Extract

The topic of freight transport costing is large and complex. It could be argued that it is not well understood. The present chapter will seek to enlighten readers, but will necessarily be a limited treatment. Not everything presented will be accepted by all. Many have great expertise in their own narrow area, but few have a breadth of overview commensurate with the title. Where examples are given they will mostly be taken from Great Britain, as those are the ones known to this author. In particular, we shall report on how we derived Road and Rail cost functions for use in the LEFT series of models (Fowkes et al., 2006, 2010). Relevant information from throughout Europe is contained in the various reports of the EU SOFTICE project (SOFTICE, 1999). We will confine our coverage to what may be termed an accounting approach to cost estimation, as opposed to an econometric approach. It is difficult to get data to apply econometrics to freight costs, except at the level of the company as a whole, so no disaggregation according to the type of traffic is possible. The accounting approach is what is used by the industry itself, but we will also show how it can be applied by researchers building models to illustrate the consequences of alternative policies towards the freight sector in terms of volume and mode split.