3 How Much Does TrAnsportAtion Cost

3y ago
30 Views
2 Downloads
975.01 KB
15 Pages
Last View : 17d ago
Last Download : 2m ago
Upload by : Amalia Wilborn
Transcription

3 How Much Does Transportation Cost?Key Takeaways The cost of transportation stems from theresources it requires—labor, equipment,fuel, and infrastructure. Fuel prices, are themost widely discussed resource cost. Fuelprices peaked in 2012, then declined in 2013through 2016 before rising once again in2017 as the price of crude oil rose. The prices received for transportationservices (e.g., by airlines for air freight andpassenger services) are an indicator of theprices businesses pay when purchasingtransportation services. They reached anall-time high in 2014 (except for the pricesreceived for water transportation services,which rose to their highest level in 2015).Prices then declined before increasing in2017. From 2004 to 2017, the price received bythe rail transportation industry (an indicatorof the prices faced by purchasers of railtransportation services) grew by more thanthe prices received by all other modes. On average, except for air, consumers facedhigher transportation costs in 2017 than in2016. Average airfares dropped to an all-time lowof 293 (chained 2009 dollars) in 2017. Local transit fares (adjusted for inflation)have remained relatively unchanged overthe past two decades. Transit fares were thesame in 2016 as in 1995, while commuterrail fares (adjusted for inflation) have grownsince their 2002 low.IntroductionThis chapter shows the costs to producetransportation services and the prices paid by usersto use those services. Producers are the firms thatcarry out transportation operations to move peopleand goods. The producers may not necessarilybe the providers. For example, freight forwardersprovide transportation services by arrangingthe shipping of merchandise with a for-hiretransportation firm that produces the transportationservices (e.g., trucking services) requested bypurchasers. Purchasers are users, who may be eitherhouseholds—known as consumers—or businesses.The cost to produce transportation services stemsfrom the resources it requires—labor, equipment,fuel, and infrastructure. Firms purchase theseresources to produce transportation services. Forexample, airlines pay for pilots, commercial jets,and jet fuel to produce air transportation services.In addition, federal, state, and local governmentspurchase labor, equipment, and material to build,operate, and maintain transportation infrastructure,such as highways.The cost of the resources used by producers oftransportation services influences the prices theycharge. The price reflects the cost of the resourcesplus mark-up and tax (box 3-1). The prices thattransportation companies charge for transportationservices become out-of-pocket costs to travelers andfreight shippers and influence their transportationchoices. Because transportation is an input tothe production of almost all goods and services,transportation price changes influence the cost ofother goods and services as well. Transportationprices themselves are affected by the prices ofinputs, such as labor costs, fuel costs, and the costsof transportation parts.3-1

Box 3-1 Transportation Cost and PriceTerminologyThe following defines the cost and price terms used inthis chapter.Cost refers to the monetary value of the resourcesused to produce transportation services—labor,equipment, fuel, and infrastructure. The cost of the resources used by producers of transportation servicesinfluences the prices they charge.Price is the sum of the cost of the resources used plusmark-up and tax.Users are purchasers, who may be either households—known as consumers—or businesses.Producers are the firms that carry out transportationoperations to move people and goods. For example,trucking companies that haul merchandise to storesand air carriers that transport freight and passengers.The producers may not necessarily be the providers.For example, freight forwarders and freight brokersprovide transportation services by arranging the shipping of merchandise with a for-hire transportationfirm that produces the transportation services (e.g.,trucking services) needed to move the merchandise.This chapter discusses fuel and equipment costsfaced by producers of transportation services,such as railroads, airlines, or trucking companies.This chapter also discusses the prices faced bytwo segments of the transportation market:1. businesses that use transportation to produceand deliver goods, such as retail and grocery,and2. households.The prices paid for transportation do not fullyaccount for air pollution, traffic congestion, orother negative effects of transportation. Theseunaccounted effects represent costs to society andare known as negative externalities. While negativeexternalities are an important part of economicanalysis, this chapter covers only prices paid.equipment prices. The prices are a cost toproducers of transportation services, as they areresources that must be purchased to producetransportation services. Chapter 4 examinesthe number employed in transportation andtransportation-related industries as well astheir wages and compensation. Chapter 7presents data on the value of and investment intransportation infrastructure.Fuel prices are a cost to firms that carry outtheir own transportation operations andindustries that sell transportation services.These industries embed the costs in the pricethey charge businesses and households—forthe transportation services they provide for afee (for-hire transportation) or for the goodsthey produce with the transportation services.Looking at for-hire transportation services, thecost of petroleum products is a large share ofthe total cost of inputs used to produce for-hiretransportation services, ranging as high as 36.7percent for aviation (figure 3-1).While this section looks at costs to producetransportation services, fuel prices also are a costto households to operate motor vehicles for theirown use. Gasoline and motor oil account for 22.0percent of household spending on transportation,as discussed in chapter 6 (figure 6-6). Fuel costis readily visible to households, as news reportsfocus on changes in fuel prices and gas stationsmust post prices by law, making fuel prices salientto consumers in ways other prices are not.Sales Price of Transportation FuelCosts to Produce Transportation ServicesPrices for regular gasoline, No. 2 diesel (used byautomobiles and trucks), jet fuel kerosene, andrailroad diesel typically move together with slightvariations (figure 3-2). This reflects the underlyingprice of crude oil from which they are all refined(figure 3-3).The major inputs to produce transportationservices include labor, equipment, fuel, andinfrastructure. This section discusses fuel andFollowing a decade of relatively stable fuel prices inthe 1990s, fuel prices began to increase (figure 3-2).Gasoline, No. 2 diesel fuel, and kerosene spiked3-2 Transportation Economic Trends

Figure 3-1 Input Cost Shares for For-hire Transportation by Mode, 2016AirRail13.0%Petroleum36.7%63.3%Other %2.5%Transit10.3%97.5%89.7%NOTES: Chapter 4 discusses labor costs in more detail. Percentages may not add to 100 due to rounding.SOURCES: U.S. Department of Transportation, Bureau of Transportation Statistics, 2016 TransportationSatellite Accounts, available at www.bts.gov as of June 2018.How Much Does Transportation Cost? 3-3

Figure 3-2 Sales Price of Transportation Fuel to End-Users, Excluding Taxes, 1990–2017(current dollars per gallon) 4.00Current dollars per gallon 3.50No. 2 diesel 3.00 2.50Regular gasoline 2.00 1.50 1.00 0.50Railroad dieselJet fuel kerosene19919 0919 1919 2919 3919 4919 5919 6919 7919 8920 9020 0020 1020 2020 3020 4020 5020 6020 7020 8020 9120 01120120 2120 3120 4120 5120 617 0.00NOTES: Gasoline costs are average retail prices. Highway diesel fuel and jet fuel prices are based on sales to end-users (sales made directly tothe ultimate consumer, including bulk customers in agriculture, industry, and utility). Shaded bars indicate economic recessions.SOURCES: All data except railroad fuel: U.S. Department of Energy, Energy Information Administration, Monthly Energy Review, tables 9.4and 9.7, available at www.eia.doe.gov/emeu/mer/prices.html as of June 18, 2018; Railroad fuel: Association of American Railroads, RailroadFacts (Washington, DC: Annual Issues), p. 62.Figure 3-3 Price of Crude Oil(current dollars per gallon) 120Europe BrentCurrent dollars per barrel 100 80 60Cushing,OK WTI 40 2019919 09119919 2919 3919 4919 5919 6919 79819920 9020 0020 1020 2020 3020 4020 5020 6020 7020 8020 9120 0120 1120 2120 31420120 5120 617 0NOTES: Cushing, OK WTI—A crude stream produced in Texas and southern Oklahoma that serves as a reference or “marker” for pricing anumber of other crude streams that are traded in the domestic spot market at Cushing, Oklahoma. Europe Brent—A blended crude streamproduced in the North Sea region that serves as a reference or “marker” for pricing a number of other crude streams. Shaded bars indicateeconomic recessions.SOURCES: U.S. Department of Energy, Energy Information Administration, Spot Prices for Crude Oil, available at www.eia.gov/dnav/pet/pet pri spt s1 a.htm as of August 2018.3-4 Transportation Economic Trends

to over 3.00 per gallon in 2008. While decliningsharply during the 2007 to 2009 recession, fuelprices began to rise again, rising above the 2008price just after 2011. Since peaking in 2012, pricesdeclined in 2013 through 2016 before rising onceagain in 2017. In 2015 prices declined below the2009 low for kerosene and diesel fuel. The pricesfor kerosene and diesel fuel remained below the2009 low despite rising in 2017. In contrast, theprice for regular gasoline declined below the 2009low in 2016 before rising above it in 2017 due to anincrease in crude oil prices. Railroad diesel fell toabout its 2005 level in 2016.Average Motor Gasoline Prices by RegionGasoline prices vary substantially across theUnited States. Prices can vary because of stateand local taxes, refinery locations, fuel supplies,Figure 3-4retail competition, and fuel regulations. Figure3-4 illustrates average regional gasoline pricesin 2017 using data from the Energy InformationAdministration (EIA). The averages include allgrades and blends of regular gasoline. In 2017the average gasoline price in the United Stateswas 2.53 per gallon. The West Coast had thehighest gasoline prices in the country at 2.95per gallon— 0.31 more than the Central Atlantic,which had the second-highest prices at 2.64per gallon. Among West Coast states, prices werehighest in California, at 3.08 per gallon, becauseCalifornia requires a unique blend of gasoline tomeet environmental regulations. Meanwhile, theGulf Coast states had the lowest gasoline prices at 2.30 per gallon, or 0.11 lower than the Midweststates, which had the second-lowest prices at 2.41 per gallon.Average Retail Gasoline Prices by Region, 2017Rocky Mountain 2.50 per gallonMidwest 2.41 per gallonNew England 2.53 per gallonCentralAtlantic 2.64per gallonWest Coast 2.95 per gallonLowerAtlantic 2.46per gallonGulf Coast 2.30 per gallonNOTE: Average prices include all grades and formulations of regular gasoline.SOURCE: U.S. Department of Energy, Energy Information Administration, available at www.eia.gov/dnav/pet/pet pri gnd dcus nus a.htm as of August 2018.How Much Does Transportation Cost? 3-5

The average gasoline price in the United Statesincreased 12.4 percent from 2016 to 2017 (figure3-5). The Central Atlantic states experienced thegreatest increase in gasoline prices, rising 14.1percent from 2.31 to 2.64. Gasoline pricesincreased the least in the Lower Atlantic states—rising 11.3 percent from 2.21 to 2.46.Equipment CostsDifferent modes of transportation purchase anduse different equipment, for example, airlinesuse aircraft to move people and goods, whilehouseholds primarily use motor vehicles to travel.This section looks at the cost of transportationequipment used to produce transportationservices. Data are not available on the pricestransportation providers pay for transportationequipment like railcars; however, data on theprices received by firms producing transportationequipment are available. The prices firms receivefor producing transportation equipment differfrom the prices purchasers pay, in that they donot include sales and other excise taxes thatpurchasers face when buying transportationFigure 3-5Current dollars per gallonThe Producer Price Index (PPI) (box 3-2) showsthe average change over time in the pricesreceived by producers of transportationequipment, for example, prices received byaircraft manufacturers (figure 3-6). The PPIincludes indexes for equipment used bytransportation industries, such as aircraft, railroadcars, and heavy trucks, as well as motor vehiclesused by businesses and households. The PPIshows the trends in transportation equipmentmanufacturing prices and reflect their potentialeffect on the cost of producing transportationservices—the higher the equipment cost, thehigher the cost of producing transportationChange in Average Retail Price of Gasoline, 2016–201720163.53.0equipment. For example, the price purchasers payfor a new car at an auto-dealership includes Statesales tax, which the State receives. This meansthat the automobile manufacturer receives lessthan what purchasers pay. The prices that firmsreceive for producing transportation equipmentare an indicator of the prices faced by purchasers,for example, if the prices firms receive rise, theprices faced by purchasers likely increase—making transportation equipment a larger cost inproducing transportation ralAtlanticU.S.AverageNOTE: Average prices include all grades and formulations of regular gasoline.SOURCE: U.S. Department of Energy, Energy Information Administration, available at www.eia.gov/dnav/pet/pet pri gnd dcusnus a.htm as of August 2018.3-6 Transportation Economic Trends

Box 3-2Producer Price IndexesThe Producer Price Index (PPI) captures the weightedaverage of wholesale or producer prices that producersof transportation services (e.g., air carriers and truckingcompanies) receive. The PPI for a mode of transportationmeasures the average change in the prices received byproducers. For example, the rail producer price index usesa survey of railroad prices charged to shippers. The PPI fortrucking services measures the average change over timein the price received for trucking services. The PPI differsfrom the Consumer Price Index (box 3-3), which showschanges in prices from the viewpoint of households purchasing transportation services.The PPI, published by the Bureau of Labor Statistics (BLS),is one of the most widely used measures of price changes for the transportation sector. BLS surveys a sample ofindividual business establishments. Because prices arefrom the point of view of the producer of transportationservices, they exclude items like sales and excise taxes. BLSweights prices by the size of establishment’s revenue tocreate indexes for narrowly defined services (e.g., local specialized freight trucking excluding used goods) and thencombines them into aggregated indexes (e.g., all trucking)using value-of-shipments data from the economic censuses of the Bureau of the Census. BLS publishes data for bothbroad and more narrowly defined services and costs.Figure 3-6 Producer Price Indexes for Select Transportation Equipment Manufacturing,2004–2017150Index (base year 2004 100)Railroad rolling stock140130120AircraftShips and boats11010090802004Automobile and lightduty motor vehicleAll 1201220132014201520162017NOTES: Producer Price Index data come from the U.S. Bureau of Labor Statistics. Shaded bars indicate economic recessions.SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, Producer Price Index Industry Data, available at www.bls.gov/ppi/ as of June 2018.services. The PPI for transportation equipmentdiffers from the PPIs for transportation servicesdiscussed later in this chapter.The prices for transportation equipment, asmeasured by the PPI, continuously increasedbetween 2004 and 2017, except for automobilesand light-duty motor vehicles. In contrast, theprices for automobiles and light-duty vehiclesdeclined between 2004 and 2008, leveled offfrom 2009 to 2010, and finally increased between2011 and 2017. The prices for railroad, aircraft,and ships and boats showed a growth greaterthan that for all transportation equipmentcombined. This increase in equipment pricesmay have affected the profitability and purchasedecisions of transportation sectors, the costsfor transportation users, and prices along theeconomic supply chain in other sectors that usetransportation services, such as wholesale, retail,and warehousing and storage industries.How Much Does Transportation Cost? 3-7

Prices Faced by Businesses PurchasingTransportation Servicesmore rapidly than any other transportation mode.The prices received for producing truck, water,and air transportation services (and hence facedby purchasers of the services) also increased. Theprice received for producing water transportationservices grew at a slightly slower rate (28.1percent) than truck (30.3 percent) and air (35.0percent) transportation services, because theprice received for producing water transportationservices declined from 2014 to 2017. Moreresearch is needed to better understand thereasons PPIs change differently by mode.The PPI for producing transportation servicesmeasures the average change over time in theprices received by producers for selling theirtransportation services, for example, airfare. ThePPIs are not the cost to purchase transportationservices, because they do not include sales andexcises taxes that businesses and householdspay for the services. Nonetheless, the PPIs arean indicator of the prices faced by businessespurchasing transportation services. Some of theservices, for example, airfare, may be purchasedby households as well.Figure 3-7 shows PPIs for transportationservice producers by mode from 2004 to 2017.Despite periods of modest decline from 2007to 2009 (during the recession) and from 2014to 2016, the prices received by producers of air,rail, truck, water, and pipeline transportationservices increased. This means that purchasers oftransportation services saw an overall increasein prices for transportation services. From 2004to 2017, the price received for producing railtransportation services grew by 60.4 percent,The historic trends in the PPI show a peakacross modes in 2008. The 2008 peak occurredat the end of a period of economic growthaccompanied by increasing fuel prices. After adecline during the economic downturn in 2009,prices rose and surpassed the 2008 peak in 2011.Prices reached their all-time highest level in2014 (except for prices received for producingwater transportation services, which rose to theirhighest level in 2015) and have since declinedmodestly before increasing in 2017 (except forprices received for water transportation services,which declined in 2017).Figure 3-7 Producer Price Indices for Producers of Selected Transportation and WarehousingServices, 2004–2017Index (base year 2004 62017NOTES: Transportation Warehousing Services are defined using the North American Industry Classification System (NAICS). Shaded barsindicate economic recessions.SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, Producer Price Index Industry Data, available at www.bls.gov/ppi as of May 2018.3-8 Transportation Economic Trends

Table 3-1 shows changes in the prices receivedby selected transportation producers. Whiletransportation PPIs have often moved together,some subsectors show exceptions. For example,the prices received for producing transportatio

the rail transportation industry (an indicator of the prices faced by purchasers of rail . such as railroads, airlines, or trucking companies. . firm that produces the transportation services (e.g., trucking services) needed to move the merchandise.

Related Documents:

Transportation Engineering The transportation engineering faculty offer graduate course in transportation planning, design, operations and safety with an emphasis on surface transportation. The faculty are engaged in research in transportation planning and safety, intelligent transportation systems, transportation systems analysis, traffic flow .

fee basis. Airlines, railroads, transit agencies, common carrier trucking companies, and pipelines are examples of for-hire transportation. Other types of transportation are discussed in Chapter 2. Box 1-1: Transportation Services Index The Bureau of Transportation Statistics’ (BTS) Transportation Services Index (TSI) measures the

Transportation's contribution to the economy can be measured by its contribution to gross domestic product (GDP). GDP is an economic measure of all goods and services produced . Source: U.S. Department of Transportation, Bureau of Transportation Statistics, 2017. Transportation-Related Final Demand by GDP Component Figure 2-1 shows total .

The overall goals of asset management are to minimize long-term costs, extend the life of the transportation system, and improve the transportation system's performance. The Iowa Department of Transportation's (DOT's) guiding principles for transportation asset management are the following: Asset management is policy driven.

Transportation Services Direct Transportation Providers deliver non-emergency transportation services that enable an eligible client to access or be retained in core medical and support services. Clients are provided with information on transportation services and instructions on how to access the services. General transportation procedures:

transportation (i.e., self, fixed route, friend, relative). In order to provide "Medicaid Transportation", Medicaid contracts with the Commission for the Transportation Disadvantaged, who in turns contracts with a single a transportation entity in each county. In most counties, that provider is the CTC. Medicaid requires its transportation

2.7 CATS Survey of Transportation Services in Mecklenburg County A community transportation survey was also designed and used in 2008 to develop an inventory of transportation services in the county, identify perspectives about transportation needs, and capture interest in transportation coordination. The survey was sent to approximately 500

MDOT State Long‐Range Transportation Plan Economic Impact Analysis of the Michigan Transportation Investment Packages Page iii Executive Summary MI Transportation Plan has set forth a vision for the future development of Michigan’s transportation system and has identified alternative investment packages that will be necessary