Assessing Public Benefits and Costs of Freight Transportation Projects: Measuring Shippers' Value of Delay on the Freight System

Freight delay is detrimental to the national economy. In an effort to gauge the economic impact of freight delay due to highway congestion, this project focuses on estimating shippers’ value of delay (VOD). The authors have accomplished this through three strategies to monetize the impacts of congestion on shippers’ operations: (1) Three half-structured on-site interviews with shipping managers in different type of industries were conducted to obtain insights into their daily logistic operations and their subjective assessment of the delay impacts. In light of the interviews, a comprehensive survey of major manufacturers and wholesalers within Texas and Wisconsin was conducted. (2) The analytical hierarchy process (AHP) and willingness-to-pay (WTP) method were then applied to quantify the impact of congestion on shippers. The AHP reveals that among four possible delay components, en route transportation delay is the most important, which justifies WTP evaluating the value of highway congestion delay. The authors have found a value of $56 per hour for congestion. Furthermore, a value of $0.4 per percentage delay was also calculated for transportation time reliability using individual defined travel time. (3) An analytical inventory model was used to examine the value of delay in view of mean and reliability of transit time for shipment receivers. Nine industrial groups were analyzed. For example, shippers in the chemical industry are calculated to have an additional $13.89 cost on a truckload delivery if the transit time is expected to increase by one hour. The random delay has an average of $31.04 per hour per truckload delivery.