NTC outlines new charging schemes for trucking

The NTC will investigate five possible new charging schemes for the trucking industry, including mass-distance-location pricing

NTC outlines new charging schemes for trucking
NTC outlines new charging schemes for trucking
By Brad Gardner | August 9, 2010

A new charging scheme for the trucking industry has been whittled down to five options, including the move to a mass-distance-location pricing model.

A discussion paper released last week by the National Transport Commission outlines options for creating a new pricing structure that replaces the current registration and fuel excise system.

Claiming existing charging arrangements are insufficient, the NTC lists a fuel-based, kilometre, and distance and location charging methods as three options.

The remaining two options are mass and distance and mass-distance-location pricing.

"The existing prices do not always accurately reflect the distance travelled, the mass transported or the type of road used by a heavy vehicle," the NTC’s paper says.

"As a result, some heavy vehicle operators pay more than the costs that road agencies incur when their vehicles use the road network, while others pay less."

It also reiterated concerns raised by trucking operators that current arrangements are not equitable.

"All heavy vehicles in a given class pay the same vehicle registration fee even though some of those trucks may typically carry less mass than others, or travel different distances on different road types," the NTC says.

The NTC will investigate the feasibility of each model in its work with the Council of Australian Governments, which is due to report at the end of next year on an alternative charging method for the trucking industry.

Under mass-distance-location pricing, trucking operators are monitored by GPS and charged based on the weight of the vehicle, how far it travels and the routes it uses.

The NTC claims pricing reform will lead to a more efficient transport sector because freight customers and operators will make decisions based on the true costs of carrying freight.

It says operators will use their vehicles more productively if they are charged for the road wear they cause. This might include changing their fleet and travelling on certain routes to reduce costs.

"Prices that are more closely aligned to the actual costs of a heavy vehicle trip will encourage more efficient use of the road network," the NTC says.

But because low quality roads will be more expensive to travel on due to the maintenance costs, the NTC says reform might lead to higher prices for people in particular communities.

"Subsidies may be required to reduce the social impact of road pricing reform on the communities in question," it says.

Trucking operators, too, face a rise in running costs or a decline in their bottom line if they have to absorb the costs of the new scheme.

"If they [the costs] are not passed through, due to fixed contractual arrangements or other reasons, then transport operators will have to accept lower profits, at least in the short term," the NTC says.

The paper lists possible options for a mass-distance-location scheme, such as applying it to a vehicle, module or axle group.

Echoing comments made by the Australian Trucking Association (ATA), the NTC says a fuel-based scheme will be cheaper because operators will not be subject to a new billing system or required to install GPS devices.

The paper highlights the ATA’s recommendation for a two-tier fuel charging system – a fuel charge and a flat registration fee.

Under the ATA’s proposal, two-axle rigid trucks will be charged differently to other heavy vehicles.

"Under a fuel-based option, the prices paid by heavy vehicle operators will increase with distance travelled (via litres consumed) and with higher mass levels (because fuel consumption rises with the weight of the vehicle)," the NTC says.

However, it does point out a drawback to the fuel-based model.

"There is no allowance for location based charging under a fuel-based charge," the NTC says.

It also criticised the current registration scheme because it encourages the use of vehicles with fewer axles.

From July this year, the cost of registering a six-axle semi-trailer climbed to $5612 and the price of a B-double hit $15,340.

"A vehicle weighing 10 tonnes may do less damage than one carrying eight tonnes, if the additional weight is distributed over a larger number of axles," it says.

ATA Chief Executive Stuart St Clair says the group will lodge a response to the discussion paper, and has called on trucking operators to get involved in the process.

"In particular, we need to hear from operators in remote areas about how higher charges could affect them and their customers," he says.

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