers, and possible indirect costs of changing their behavior to improve their compliance rates. For the former, we multiplied the increased OOS placements by the weighted average time of vehicle and driver OOS placements. No firm estimates are available for the latter costs. However, since less compliant carriers are more likely to incur increased OOS costs, this cost is likely to be included at least partly in their increased OOS cost.
5. BENEFIT/COST ANALYSIS COMPONENTS AND SCENARIOS The BCA presented here is undertaken separately for the two CVISN MDI components and five scenarios. In part, this is due to the fact that the categories of benefits and costs are different and more limited for electronic credentialing than for roadside enforcement. For the former, they include only costs and cost savings, while for roadside enforcement (including Safety Information Exchange), the over-the-road operations of motor carriers are directly affected. Also, investment decisions are likely to be made separately for these two CVISN elements. Consequently, a variety of investment scenarios can be envisioned for each of these CVISN elements.
5.1. Roadside Enforcement Scenarios Three national scenarios are defined for CVISN’s roadside enforcement element. These consist of increasingly more comprehensive application and effectiveness of CVISN components. National scenarios were developed by expanding the unit costs collected from the participating states to a nationwide 100% deployment, using available data on CVO activity nationwide. For example, government safety inspection data by state were used to extrapolate roadside enforcement costs from
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Kentucky or Connecticut to the level that would reasonably be expected once CVISN is deployed in all 50 states. Scenario RE 1. Upgrade of all fixed inspection sites to Aspen capability, including PCs and printers to provide improved data for selecting high-risk vehicles for inspection. The Aspen system consists of laptop computers which record and transmit inspection data electronically. The software also provides a score for the carrier for which the particular truck is operating which the inspector uses to select higher risk trucks for inspection. However, no electronic screening capability is included. Scenario RE 2. Electronic screening and all inspections focused on high-risk vehicles, with no assumed change in compliance rates. Improvements include those in Scenario RE 1 plus automated vehicle identification, mainline weigh-inmotion, electronic signs, loop detectors, electronic snapshot capability, wireless communication, Safety and Fitness Electronic Records (SAFER) mailbox, Commercial Vehicle Information Exchange Window (CVIEW) or equivalent, and in-truck transponders for low-risk vehicles. Scenario RE 3. Scenario RE 2 with the assumption of a 25% decrease in motor carrier safety regulation violation rates.
5.2. Electronic Credentialing Scenarios Two scenarios are defined for electronic credentialing: Scenario EC 1. End-to-end International Registration Plan (IRP) credentialing for those states with in-house credentialing interface systems (i.e. currently not using the Vehicle Information System for Tax Apportionment – or VISTA), as well as end-to-end IFTA and the IRP clearinghouse. Scenario EC 2. End-to-end IRP credentialing with VISTA for those states currently using VISTA, as well as end-to-end International Fuel Tax Agreement (IFTA) and the IRP clearinghouse. Descriptions, deployments, and costs of each of these improvements are presented in detail in (Battelle, 2002).
6. BENEFIT/COST CALCULATIONS All benefits and costs occurring each year between 2000 and 2025 are included in the BCA and all values are discounted back to 2000 using both a 4 and 7% real discount rate to calculate the present values of the benefits and costs in 1999 dollars. The use of a 4% real discount rate in these benefit/cost calculations has been recommended by economists in both the public and private sector (U.S.
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EPA, 1999). The use of a 7% real discount is a more stringent test and has been required for nearly two decades for use in BCAs of federal programs by the U.S. Office of Management and Budget (Office of Management and Budget, 1992).
6.1. Roadside Enforcement Scenarios Tables 4–6 show the results of the BCA for the three roadside enforcement scenarios. (The detailed tables listing the actual year-by-year benefits and costs and their discounted values using 4 and 7% real discount rates are included in (Battelle, 2002).) The tables show the present values of all the benefits for roadside enforcement that have been included in the BCA and compares these to the total system costs. Listing the benefits and costs in the format in these tables shows how they are aggregated in their common dollar units to calculate the net benefits and the benefit/cost ratio (BCR) for each investment alternative or scenario. Discounting future values to calculate a present value in 1999 dollars is necessary to be able to compare these future streams of costs and benefits. The 4 and 7% discount rates are applied to the future benefits and costs estimated in real (constant 1999) dollars, not inflated dollars. If the future benefits and costs were estimated in inflated (current) dollars, the “nominal” discount rate
Table 4. Benefit/Cost Comparison for Roadside Enforcement Scenario #1 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Crashes avoided Transit-time savings (including O&M and air and noise pollution)
$90,740,000 $0
$69,076,000 $0
Total benefits
$90,740,000
$69,076,000
Costs One time startup cost to states Replacement capital costs to states Increased operating costs to states Increased operating costs to carriers Increased OOS costs to carriers
$30,980,000 $72,890,000 $12,490,000 $0 $26,130,000
$30,980,000 $51,208,000 $9,512,000 $0 $19,891,000
Total costs
$142,490,000
$111,591,000
Total (net present value) Benefit/Cost ratio
−$51,750,000 0.64
−$42,515,000 0.62
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Table 5. Benefit/Cost Comparison for Roadside Enforcement Scenario #2. (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Crashes avoided Transit-time savings (including O&M and air and noise pollution)
$636,000,000 $6,328,000,000
$484,300,000 $4,817,000,000
Total benefits
$6,964,000,000
$5,301,300,000
Costs One time startup cost to states Replacement capital costs to states Increased operating costs to states Increased operating costs to carriers Increased OOS costs to carriers
$99,500,000 $124,700,000 $234,700,000 $2,800,500,000 $183,100,000
$99,500,000 $86,400,000 $178,700,000 $2,131,900,000 $139,400,000
Total costs
$3,442,500,000
$2,635,900,000
Total (net present value) Benefit/Cost ratio
$3,521,500,000 2.0
$2,665,400,000 2.0
Table 6. Benefit/Cost Comparison for Roadside Enforcement Scenario #3 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Crashes avoided Transit-time savings (including O&M and air and noise pollution)
$10,742,000,000 $6,328,000,000
$8,178,000,000 $4,817,000,000
Total benefits
$17,070,000,000
$12,995,000,000
Costs One time startup cost to states Replacement capital costs to states Increased operating costs to states Increased operating costs to carriers Increased OOS costs to carriers
$99,500,000 $124,700,000 $234,700,000 $2,800,500,000 $137,300,000
$99,500,000 $86,400,000 $178,700,000 $2,131,900,000 $104,500,000
Total costs
$3,396,700,000
$2,601,000,000
Total (net present value) Benefit/Cost ratio
$13,673,300,000 5.0
$10,394,000,000 5.0
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would have to be 4 or 7% plus the rate of inflation. If we assume today’s modest 2.5% annual inflation rate going forward, the 4 and 7% real discount rates are equivalent to 6.5 and 9.5% nominal discount rates, respectively. For the three roadside enforcement scenarios, Tables 4–6 show that the BCRs using the more stringent 7% discount rate range from 0.62 to 5.0, depending on the scenario. For the simplest roadside enforcement scenario, RE 1, which is the upgrade to Aspen without electronic screening, the BCR is less than 1.0, showing that Aspen by itself has negative net benefits and is economically not worthwhile. For the two roadside enforcement scenarios that involve electronic screening (RE 2 and RE 3), the BCRs increase considerably, as do the NPVs of the benefits of these improvements. For Scenario RE 2, which assumes no change in compliance behavior, the NPV ranges from $2.6 billion to $3.5 billion, depending on the discount rate used. With improved compliance behavior, which is an important objective of these systems, the increase in the value of the net benefits (NPV) is truly impressive, ranging from over $10 billion to over $13 billion for Scenario RE 3, depending on the discount rate. Therefore, the systems involved in the two roadside enforcement scenarios that include electronic screening are economically well justified, even with the use of the more stringent 7% real discount rate. The make up of the benefits and costs varies, depending on the roadside enforcement investment scenario. Table 4 for Scenario RE 1, which involves only Aspen with no electronic screening, shows there are no transit-time savings for low-risk carriers, and no costs to the carriers as a result of electronic screening to bypass inspection and weigh stations. The costs involved in this RE scenario are small compared to the RE 2 and RE 3 scenarios involving electronic screening. In these instances, less than 20% of the total costs (mainly increased OOS costs) are borne by the carriers. The importance of the increased OOS rate in scenario RE 1 is reflected in the value of the crashes avoided benefit, which is well over 3 times the higher OOS cost to the carriers. Tables 5 and 6 show the differences between scenarios RE 2 and RE 3 to be only in the values of the crashes avoided benefit and the increased OOS costs to the carriers. This results from the 25% improvement in the compliance rate assumed as the only difference between the two scenarios. Otherwise, the costs to implement the “investments” are the same, and no change is assumed in the number or percentage of trucks deemed to be low-risk and, therefore, able to benefit from (and pay for) the electronic screening. Note that in RE 3, the increased OOS cost to carriers decreases from the cost in RE 2 by the 25% improvement in compliance rate, while the crashes avoided benefit increases dramatically with the assumed change in compliance behavior. This shows the potential benefit from
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the combined “carrot” (ES) and “stick” (better inspection targeting) incentives possible with CVISN. The carrot is actually much larger than shown in Tables 5 and 6. These tables reflect the assumption of no change in total time spent by all trucks stopped in inspection and weigh stations, so that the same number of trucks are inspected. (The time savings benefit is to the trucks bypassing the inspection stations at highway speeds.) Only the targeting of high-risk trucks for inspection is improved. In a BCA, the total costs and benefits to society are used to evaluate the investment alternative. However, if the 52% of trucks that earn the right to bypass the inspection stations – saving 2.81 minutes per bypass (Iowa State University, 1998) also avoid spending a (weighted) average of 22.2 minutes being weighed and/or inspected, their benefit is valued at nearly $3.3 billion per year. This is nearly 20 times the $168 million cost per year to the low-risk carriers to equip their 52% of the nation’s 7.2 million heavy trucks at $45 per truck per year. This is a strong incentive to carriers to increase their compliance behavior and make the nation’s highways safer.
6.2. Electronic Credentialing Scenarios Tables 7 and 8 show that the two electronic credentialing scenarios are characterized by huge BCRs. For Scenario EC 1, the BCR is 12.5 using the 7% discount rate, meaning that the total benefits of electronic credentialing for states not Table 7. Benefit/Cost Comparison for Electronic Credentialing Scenario # 1 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Operating cost savings to states Operating cost savings to carriers Inventory cost savings to carriers
$338,800,000 $74,500,000 $319,300,000
$257,900,000 $56,700,000 $243,100,000
Total benefits
$732,600,000
$557,700,000
Costs One time startup cost to states Replacement capital costs to states
$42,140,000 $3,460,000
$42,140,000 $2,340,000
Total costs
$45,600,000
$44,480,000
Total (net present value) Benefit/Cost ratio
$687,000,000 16.1
$513,220,000 12.5
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Table 8. Benefit/Cost Comparison for Electronic Credentialing Scenario #2 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Operating cost savings to states Operating cost savings to carriers Inventory cost savings to carriers
$316,300,000 $24,500,000 $104,900,000
$240,800,000 $18,600,000 $79,900,000
Total benefits
$445,700,000
$339,300,000
Costs One time startup cost to states Replacement capital costs to states
$7,200,000 $1,800,000
$7,200,000 $1,200,000
Total costs
$9,000,000
$8,400,000
Total (net present value) Benefit/Cost ratio
$436,700,000 49.5
$330,900,000 40.4
using VISTA are over 12 times as large as the total costs. For states using VISTA (Scenario EC 2), Table 8 shows that the BCR is over 40. However, an examination of the make up of the benefits and costs of the two EC scenarios shows the major contribution to the difference in the BCR is the much lower startup cost to the states with VISTA. VISTA provides credentialing services to the states under contract so that its capital costs are amortized over time as operating charges to the states. The present value of the non-VISTA scenario, EC 1, is actually about 50% higher than the VISTA scenario, EC-2, in part because the number of trucks and carrier accounts is much greater in the non-VISTA systems than in the VISTA system. In any event, both the VISTA and non-VISTA scenarios for the electronic credentialing element of CVISN easily pass the important BCR and positive NPV criteria for determining whether such systems are economically justified. For EC in states currently operating without VISTA, the “breakeven” deployment size in percentage terms is less than 10% (equal to the inverse of the BCR) at a 7% real discount rate. This is easily seen from Table 7 when it is considered that the total costs are startup and replacement capital costs that are fixed statewide, while the cost saving benefits vary linearly with the number or percent of carriers using EC. Similarly, for EC in states with VISTA (Scenario EC 2), the breakeven % deployment is only 2.5%. At deployments above these levels, electronic credentialing is economically justified with rapidly increasing BCRs, reaching the BCRs in Tables 7 and 8 at 100% deployment. Thus, even with a slow take-up of electronic credentialing, with or without VISTA, it is prudent to proceed with deploying such systems.
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7. CONCLUSIONS This paper has identified and quantified the principal benefits and costs of implementing CVISN nationally, and has identified the main customer groups impacted by these benefits and costs. The paper also presents the unitary dollar values that were selected to monetize the roadside enforcement benefits of CVISN. Corresponding dollar values for the electronic credentialing element of CVISN, along with the implementation and O&M costs of both components, were presented based on estimates made at various MDI sites, mainly Kentucky, Connecticut, and Maryland. Based on the benefit/cost analyses undertaken, it is clear that the deployment of CVISN will yield significant benefits to all stakeholders – the states, motor carriers, and the public. Benefit/cost ratios were found to be the highest for those applications involving more complete CVISN systems for roadside enforcement. Both electronic credentialing scenarios had very high benefit/cost ratios and thus easily pass the important BCR criterion for determining whether such systems are economically justified.
ACKNOWLEDGMENTS The work presented in this paper was performed by Charles River Associates for Battelle under contract to the U.S. Department of Transportation (DTFH61–96C-00077, Task Order No. 7703). The authors would like to acknowledge the guidance and assistance provided by Jeff Secrist of FMCSA; Mark Kiefer of Charles River Associates; Edward Fekpe of Battelle; and John Kinateder, formerly of Battelle. However, the opinions and conclusions expressed in this paper are those of the authors and do not necessarily reflect the views or policy of the U.S. DOT, FMCSA, or FHWA.
REFERENCES American Trucking Associations (1995). 1994 Motor carrier annual report: Financial and operating statistics. Alexandria, VA. Battelle (2002, March). Evaluation of the commercial vehicle information systems and networks (cvisn) model deployment initiative. Prepared for the ITS Joint Program Office, Final Report. Brand, D. (1994). Criteria and methods for evaluating intelligent transportation system plans and operational tests. Transportation Research Record No. 1453. Brand, D. (1996, June 1). The values of time savings for intercity air and auto travelers for trips under 500 miles in the U.S. Prepared for U.S. DOT, Office of the Secretary, Panel on the Value of Time for Use in Transportation Investment Valuation.
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Brand, D. et al. (2001). Application of benefit-cost analysis to the proposed California high speed rail system. Transportation Research Record, 1742. Electronic diesels and other ways to improve fuel economy. Commercial Carrier Journal, April 1993, as cited in Office of Technology Assessment, Saving Energy in U.S. Transportation, OTA-ETI-589, July 1994. Federal Highway Administration (1998, May). U.S. freight: Economy in motion. FHWA-PL-98-034. Federal Motor Carrier Safety Administration (2000, January). Large Truck Crash Profile: The 1998 National Picture. Forkenbrock, D. (1999, September/November). External costs of intercity truck freight transportation. Transportation Research A, 33(7/8). Iowa State University, Center for Transportation Research and Education (1998). Advantage I-75 mainline automated clearance system: Final evaluation report. August, 3–26. With calculations by Charles River Associates. Miller, T. et al. (The Urban Institute) (1991, October). The costs of highway crashes, Report No. FHWA-RD-91-055. Miller, T. R., Spicer, R. S., Lestina, D. C., & Levy, D. T. (1999). Is it safest to travel by bicycle, car, or big truck? Journal of Prevention and Injury Control, 1(1). Office of Management and Budget (1992, October 29). Guidelines and discount rates for benefit-cost analysis of federal programs. Circular No. A-94 (Revised). Richeson, K. (2000, February). The Johns Hopkins University, Applied Physics Laboratory. Introductory Guide to CVISN, POR-99-7186. Transportation Research Board (1996). Paying our way: Estimating marginal social costs of freight transportation. Special Report 246. Tyworth, J., & Zeng, A. (1998, February). Estimating the effects of carrier transit-time performance on logistics cost and service. Transportation Research A, 32(2). U.S. Department of Commerce (1997). Motor freight transportation and warehousing survey: 1995, issued February. U.S. Department of Transportation and the U.S. Department of Commerce (1999, December). 1997 commodity flow survey. U.S. EPA (1998, April). Emission facts: Idling vehicle emissions, report no. EPA-F-98-014, http://www.epa.gov/oms/consumer/f98014.htm. U.S. EPA (1999). Guidelines for preparing economic analyses, June 11, Chapter 6: Recommends a real rate of 2 to 3 percent for some public projects. Zaloshnja, E., Miller, T., & Spicer, R. (2000, November 30). Pacific institute for research and evaluation. Costs of Large Truck- and Bus-Involved Crashes. Prepared for the Federal Motor Carrier Safety Administration.
APPENDIX: LIST OF ABBREVIATIONS Abbreviation
Definition
ATA BCA BCR
American Trucking Associations, Inc. Benefit/cost analysis Benefit/cost ratio
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Abbreviation
Definition
CO CO2 CPI CV CVIEW CVISN CVO EC FHWA FMCSA GHG IFTA IRP ITS MDI NOx NPV O and M OOS OS/OW PC PM RE SAFER USDOT VISTA VOC VOT
Carbon monoxide Carbon dioxide Consumer Price Index Commercial vehicle Commercial Vehicle Information Exchange Window Commercial Vehicle Information Systems and Networks Commercial vehicle operations Electronic credentialing Federal Highway Administration Federal Motor Carrier Safety Administration Greenhouse gas International Fuel Tax Agreement International Registration Plan Intelligent Transportation System [formerly IVHS] Model Deployment Initiative Nitrogen oxides Net present value Operating and maintenance Out of service Oversize/overweight Personal computer Particulate matter Roadside enforcement Safety and Fitness Electronic Record United States Department of Transportation Vehicle Information System for Tax Apportionment Volatile organic compound Value of time
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1. INTRODUCTION Beginning in the mid-1990s the Office of Motor Carriers in the Federal Highway Administration (now the Federal Motor Carrier Safety Administration), established the Commercial Vehicle Information Systems and Networks (CVISN) program to examine and facilitate the use of various information systems and communication technologies to improve commercial vehicle operations (CVOs). The CVISN Model Deployment Initiative (MDI) began in 1996 in Maryland and Virginia and was later extended to eight additional states (California, Colorado, Connecticut, Kentucky, Michigan, Minnesota, Oregon, and Washington). The objective of the MDI was to demonstrate the technical and institutional feasibility, costs, and benefits of intelligent transportation system (ITS) programs aimed at improving the safety and operational characteristics of CVOs. In essence, the initial, or what has been referred to as Level 1 functions of CVISN, can be grouped into the following three activities: (1) Safety Information Exchange – technologies that permit the collection, rapid dissemination and easy review of motor carrier safety information at the roadside. (2) Electronic-Credentialing – the capability to allow motor carriers to apply, pay for, and receive various credentials electronically, as well as provisions for electronic tax filing, and the payment of certain taxes and fees. (3) Electronic-Screening – the ability to detect, identify and weigh commercial vehicles at highway speeds, and, if all certificates and weights are in order, give the vehicles a green light to bypass static weigh and inspection stations. Additional background material on the early phase of the CVISN program can be found in Richeson (2000). An important objective of the CVISN MDI was to conduct a rigorous benefit/cost analysis (BCA) to determine the net economic benefits that could be expected from a nationwide CVISN program. In the public sector, BCA helps maximize economic efficiency, or the total net benefits to the public from an investment. The safety information exchange, electronic credentialing and roadside enforcement elements of CVISN can make commercial vehicle credentialing and operations less costly, and safety inspections more effective. The electronic screening of commercial vehicles can also be expected to save transit time for trucks with good safety compliance records by enabling them to bypass inspection stations at highway speeds in most cases. It is also hoped that this benefit will motivate carriers to improve their safety compliance behavior.
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Trucks bypassing inspection stations will not only experience time savings for themselves and their cargo, but also they provide energy savings and air and noise pollution benefits for the public. Of most importance to the public, however, are the cost savings and productivity increases of electronic credentialing to the states and carriers, and the improved targeting for inspection of unsafe vehicles enabled by the new information systems that make up the roadside enforcement element of CVISN. The benefits of crashes avoided by removing unsafe trucks from highways include the value of lives saved, injuries avoided, reduced property damage to trucks, their cargo, and to other vehicles, and reduced delay to all vehicles from congestion due to crashes. These public benefits from CVISN are obviously important in justifying the expenditures needed to implement and operate these systems. The question to be answered by a BCA is whether all the benefits exceed all the costs. This means that all the benefits and costs input to a BCA must have some inherent value to society. It is important for government to consider all such impacts, even if the private sector does not. And, while the actual summing of the benefits and costs in a BCA is straightforward, identifying the right inputs and observing or estimating their values is not. Once identified and quantified, the benefits and costs in a BCA can be discounted to a present value over the economic life of a project (Brand et al., 2001). For the CVISN MDI, benefits are assumed to begin immediately with the one-time startup costs in the year 2000, and extend for a 25-year period through 2025. This allows 25 years of economic returns for the project, which will include one or more replacement cycles for equipment and software at appropriate intervals.
2. BENEFITS AND COSTS OF CVISN The CVISN benefits and their measures included in this BCA consist of: (1) Roadside Enforcement (including safety information exchange and electronic screening) Crashes avoided; Truck transit-time savings; Air and noise pollution reductions from trucks bypassing inspection stations at highway speeds. (2) Electronic Credentialing Operating cost savings to states; Operating cost savings to carriers; Inventory cost savings to carriers.
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Similarly, the principal costs associated with these two elements are: (1) Roadside Enforcement One-time startup cost to state; Replacement capital costs to states; Increased operating costs to states; Increased operating costs to carriers; Increased out-of-service (OOS) costs to carriers. (2) Electronic Credentialing One-time startup cost to states Replacement capital costs to states in future years Where possible, all of the benefits and costs included in the BCA were derived from a series of on-site, in-person interviews with state agencies and with motor carriers participating in electronic credentialing programs. Because this was the first study of CVISN systems as actually deployed, the data collection effort was limited to the few states that had sufficient experience with the deployment and operation of these systems. Most of the credentialing cost data came from two states, Kentucky and Maryland, and the majority of the cost information for CVISN electronic screening and safety information exchange services came from Connecticut, Kentucky, and Virginia. Each participating state has unique characteristics and policies, so the cost data underlying the BCA should be viewed as a limited, early sample of the costs that later adopting states may incur. To supplement the cost data collected, a literature review was conducted. CVISN may alter the administration of commercial vehicle enforcement and regulatory processes in various ways, but the net economic benefits cannot be assessed until the impacts are translated into the measures listed above. These impacts are the result of changes in accidents, administrative and compliance costs, motor carrier behavior, and other changes in commercial vehicle regulatory administration and transportation activities. These evaluation measures determined the type of data to be collected and analyzed in the CVISN evaluation. The process of identifying the benefit measures listed above is described below for each of the five traditional ITS goal areas (safety, efficiency, productivity, mobility, and energy/environment). Since the five ITS goal areas double count some benefits, and include benefits that make no contribution to economic efficiency (and, thus, have no economic value), only four of the five ITS goal areas include potential benefits (or disbenefits) that should be input to the CVISN BCA. The reasons for this are explained below under efficiency benefit measures.
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2.1. BCA Safety Benefit Measures The anticipated safety benefits of CVISN from increased motor carrier compliance with state safety regulations are extremely important. The benefits consist primarily of reductions in truck-related crashes caused by violations of vehicle or driver safety regulations. The crashes are avoided either because additional trucks or drivers are placed out of service due to more efficient enforcement practices or the number of violations is reduced in response to enhanced enforcement (the indirect effect). The safety benefit will take the form of decreased fatalities and personal injuries, and decreased property damage costs from accidents. Note that in quantifying this benefit, the total cost to society of crashes, including the losses and delays to other motorists due to these accidents, is considered. Amounts reimbursed by insurance are not deducted from the cost savings since the cost savings will lower insurance premiums for everyone. Thus, all the accident cost savings should be included as a benefit to CVISN.
2.2. BCA Efficiency Benefit Measures A major source of confusion on the proper inputs to an ITS BCA stems from the fact that economists and engineers sometimes use the same term to mean different things. Most importantly, in economics, efficiency means maximizing total net benefits from an investment or policy. This means that the economic efficiency goal includes all the ITS goals that have (a dollar) value to society. However, engineers use the term efficiency much more narrowly to mean more output per unit of input (engineering efficiency). The efficiency goal that is well accepted as one of the five major ITS goals is the engineering efficiency goal, not the economic efficiency goal. Measures of achievement of the engineering efficiency goal do not enter into a BCA. This is because increased output per unit of input is best measured in transportation as increased throughput or capacity (e.g. vehicles per hour, inspections per hour, inspections per person-hour, etc.). Converting this benefit to a dollar value to society falls under the productivity goal in the form of cost savings.
2.3. BCA Productivity Benefit Measures Productivity means lower costs to produce a given level of output. Cost savings are an important measure of achievement of the CVISN productivity goal (e.g. cost
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per vehicle registration, reduced truck transit time, etc.). This benefit includes the savings to motor carriers and government agencies that result from CVISN. These cost savings certainly have value to society and enter into a BCA to calculate the net benefit of CVISN investments. With regard to roadside enforcement, the productivity-related cost savings to compliant motor carriers results from saving time by bypassing inspection sites at highway speeds. The time to inspect each truck selected for inspection is assumed to remain the same. Further, it is assumed that the number of truck inspections will not change. Rather, CVISN can be expected to result in a better targeting of truck inspections since more of these trucks will have been prescreened for violations using the real-time access to timely and accurate data for targeting high-risk carriers provided by CVISN. Therefore, rather than a cost savings to states, the benefit to the states is increased numbers of OOS violations and improved compliance resulting in fewer crashes. Cost savings to states are forgone for the benefit of increased output from the inspection process in the form of increased safety as measured by fewer crashes. This increased output provided by CVISN is an important benefit. With regard to electronic credentialing, the benefits of CVISN to both states and motor carriers consist mainly of cost savings. States can change their credentialing requirements (i.e. output) only as a result of legislative changes. Such changes are exogenous to the CVISN MDI and, therefore, they are not included in this BCA. Similarly, motor carriers can benefit from the cost savings that electronic credentialing’s speed and increased operating flexibility provides them (e.g. with IRP and IFTA credentialing). The benefits include both direct operating cost savings and increased fleet utilization from the increased speed with which carriers can get their trucks on the road due to faster credentialing. With regard to the latter, this BCA assumes carriers can register new trucks faster and, thus, save on truck inventory costs. Registration renewals are assumed to be scheduled, with or without electronic credentialing, to keep existing truck fleets in service. Also, oversize/overweight (OS/OW) permits were not included in the electronic credentialing portions of the CVISN MDI, so no benefits for faster credentialing of these permits were included in the BCA. Finally, significant or measurable levels of increased revenue to motor carriers from goods shipped are not anticipated as a result of the CVISN program. (This is discussed in the mobility section below.) Another potential productivity cost savings to states is pavement cost savings (increased pavement life or productivity) from fewer un-permitted overweight trucks on the road. This is a savings that can be expected to materialize over the long term, well beyond the term of the CVISN MDI. For this reason, it was excluded from the quantitative results of this BCA. However, a discussion
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of this issue with some very approximate benefit estimates is included in (Battelle, 2002). Other productivity-related outcome measures may have economic value to some, but should be excluded from a BCA because they represent transfers of benefits. For example, CVISN may increase the fee revenue “production” from more effective regulatory enforcement and compliance with CVISN. However, this should not be treated as a net benefit that enters into a BCA, since it is really a transfer from the carriers to state government. Finally, as explained under the mobility and energy/environment goal areas below, certain benefits that fall under other goal areas are included in the calculation of productivity benefits due to the way unit costs are calculated in the available literature. Examples of these are: (1) Reduced delay to the motoring public from CV accidents (mobility goal area benefit included in the literature review based valuation of the accident cost savings). (2) Gallons of fuel saved by motor carriers (energy goal area cost included in the valuation of truck transit-time operating cost saving).
2.4. BCA Mobility Benefit Measures Mobility can be measured by the net benefits to travelers or other transportation consumers from a transportation improvement. To avoid double counting, one of the most important measures of achievement of the mobility goal is purposely omitted as an input to this BCA. This is the portion of the CVISN motor carrier productivity cost savings benefit that is passed on to the shipper/receiver (e.g. a value-added manufacturer, wholesaler, retail store), or to the final consumer. The very difficult problem of obtaining data on some elusive cost savings passed on to customers can be avoided by including in the BCA the entire direct CVISN productivity benefit (the cost savings to motor carriers). Whether these cost savings are passed on to customers is immaterial for the BCA since the total benefit to society is the same. Three non-motor carrier cost saving mobility measures are valid inputs to a CVISN BCA: (1) Reduced highway delays to the public due to reduced motor carrier (truck) crashes; (2) Reduced time in transit that reduces shipper/receiver inventory costs; and (3) Increased shipper/receiver satisfaction with carriers (e.g. use of safety rating data).
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The first measure impacts the public in a different way than the CVISN productivity measure (i.e. it impacts public benefits differently from the costs of the shipped goods). It is included in the accident cost saving benefit since it is oftentimes included in the values reported for cost of accidents. Similarly, the value to shippers/receivers of decreasing time in transit to reduce inventory costs is included in the motor carrier value of truck travel time. With regard to the third measure, to the extent that shippers are willing to pay separately for (i.e. that they value) the safety rating data, this benefit is additive to the carrier cost savings from reduced accidents. However, it fails the quantifiable and thus monetized criterion of a BCA. Also, the third measure can affect the volume of carrier business and, therefore, revenues. However, additional revenues are presumably mostly transfers, not increases in output or total goods shipped. Therefore, they do not provide net benefits for input to a BCA. (To the extent that additional revenues accrue to more efficient, profitable, compliant carriers, there is a net benefit to society. However, evaluating the relative profitability of different carriers is beyond the scope of this evaluation.)
2.5. BCA Energy and Environment Benefit Measures Energy savings in the form of decreased fuel use come from bypassing inspection stations and are included in the value of transit-time-related operating cost savings to motor carriers. Similarly, the values of air and noise pollution reductions from CVISN are attributable to trucks bypassing inspection stations and not having to decelerate, idle (in the inspection station) and accelerate again to highway speed. Again, while individually calculated, these benefits are included in the transit-time-related benefits input to the BCA.
3. ESTIMATION OF VALUES FOR CALCULATING CVISN BENEFITS Table 1 summarizes the evaluation benefit measures (i.e. metrics) for input to the CVISN BCA along with the customers who benefit. States and motor carriers are the primary beneficiaries of the most important productivity (cost saving) benefits. Shippers/receivers and the public benefit as well from these and the safety impacts of CVISN. However, the BCA needs to value these benefits in the aggregate in order to assess the total net worth of a project. The three major benefits of CVISN’s roadside enforcement (RE) listed in Table 1 are:
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Table 1. Classifications of Benefits and Their Incidence. Benefit Description
Customer Impacted State Carriers (and Shippers) Public
Roadside enforcement Safety Crashes avoided Productivity/Mobility Cost savings Transit-time savings (including O&M) Increased output (included in safety benefit) Energy/Environment Fuel use (included in transit-time savings) Air/noise pollution (included in transit-time savings) Electronic credentialing Productivity Cost savings Faster credentialing New truck inventory
√
√
√ √
√ √
√
√
√
√ √
(1) Safety: Crashes avoided through improved inspection, plus reduced accident costs, including delays to the motoring public from fewer truck accidents. (2) Productivity/Mobility: Cost savings to motor carriers from electronic screening transit-time savings, including operating and maintenance (O&M). Reduced delays to the motoring public from accidents. Increased output from more productive inspections measured by crashes avoided with benefits (again) to motor carriers and the public. (3) Energy/Environment: Energy/fuel savings to motor carriers included in value of transit-time savings. Air and noise pollution savings from transittime savings are calculated separately, but included in the value of transit-time savings. The benefits of CVISN’s electronic credentialing (EC) element include only measures of cost savings to both the state and to motor carriers. These savings result from the lower costs of the credentialing process itself, and improved carrier fleet utilization from faster credentialing of new trucks. However some of the above benefit measures are in natural units other than dollars. They can be converted to dollar values (monetized) for input to the BCA by using the following values.
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3.1. Valuation of Truck Crashes Based on a review of the literature, there are only a handful of studies that have attempted to calculate the cost associated with a truck crash. For example, one analysis of the cost of crashes by vehicle type (Miller, Spicer, Lestina & Levy, 1999), developed an overall estimate of $72,000 per crash (in September 1995 dollars) for “other single trucks.” This average value appears to reflect very logical differences in definitions of what constitutes a crash. That is, the universe of truck crashes in the database used is reported to be four times as large as other truck-related crash databases. This suggests that it includes many more minor accidents. A continuation and further refinement of this work was reported in a very recent study for the FMCSA (Zaloshnja, Miller & Spicer, 2000). In particular, costs for police-reported crashes involving trucks with a gross weight of more than 10,000 pounds were computed to be $75,637 each (in 1999 dollars). Great care was taken in this study to adjust the various input databases for known anomalies. Unfortunately, differences in cost categories examined make it difficult to compare truck accident figures reported elsewhere (Federal Motor Carrier Safety Administration, 2000). However, the approximately 320,000 annual truck accidents included in the study means that the database is more consistent with the latest FMCSA data, which has been used in this paper to calculate the number of truck accidents avoided by CVISN. When disaggregating their findings, however, the authors noted that the value of “delays to other traffic” increased markedly when compared to earlier studies. As an alternative hypothesis, therefore, the authors elected to constrain (i.e. reduce) the values for the delay component of truck crashes to those reported in (Miller et al., 1991). After doing so, the average value of a large truck crash was reported to be $64,985 (in 1999 dollars). This more conservative value of the benefit of a reduced truck crash was adopted for use in the current study.
3.2. Valuation of CV Transit Time There is a small but growing body of literature on the value of time (VOT) associated with intercity auto trips (Brand, 1996). However, there is very little published on the VOT of trucks, perhaps because these are private costs in a competitive market. Truck VOT should include driver wages, truck operating and maintenance costs (including depreciation), and the time value of the freight being transported. Typically, the values of truck travel time in the CVISN literature have been limited to the cost of the driver of the truck.
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In a recent study (Forkenbrock, 1999), truck O&M cost (including depreciation) for truckload (TL) carriers was estimated as $1.25 per vehicle-mile or 8.42 cents per ton mile (in 1994 dollars) based on operating and financial data compiled by the American Trucking Associations (American Trucking Associations, 1995). At an average speed of 50 mph, this implies a variable cost of $62.50 per hour (in 1994 dollars) or $70 (in 1999 dollars). Inventory costs are available from a study that presented an innovative method of estimating the effects of carrier transit-time performance on logistics cost and service (Tyworth & Zeng, 1998). That study estimated that for just-in-time service delivery, an average shipper is willing to expend $310 to reduce transit time by 24 hours (i.e. from 3 to 2 days). This implies an average unit cost of $12.90 per hour. It is well known that just-in-time service implies a higher VOT, and that higher value goods are more likely to be transported by air (Federal Highway Administration, 1998). Still, over all modes (i.e. but not including local package carriers and multiple mode goods), trucks represent the overwhelming majority (87%) of the value of all goods shipped (U.S. Department of Transportation, 1999), with about 63% of the value of trucking and courier service being truckload shipments (U.S. Department of Commerce, 1997). Thus, it is reasonable to use $10 per hour to represent the time value of goods shipped by truck. This is the same as an earlier value cited in the literature (Brand, 1994). Adding this to the $70 presented above yields a value of $80 per hour for the total value of time savings of a truck.
3.3. Valuation of Air Pollutants With regard to the air pollution costs that are to be applied to the time savings per truck, it is important to note that the amount of air pollutants emitted from trucks is dependent on a variety of factors such as engine size and design, vehicle condition, speed, frequency of acceleration and deceleration, temperature, etc. In almost all instances, unit costs in the literature for amounts of air pollution are expressed either as a function of (1) vehicle miles traveled or (2) weight times distance traveled. Emission rates are usually provided for heavy trucks in motion (Transportation Research Board, 1996). However, for heavy-duty diesel trucks that are idling (e.g. waiting for an inspection), U.S. EPA (1998) (http:/www.epa.gov/oms/consumer/ f98014.htm) has estimated the following average values (i.e. over summer and winter conditions) in grams per hour for a heavy-duty diesel vehicle: NOx = 55.8, CO = 94.3, VOC = 12.6, and PM10 = 2.57. Fuel consumption for a typical truck that is idling has been estimated at 0.5 gallons per hour (Commercial Carrier Journal, 1994).
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Others have calculated emission rates for heavy-duty diesel trucks that are comparable to those above, but they add carbon dioxide (CO2 ) in a separate category – “greenhouse gas (GHG) emissions” – since some do not view CO2 as air pollution. Recognizing the great uncertainty of the cost to society of GHG emissions, Forkenbrock (1999) has estimated a GHG (only) emissions value due to truck operations of 0.15 cents per ton-mile based on the amount of CO2 discharged for each gallon of diesel fuel used (22.8 pounds), the fuel economy of an average truck (5.2 mpg), and the GHG value of CO2 ($10 per ton). Given the earlier data on emission rates, we can combine these with the air pollution values and the separate estimate of the value of CO2 emissions. Using the emission values for rural areas, a heavy duty diesel truck traveling at 60 mph emits air pollutants (including GHG) at a rate of 0.262 cents per ton mile or $2.33 per hour (in 1999 dollars) assuming an average truck load of 14.8 tons (Forkenbrock, 1999) Conversely, an idling heavy-duty diesel truck emits air pollutants with a value of $0.099 per hour (in 1999 dollars). This idling value, while not zero, is much less than the $2.33 figure. since no energy is being expended to move the truck and its freight.
3.4. Valuation of Noise There is general agreement that transportation is a major cause of noise pollution, and that trucks typically have significantly different noise patterns compared to automobiles because of engine size, number of axles, and vehicle weight. Similarly, there is agreement that the value of noise pollution is greatly influenced by factors such as traffic characteristics, roadway geometry, vehicle type, speed, and land use/density. There is less agreement, however, on the cost that should be attributable to noise levels produced by truck travel. Based on the types of trucks providing intercity freight service, Forkenbrock (1999) estimated a value of 0.045 cents per ton-mile (in 1994 dollars). Given the overall uncertainty associated with this estimate, this value is used in the CVISN evaluation without a further adjustment for CPI changes.
3.5. Summary of Unit Cost Values to be Used For Roadside Enforcement Benefits Table 2 presents the unit cost values that have been presented above for use in the estimation of benefits for roadside enforcement CVISN scenarios. They are consistently reported in 1999 dollars.
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Table 2. Summary Values of Truck-related Benefit Measures. Item
Unit Amount (in 1999 Dollars)
Truck crash (total) Truck VOT (total) Air and greenhouse gas (in motion) Air and greenhouse gas (idling) Noise
64,985 per incident 80 per hour 2.33 per hour 0.099 per hour 0.00045 per ton-mile
4. COSTS ASSOCIATED WITH CVISN SCENARIOS The five ITS goal areas focus only on benefits (including cost savings). For the purpose of this BCA, the costs associated with the implementation and operation of CVISN consist of the one-time startup costs and the on-going costs of CVISN programs, including equipment replacement at appropriate intervals. More specifically, these CVISN costs include the incremental capital and operating costs of the hardware and software, including computers and electronic data communications, and labor and administrative overhead costs for performing the functions associated with CVISN. In contrast to defining the cost saving benefits of CVISN, defining the incremental expenditures of resources on CVISN is relatively straightforward. Table 3 disaggregates CVISN’s costs by who bears the costs. For both roadside enforcement and electronic credentialing, there are startup and replacement capital costs in future years to both the states and carriers. Table 3. Classification of Costs and Their Incidence. Cost Description
Roadside enforcement CVISN startup costs Equipment/housing/training CVISN replacement capital costs CVISN operating costs
Customer Impacted State
Carriers (and Shippers)
√ √ √
√
(Increased) costs of compliance Out-of-service (OOS) Electronic credentialing CVISN startup costs Equipment/housing/training CVISN replacement capital costs
√
√ √
Public
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However, for roadside enforcement, it is assumed that a vendor will charge $45 per year per truck (based on NORPASS annual charges to carriers). This represents all costs, including in-truck equipment required for electronic screening, thus eliminating startup or replacement capital costs for carriers. The $45 is treated as an annual operating cost of electronic screening. And, for electronic credentialing, it can be assumed that essentially all carriers have PCs, and, therefore, that the startup and replacement capital costs are essentially zero for carriers. States, on the other hand, need to install, operate, and maintain the equipment and software to enable electronic credentialing to take place. Finally, there are costs to the carriers from improved roadside enforcement. These will take the form of increased OOS violations for high-risk carriers, and possible indirect costs of changing their behavior to improve their compliance rates. For the former, we multiplied the increased OOS placements by the weighted average time of vehicle and driver OOS placements. No firm estimates are available for the latter costs. However, since less compliant carriers are more likely to incur increased OOS costs, this cost is likely to be included at least partly in their increased OOS cost.
5. BENEFIT/COST ANALYSIS COMPONENTS AND SCENARIOS The BCA presented here is undertaken separately for the two CVISN MDI components and five scenarios. In part, this is due to the fact that the categories of benefits and costs are different and more limited for electronic credentialing than for roadside enforcement. For the former, they include only costs and cost savings, while for roadside enforcement (including Safety Information Exchange), the over-the-road operations of motor carriers are directly affected. Also, investment decisions are likely to be made separately for these two CVISN elements. Consequently, a variety of investment scenarios can be envisioned for each of these CVISN elements.
5.1. Roadside Enforcement Scenarios Three national scenarios are defined for CVISN’s roadside enforcement element. These consist of increasingly more comprehensive application and effectiveness of CVISN components. National scenarios were developed by expanding the unit costs collected from the participating states to a nationwide 100% deployment, using available data on CVO activity nationwide. For example, government safety inspection data by state were used to extrapolate roadside enforcement costs from
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Kentucky or Connecticut to the level that would reasonably be expected once CVISN is deployed in all 50 states. Scenario RE 1. Upgrade of all fixed inspection sites to Aspen capability, including PCs and printers to provide improved data for selecting high-risk vehicles for inspection. The Aspen system consists of laptop computers which record and transmit inspection data electronically. The software also provides a score for the carrier for which the particular truck is operating which the inspector uses to select higher risk trucks for inspection. However, no electronic screening capability is included. Scenario RE 2. Electronic screening and all inspections focused on high-risk vehicles, with no assumed change in compliance rates. Improvements include those in Scenario RE 1 plus automated vehicle identification, mainline weigh-inmotion, electronic signs, loop detectors, electronic snapshot capability, wireless communication, Safety and Fitness Electronic Records (SAFER) mailbox, Commercial Vehicle Information Exchange Window (CVIEW) or equivalent, and in-truck transponders for low-risk vehicles. Scenario RE 3. Scenario RE 2 with the assumption of a 25% decrease in motor carrier safety regulation violation rates.
5.2. Electronic Credentialing Scenarios Two scenarios are defined for electronic credentialing: Scenario EC 1. End-to-end International Registration Plan (IRP) credentialing for those states with in-house credentialing interface systems (i.e. currently not using the Vehicle Information System for Tax Apportionment – or VISTA), as well as end-to-end IFTA and the IRP clearinghouse. Scenario EC 2. End-to-end IRP credentialing with VISTA for those states currently using VISTA, as well as end-to-end International Fuel Tax Agreement (IFTA) and the IRP clearinghouse. Descriptions, deployments, and costs of each of these improvements are presented in detail in (Battelle, 2002).
6. BENEFIT/COST CALCULATIONS All benefits and costs occurring each year between 2000 and 2025 are included in the BCA and all values are discounted back to 2000 using both a 4 and 7% real discount rate to calculate the present values of the benefits and costs in 1999 dollars. The use of a 4% real discount rate in these benefit/cost calculations has been recommended by economists in both the public and private sector (U.S.
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EPA, 1999). The use of a 7% real discount is a more stringent test and has been required for nearly two decades for use in BCAs of federal programs by the U.S. Office of Management and Budget (Office of Management and Budget, 1992).
6.1. Roadside Enforcement Scenarios Tables 4–6 show the results of the BCA for the three roadside enforcement scenarios. (The detailed tables listing the actual year-by-year benefits and costs and their discounted values using 4 and 7% real discount rates are included in (Battelle, 2002).) The tables show the present values of all the benefits for roadside enforcement that have been included in the BCA and compares these to the total system costs. Listing the benefits and costs in the format in these tables shows how they are aggregated in their common dollar units to calculate the net benefits and the benefit/cost ratio (BCR) for each investment alternative or scenario. Discounting future values to calculate a present value in 1999 dollars is necessary to be able to compare these future streams of costs and benefits. The 4 and 7% discount rates are applied to the future benefits and costs estimated in real (constant 1999) dollars, not inflated dollars. If the future benefits and costs were estimated in inflated (current) dollars, the “nominal” discount rate
Table 4. Benefit/Cost Comparison for Roadside Enforcement Scenario #1 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Crashes avoided Transit-time savings (including O&M and air and noise pollution)
$90,740,000 $0
$69,076,000 $0
Total benefits
$90,740,000
$69,076,000
Costs One time startup cost to states Replacement capital costs to states Increased operating costs to states Increased operating costs to carriers Increased OOS costs to carriers
$30,980,000 $72,890,000 $12,490,000 $0 $26,130,000
$30,980,000 $51,208,000 $9,512,000 $0 $19,891,000
Total costs
$142,490,000
$111,591,000
Total (net present value) Benefit/Cost ratio
−$51,750,000 0.64
−$42,515,000 0.62
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Table 5. Benefit/Cost Comparison for Roadside Enforcement Scenario #2. (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Crashes avoided Transit-time savings (including O&M and air and noise pollution)
$636,000,000 $6,328,000,000
$484,300,000 $4,817,000,000
Total benefits
$6,964,000,000
$5,301,300,000
Costs One time startup cost to states Replacement capital costs to states Increased operating costs to states Increased operating costs to carriers Increased OOS costs to carriers
$99,500,000 $124,700,000 $234,700,000 $2,800,500,000 $183,100,000
$99,500,000 $86,400,000 $178,700,000 $2,131,900,000 $139,400,000
Total costs
$3,442,500,000
$2,635,900,000
Total (net present value) Benefit/Cost ratio
$3,521,500,000 2.0
$2,665,400,000 2.0
Table 6. Benefit/Cost Comparison for Roadside Enforcement Scenario #3 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Crashes avoided Transit-time savings (including O&M and air and noise pollution)
$10,742,000,000 $6,328,000,000
$8,178,000,000 $4,817,000,000
Total benefits
$17,070,000,000
$12,995,000,000
Costs One time startup cost to states Replacement capital costs to states Increased operating costs to states Increased operating costs to carriers Increased OOS costs to carriers
$99,500,000 $124,700,000 $234,700,000 $2,800,500,000 $137,300,000
$99,500,000 $86,400,000 $178,700,000 $2,131,900,000 $104,500,000
Total costs
$3,396,700,000
$2,601,000,000
Total (net present value) Benefit/Cost ratio
$13,673,300,000 5.0
$10,394,000,000 5.0
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would have to be 4 or 7% plus the rate of inflation. If we assume today’s modest 2.5% annual inflation rate going forward, the 4 and 7% real discount rates are equivalent to 6.5 and 9.5% nominal discount rates, respectively. For the three roadside enforcement scenarios, Tables 4–6 show that the BCRs using the more stringent 7% discount rate range from 0.62 to 5.0, depending on the scenario. For the simplest roadside enforcement scenario, RE 1, which is the upgrade to Aspen without electronic screening, the BCR is less than 1.0, showing that Aspen by itself has negative net benefits and is economically not worthwhile. For the two roadside enforcement scenarios that involve electronic screening (RE 2 and RE 3), the BCRs increase considerably, as do the NPVs of the benefits of these improvements. For Scenario RE 2, which assumes no change in compliance behavior, the NPV ranges from $2.6 billion to $3.5 billion, depending on the discount rate used. With improved compliance behavior, which is an important objective of these systems, the increase in the value of the net benefits (NPV) is truly impressive, ranging from over $10 billion to over $13 billion for Scenario RE 3, depending on the discount rate. Therefore, the systems involved in the two roadside enforcement scenarios that include electronic screening are economically well justified, even with the use of the more stringent 7% real discount rate. The make up of the benefits and costs varies, depending on the roadside enforcement investment scenario. Table 4 for Scenario RE 1, which involves only Aspen with no electronic screening, shows there are no transit-time savings for low-risk carriers, and no costs to the carriers as a result of electronic screening to bypass inspection and weigh stations. The costs involved in this RE scenario are small compared to the RE 2 and RE 3 scenarios involving electronic screening. In these instances, less than 20% of the total costs (mainly increased OOS costs) are borne by the carriers. The importance of the increased OOS rate in scenario RE 1 is reflected in the value of the crashes avoided benefit, which is well over 3 times the higher OOS cost to the carriers. Tables 5 and 6 show the differences between scenarios RE 2 and RE 3 to be only in the values of the crashes avoided benefit and the increased OOS costs to the carriers. This results from the 25% improvement in the compliance rate assumed as the only difference between the two scenarios. Otherwise, the costs to implement the “investments” are the same, and no change is assumed in the number or percentage of trucks deemed to be low-risk and, therefore, able to benefit from (and pay for) the electronic screening. Note that in RE 3, the increased OOS cost to carriers decreases from the cost in RE 2 by the 25% improvement in compliance rate, while the crashes avoided benefit increases dramatically with the assumed change in compliance behavior. This shows the potential benefit from
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the combined “carrot” (ES) and “stick” (better inspection targeting) incentives possible with CVISN. The carrot is actually much larger than shown in Tables 5 and 6. These tables reflect the assumption of no change in total time spent by all trucks stopped in inspection and weigh stations, so that the same number of trucks are inspected. (The time savings benefit is to the trucks bypassing the inspection stations at highway speeds.) Only the targeting of high-risk trucks for inspection is improved. In a BCA, the total costs and benefits to society are used to evaluate the investment alternative. However, if the 52% of trucks that earn the right to bypass the inspection stations – saving 2.81 minutes per bypass (Iowa State University, 1998) also avoid spending a (weighted) average of 22.2 minutes being weighed and/or inspected, their benefit is valued at nearly $3.3 billion per year. This is nearly 20 times the $168 million cost per year to the low-risk carriers to equip their 52% of the nation’s 7.2 million heavy trucks at $45 per truck per year. This is a strong incentive to carriers to increase their compliance behavior and make the nation’s highways safer.
6.2. Electronic Credentialing Scenarios Tables 7 and 8 show that the two electronic credentialing scenarios are characterized by huge BCRs. For Scenario EC 1, the BCR is 12.5 using the 7% discount rate, meaning that the total benefits of electronic credentialing for states not Table 7. Benefit/Cost Comparison for Electronic Credentialing Scenario # 1 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Operating cost savings to states Operating cost savings to carriers Inventory cost savings to carriers
$338,800,000 $74,500,000 $319,300,000
$257,900,000 $56,700,000 $243,100,000
Total benefits
$732,600,000
$557,700,000
Costs One time startup cost to states Replacement capital costs to states
$42,140,000 $3,460,000
$42,140,000 $2,340,000
Total costs
$45,600,000
$44,480,000
Total (net present value) Benefit/Cost ratio
$687,000,000 16.1
$513,220,000 12.5
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Table 8. Benefit/Cost Comparison for Electronic Credentialing Scenario #2 (Present Value in $1999). Discounted at 4%
Discounted at 7%
Benefits Operating cost savings to states Operating cost savings to carriers Inventory cost savings to carriers
$316,300,000 $24,500,000 $104,900,000
$240,800,000 $18,600,000 $79,900,000
Total benefits
$445,700,000
$339,300,000
Costs One time startup cost to states Replacement capital costs to states
$7,200,000 $1,800,000
$7,200,000 $1,200,000
Total costs
$9,000,000
$8,400,000
Total (net present value) Benefit/Cost ratio
$436,700,000 49.5
$330,900,000 40.4
using VISTA are over 12 times as large as the total costs. For states using VISTA (Scenario EC 2), Table 8 shows that the BCR is over 40. However, an examination of the make up of the benefits and costs of the two EC scenarios shows the major contribution to the difference in the BCR is the much lower startup cost to the states with VISTA. VISTA provides credentialing services to the states under contract so that its capital costs are amortized over time as operating charges to the states. The present value of the non-VISTA scenario, EC 1, is actually about 50% higher than the VISTA scenario, EC-2, in part because the number of trucks and carrier accounts is much greater in the non-VISTA systems than in the VISTA system. In any event, both the VISTA and non-VISTA scenarios for the electronic credentialing element of CVISN easily pass the important BCR and positive NPV criteria for determining whether such systems are economically justified. For EC in states currently operating without VISTA, the “breakeven” deployment size in percentage terms is less than 10% (equal to the inverse of the BCR) at a 7% real discount rate. This is easily seen from Table 7 when it is considered that the total costs are startup and replacement capital costs that are fixed statewide, while the cost saving benefits vary linearly with the number or percent of carriers using EC. Similarly, for EC in states with VISTA (Scenario EC 2), the breakeven % deployment is only 2.5%. At deployments above these levels, electronic credentialing is economically justified with rapidly increasing BCRs, reaching the BCRs in Tables 7 and 8 at 100% deployment. Thus, even with a slow take-up of electronic credentialing, with or without VISTA, it is prudent to proceed with deploying such systems.
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7. CONCLUSIONS This paper has identified and quantified the principal benefits and costs of implementing CVISN nationally, and has identified the main customer groups impacted by these benefits and costs. The paper also presents the unitary dollar values that were selected to monetize the roadside enforcement benefits of CVISN. Corresponding dollar values for the electronic credentialing element of CVISN, along with the implementation and O&M costs of both components, were presented based on estimates made at various MDI sites, mainly Kentucky, Connecticut, and Maryland. Based on the benefit/cost analyses undertaken, it is clear that the deployment of CVISN will yield significant benefits to all stakeholders – the states, motor carriers, and the public. Benefit/cost ratios were found to be the highest for those applications involving more complete CVISN systems for roadside enforcement. Both electronic credentialing scenarios had very high benefit/cost ratios and thus easily pass the important BCR criterion for determining whether such systems are economically justified.
ACKNOWLEDGMENTS The work presented in this paper was performed by Charles River Associates for Battelle under contract to the U.S. Department of Transportation (DTFH61–96C-00077, Task Order No. 7703). The authors would like to acknowledge the guidance and assistance provided by Jeff Secrist of FMCSA; Mark Kiefer of Charles River Associates; Edward Fekpe of Battelle; and John Kinateder, formerly of Battelle. However, the opinions and conclusions expressed in this paper are those of the authors and do not necessarily reflect the views or policy of the U.S. DOT, FMCSA, or FHWA.
REFERENCES American Trucking Associations (1995). 1994 Motor carrier annual report: Financial and operating statistics. Alexandria, VA. Battelle (2002, March). Evaluation of the commercial vehicle information systems and networks (cvisn) model deployment initiative. Prepared for the ITS Joint Program Office, Final Report. Brand, D. (1994). Criteria and methods for evaluating intelligent transportation system plans and operational tests. Transportation Research Record No. 1453. Brand, D. (1996, June 1). The values of time savings for intercity air and auto travelers for trips under 500 miles in the U.S. Prepared for U.S. DOT, Office of the Secretary, Panel on the Value of Time for Use in Transportation Investment Valuation.
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Brand, D. et al. (2001). Application of benefit-cost analysis to the proposed California high speed rail system. Transportation Research Record, 1742. Electronic diesels and other ways to improve fuel economy. Commercial Carrier Journal, April 1993, as cited in Office of Technology Assessment, Saving Energy in U.S. Transportation, OTA-ETI-589, July 1994. Federal Highway Administration (1998, May). U.S. freight: Economy in motion. FHWA-PL-98-034. Federal Motor Carrier Safety Administration (2000, January). Large Truck Crash Profile: The 1998 National Picture. Forkenbrock, D. (1999, September/November). External costs of intercity truck freight transportation. Transportation Research A, 33(7/8). Iowa State University, Center for Transportation Research and Education (1998). Advantage I-75 mainline automated clearance system: Final evaluation report. August, 3–26. With calculations by Charles River Associates. Miller, T. et al. (The Urban Institute) (1991, October). The costs of highway crashes, Report No. FHWA-RD-91-055. Miller, T. R., Spicer, R. S., Lestina, D. C., & Levy, D. T. (1999). Is it safest to travel by bicycle, car, or big truck? Journal of Prevention and Injury Control, 1(1). Office of Management and Budget (1992, October 29). Guidelines and discount rates for benefit-cost analysis of federal programs. Circular No. A-94 (Revised). Richeson, K. (2000, February). The Johns Hopkins University, Applied Physics Laboratory. Introductory Guide to CVISN, POR-99-7186. Transportation Research Board (1996). Paying our way: Estimating marginal social costs of freight transportation. Special Report 246. Tyworth, J., & Zeng, A. (1998, February). Estimating the effects of carrier transit-time performance on logistics cost and service. Transportation Research A, 32(2). U.S. Department of Commerce (1997). Motor freight transportation and warehousing survey: 1995, issued February. U.S. Department of Transportation and the U.S. Department of Commerce (1999, December). 1997 commodity flow survey. U.S. EPA (1998, April). Emission facts: Idling vehicle emissions, report no. EPA-F-98-014, http://www.epa.gov/oms/consumer/f98014.htm. U.S. EPA (1999). Guidelines for preparing economic analyses, June 11, Chapter 6: Recommends a real rate of 2 to 3 percent for some public projects. Zaloshnja, E., Miller, T., & Spicer, R. (2000, November 30). Pacific institute for research and evaluation. Costs of Large Truck- and Bus-Involved Crashes. Prepared for the Federal Motor Carrier Safety Administration.
APPENDIX: LIST OF ABBREVIATIONS Abbreviation
Definition
ATA BCA BCR
American Trucking Associations, Inc. Benefit/cost analysis Benefit/cost ratio
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Abbreviation
Definition
CO CO2 CPI CV CVIEW CVISN CVO EC FHWA FMCSA GHG IFTA IRP ITS MDI NOx NPV O and M OOS OS/OW PC PM RE SAFER USDOT VISTA VOC VOT
Carbon monoxide Carbon dioxide Consumer Price Index Commercial vehicle Commercial Vehicle Information Exchange Window Commercial Vehicle Information Systems and Networks Commercial vehicle operations Electronic credentialing Federal Highway Administration Federal Motor Carrier Safety Administration Greenhouse gas International Fuel Tax Agreement International Registration Plan Intelligent Transportation System [formerly IVHS] Model Deployment Initiative Nitrogen oxides Net present value Operating and maintenance Out of service Oversize/overweight Personal computer Particulate matter Roadside enforcement Safety and Fitness Electronic Record United States Department of Transportation Vehicle Information System for Tax Apportionment Volatile organic compound Value of time