Office of Naval Research - National Transportation Library

5-3 Estimating Avoided External Costs of Highway TruckingNot all the costs of moving a cargo container from the point of cargo-origination to thedestination port are internalized costs paid by private-sector shippers or commercial carriers.In the process of producing a transportation service, there are “negative externalities” that aregenerated, but are not paid for by the direct beneficiaries of the transaction, the shippers, andcarriers. A negative externality can be defined as the costs of producing and distributing ashipment (or alternatively, consuming a product or receiving a freight service) that are notborne by the product’s producers or consumers. Negative externalities of freight movementinclude network congestion and maintenance costs not paid for by the user through user feesor higher private costs; air and noise pollution costs; unpaid-for accident costs; infrastructurewear and tear from heavy truck use (not covered by diesel taxes); and inefficient fuelconsumption.A study by the Short-Sea Shipping Cooperative (SCOOP) conducted in 2004 estimated theprivate (internalized) and external costs of moving a 40-foot container for two origindestinationpoints: Boston to New York, and New York to Miami (Table 12). 60 For theNew York to Boston route, the study simulated the costs and performance for a modified FastCraft Ferry with a speed of 22 knots and capacity of 66 trailers. 61 The study findingsindicated that SSS movement of cargo generated significant savings in external costs ofmoving a freight container. More specifically, diverting a container unit destined to movefrom New York to Boston from highway mode to coastal ferry amounted to a saving $131 inexternal cost for a one-way truck trip or $0.56 per truck mile. Diverting a truck from movinga load from New York to Miami from highway to SSS would save $398 in external costs, asaving of $0.32 per highway mile.Table 12 – A Comparison of Private and Public/External Costs of Moving a 40-footFreight Container in Two CorridorsPrivate and External Costs ofMoving a 40-Foot ContainerBoston toNew York CityNew York CityTo MiamiPrivate Costs/Trip $500 $1,460External Costs/Trip $131.2 $398.2External Costs as % of Private Costs 26.2% 27.3%External Costs per mile $0.58 $0.32Source: University of New Orleans, National Ports and Waterways Institute, “The Public Benefits ofthe Short-Sea Intermodal System,” Prepared for the Short Sea Cooperative Program (SCOOP),November 2004.The additional $131 or $398 in external costs, accrued on top $500 and $1,460 truck rates,paid by private beneficiaries for delivery of a 40-foot container (from Boston to New York orfrom New York to Miami) by truck, represents the unpaid-for costs of air and noise60 University of New Orleans, National Ports and Waterways Institute (NPWI), “The Public Benefits of theShort-Sea Intermodal System,” Prepared for the Short Sea Cooperative Program (SCOOP), November 2004.61 The vessel design and cost assumptions were based on the National Ports and Waterways Institute (NPWI)model estimates.ONR SSS Final Report 56