Assessment of Fuel Economy Technologies for Medium and Heavy ...

vehicle fuel consumption (78 percent). 2 Little or no research exists to provide information on a
rebound effect for medium-duty trucks. The sketch analysis presented herein will focus on long
haul trucks, which are generally Class 8 trucks with 53-foot trailers and a gross vehicle weight
(GVW) of up to 80,000 pounds.
Caution should be exercised when considering the price-demand relationships found in the
literature for freight trucks. The results appear to be heavily reliant on factors including the type
of demand measures analyzed (vehicle-miles of travel, ton-miles, or tons), analysis geography,
trip lengths, markets served, and commodities transported. 3 The literature does not treat
differences between short- and long-run effects consistently, and, in general, presents
inconsistent results across studies. To provide an envelope of potential effects, the analysis
presented herein provides reasonable upper and lower bounds of potential effects as well as a
mid-point or ―likely‖ estimate.
An additional issue is the difference between the average and marginal per-mile cost of truck
shipping. The marginal cost considers only the fuel savings. The average cost also considers any
increase in the capital cost of the vehicle, amortized over the lifetime of the vehicle. For the
purposes of this assessment it is assumed that vehicle owners will pass these capital costs along
to their customers, and therefore it is the average (net) cost or cost savings that is important.
The rebound effect in heavy-duty vehicles works in three ways. The first two have been
measured and characterized with price elasticities while the third is speculative:
An increase in overall demand for truck shipping, if total shipping costs are reduced (the selfprice
elasticity effect);
A shift of some commodities from other modes (especially rail) to truck due to lower truck
shipping costs (the cross-price elasticity effect); and
Less efficient utilization of trucks (e.g., lighter loads), because lower costs reduce cost
pressures on industry to maximize efficiency.
The self-price elasticity provides a measure for describing how the volume of truck shipping
(demand) changes with its price while the cross-price elasticity provides a measure for describing
how the volume of rail shipping changes with truck price. In general, an elasticity describes the
percent change in one variable (e.g. demand for trucking) in response to a percent-change in
another (e.g. price of truck operations). For example, a price elasticity of truck demand with
respect to truck prices (self-price elasticity) of -0.5 implies that the demand for trucking will grow
by 5 percent if truck operations costs decrease by 10 percent (+5 percent change in truck
demand/-10 percent change in truck cost = -0.5). Similarly, a cross-price elasticity of rail demand
with respect to truck prices (cross-price elasticity) of 0.5 implies that the demand for rail will
decrease by 5 percent if truck operations costs decrease by 10 percent (-5 percent change in rail
demand/-10 percent change in truck price = 0.5).
2
Oak Ridge National Laboratory, Transportation Energy Data Book, Edition 28, prepared for the US
Department of Energy, 2009. See table 5.4 for relevant data.
3
Graham and Glaister, ―Road Traffic Demand Elasticity Estimates: A Review,‖ Transport Reviews
Volume 24, 3, pp. 261-274, 2004 and Oum, Waters, and Jong Say Yong, ―A Survey of Recent Estimates
of Price Elasticities of Demand for Transport,‖ prepared for the World Bank, Infrastructure and Urban
Development Department, January 1990.
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