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Tolling Points

No More Chickens: How Tolling and the Free Market Can Fix Our Nation’s Infrastructure

By: 
Pete Garino

Guest blog by Pete Garino

The views expressed in this article are solely those of the author.

I still remember the day I saw the statistic that shaped my approach to highway infrastructure funding.

When I found a 1970s General Accounting Office report saying that a single tractor trailer does as much damage to a roadway as 9,600 passenger vehicles, my jaw nearly hit the floor. Intuitively, I’d known trucks did more damage. But the extent of that damage surprised me. In fact, tractor trailers alone account for about 70% of the vehicle damage to our highways, but pay less than 30% of the cost to maintain them.

Those numbers hold the key to a grown-up conversation about who benefits from truckers’ use of the nation’s highways, who pays, and how to deliver the safety and reliability that every driver is entitled to, whether they’re behind the wheel of a big rig or a two-seat electric car.

A Professor, a Micro-Economy and Chickens

The outsized wear and tear that trucking creates for the nation’s highway infrastructure represents a massive, continuing subsidy by automobile drivers, and makes it difficult or impossible for highway operators to manage and maintain their infrastructure without tolling. The distortion means truckers pay less for premium infrastructure—our interstate system of divided highways—than they do for a secondary road with stop lights and intersections. It continues with gas taxes and fuel consumption: travelling at highway speeds means you expend less fuel per mile (and pay less fuel tax) than you do stopped at a traffic light.

Imagine how quickly the business model would collapse if airlines charged more for coach seats than they did for first class. Coach would be pretty good. But first class would collapse, and the business would not be sustainable.

That line of thought brought me back to the Jesuit priest who taught me microeconomics at Georgetown University in Washington, DC. In one impassioned lecture, he told us what happened in Hungary when the communists placed price controls on farm products. As producers responded to the market distortion, he said, the supply of the commodity crashed. The end result? “NO MORE CHICKENS!”, he bellowed, leaving me to fret briefly about his unintended audience in the room next door.

It’s a funny memory, and a fond one. But it’s as relevant to our highways as it is to the farm gate at the other end of the road.

Your Economy: Brought to You by Your Local Highway

The trucking industry is a massive, constant presence, on our roads and in our economy. We depend on it every day. And our highway infrastructure is the unsung hero that makes it possible.

In 2017, according to the American Trucking Associations (ATA), the industry’s reported annual revenue topped $700 billion for just the third time in its history. Trucks carried 10.77 billion tons of freight, 70% of the country’s domestic volume—and, significantly, 70% of the trade between the United States and Mexico.

U.S. Trucking Industry Revenue

Year

Revenue (US$B)

2017

700

2016

676

2015

726

2014

700

2013

682

2012

642

2011

604

2009

544

2008

660 (pre-recession high)

 

By rights, every truck and every packing crate should come with an asterisk: * Brought to you by your local highway. Particularly because, according to another set of figures, the entities that are carrying the freight are not necessarily paying the freight.

In 2015, ATA reported that trucks paid $41.3 billion in state and federal user fees to support maintenance and reconstruction of the nation’s highway infrastructure. In that same year, according to the Bureau of Transportation Statistics, trucks carried goods worth $11.7 trillion. Which means that, for every dollar they spent on goods shipped by truck, American consumers paid just over one-third of a cent for the infrastructure that made it all possible.

No wonder the country has such a large and growing highway infrastructure deficit.

Investing the Dollars Where They’re Collected

With so much of our highway infrastructure in dire need of maintenance, upgrading, or overhaul, the obvious solution is to charge vehicles according to their contribution to the problem, and invest it where it’s needed most. Tolling is a logical mechanism for that purpose. And while federal law currently prohibits tolling existing interstate highways, it does allow tolling for reconstruction of interstate bridges. That toll revenue must first be invested on the facility where it is collected. So even if many truckers object to tolls, they at least know the money is being used to maintain the infrastructure they depend on.

That link between collection and investment is particularly important on bridges, which represent a significant cost of the country’s surface transportation infrastructure but a far smaller proportion of its lane miles. Truckers actually have the most to lose if a weight restriction is declared for a structurally deficient bridge, since a detour of up to 50 miles costs them time and money. If we’re really so determined to get freight into the hands of businesses and consumers who are counting on it, on time and on budget, a truck toll is a small price to pay.

Price Controls Hurt the System

By failing to connect highway pricing with highway usage, our state and federal governments have essentially placed price controls on a system that is hurting badly as a result. Our interstate highway system is first class infrastructure, but market distortions mean it is not properly maintained.

This country has an army of engineers and technicians inspecting the bridges that comprise our interstate system. On any given day, one of their inspections could result in a need to weight restrict a structurally deficient bridge. When that happens, the truckers see the impact, not the cars.

The trucking industry is playing Russian roulette with the nation’s bridges. Along so many of the nation’s structurally deficient bridges, a toll would ensure the capacity to maintain and upgrade before problems occur.

My microeconomics prof from Georgetown would say (actually, he would probably shout) that today’s state of affairs is no way to run a business. He has since passed away, and he’s buried on the Georgetown campus. Let’s hope his wise advice is not buried with him.

Pete Garino is President of Advanced Management Consulting LLC and former Chief Operating Officer of the Rhode Island Department of Transportation.

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