Traffic Congestion Effects on Supply Chains: Accounting for Behavioral Elements in Planning and Economic Impact Models

Abstract

As traffic volumes and congestion grows on highways and urban roadways, freight and delivery service operators become increasingly challenged to maintain dependable and reliable schedules. This affects supply chains and truck-dependent businesses both of which are of increasing importance for both public policy and private sector operators. From the public perspective, there is a need to make investment, financing and policy decisions based on an understanding of public infrastructure needs, costs and broader economic stakes involved. From the perspective of shippers and carriers, there are the day-to-day cost implications of delay and reliability as it affects supply chain management, and well as a longer-range need to assess opportunities, risks and returns associated with location, production and distribution decisions. Both perspectives need to be recognized when considering the full range of impacts that traffic congestion can have on the economy. A barrier to considering these two perspectives together is the gap that exists between theoretical simulation modeling and real world observations of business responses to congestion. A review of research literature reveals a number of theoretical models which posit that the generalized growth of traffic congestion adds to total transport costs for delivered products, causing firms to shift location and shipment size configurations to reoptimize net revenues. However, industry publications and business interviews reveal a wider variety of behavioral responses that depend on the type and timing of congestion delays (bottlenecks at specific ports, intermodal facilities, highways or urban road networks) and their frequency, leading to a range of operational responses as a hedge against both expected and unexpected delay. The nature of the affected parties, and the form of operational responses, can vary widely by industry. The impacts can span different supply chain configurations â including not only the movement of material and parts to producers and then to distributors, but also local distribution and delivery of finished goods to retail markets, and even local delivery of parts and repair services to businesses and households. For service-oriented economies, more sophisticated changes in operations â especially those that depend on efficiency of over-the-road operations â can be limited or entirely foreclosed by congestion. In a broad sense, all of these forms of movement have supply chain elements. And they share a common factor, which is that they are very much affected by the degree of of unpredictability and variation in delays associated with growing congestion.