Logistical restructuring and road freight traffic growth

Abstract

The forecasting of road freight traffic has relied heavily on the close correlation between GDP and road tonne-kilometers. It has not been rooted in an understanding of the causes of freight traffic growth. The research reported in this paper has investigated this process of traffic growth in two ways: first, by analysing official data on the production, consumption and movement of food and drink products, and second, by conducting a survey of the changing freight transport requirements of 88 large British-based manufacturers.The analysis of secondary data shows how, in the food and drink sector, the relationship between the real value of output and road vehicle-kms hinges on four key parameters: value density, handling factor, average length of haul and consignment size. An attempt is made to explain variations in these parameters.The survey of manufacturers suggests that the growth of lorry traffic is the net result of a complex interaction between factors operating at four levels of logistical management: strategic planning of logistical systems, choice of suppliers and distributors, scheduling of product flow and the management of transport resources. Changes in the frequency and scheduling of freight deliveries in response to tightening customer service requirements and just-in-time management appear to have become a more prevalent cause of freight traffic growth than the physical restructuring of logistical systems. Manufacturers anticipate that their road freight demand will broadly increase in line with sales and be largely unaffected by road transport cost increases at the levels currently proposed. The paper concludes by examining their likely reactions to a much sharper increase in the cost of road freight movement.

Public policy intervention in freight transport costs: effects on printed media logistics in the Netherlands

“…Decentralisation of production or distribution is generally stated not to be feasible since the cost of duplicating production or distribution facilities, synergy losses, or increased overall stock levels will by far exceed savings on transport costs. This is in line with what McKinnon found in a similar study (McKinnon, 1998). Spatial effects will be restricted to smaller geographical market areas due to a loss of remote customers (an involuntary decentralisation of supply) and more local or regional sourcing.…”

“…An important reason is that over recent decades, real carrier rates have shown a continuous fall (see Dings et al, 1999a;Cooper et al, 1998;McKinnon, 1998;NEI, 1999). These falling rates can be attributed to a strong growth in competition, scale effects (larger volumes of freight) and improved physical infrastructure networks.…”

“…Instead attention is typically focused on minimising the cost of producing and in particular storing products (Svensson, 2002). Empirical studies have shown that transport costs are hardly recognised when shippers make strategic decisions that have transport implications (McKinnon, 1998). Moreover, in order to minimise the costs of stock and production, logistical processes have often been restructured such that transport demand has increased (e.g.…”

“…However, surveys that assessed the impact of (hypothesised) increases in direct transport costs reported adaptations mainly in the area of transport operations (McKinnon, 1998;Muilerman, 2001;Musso et al, 1999;van Schijndel and Dinwoodie, 2000). This may be due to the fact that these surveys were not explicit in the time horizon employed.…”

City Logistics – Status and Trends

“…the growth of social costs. This is confirmed by empirical research in the UK: on a sample of 87 companies, the decrease of 39% in the storage capacity is identified, while one third of the companies had a larger volume of road transport (McKinnon, 1998). Part of the goods for supplying the city is not stored at all, but instead it is sorted inside the cross-docking terminals and immediately loaded onto the vehicles and delivered to the buyers (Bowen, 2008).…”