Society pays more for trucking

A report by the Government Accountability Office (GAO), released earlier this year, details the far greater marginal costs imposed on society from trucking than rail or waterborne shipping. These costs include public infrastructure costs (such as pavement repair) as well as external costs such as emissions, accidents, and congestion.

The report provides an analysis of the fixed costs associated with each mode and the average social costs attributable to each. The GAO found that, after taking taxes and fees into account, society pays $7 per million ton-miles for truck transportation versus $2 for shipping on waterways. Because most railroad infrastructure is privately owned, the fixed costs of rail that were passed to society were estimated to be negligible.

The unpriced costs of shipping that are borne by society distort the market and effectively create a subsidy for trucking compared to railroad and waterborne freight transportation. Developing policies that can shift these costs onto consumers without increasing total costs or creating new inefficiencies is difficult. A policy that aligned marginal costs with marginal prices on a shipment-by-shipment basis would theoretically create the greatest economic benefit. However, the costs of administering such a policy could very well exceed its benefits. Policies to charge users for the fixed costs of public infrastructure create different inefficiencies—some potential users who could have paid for the marginal cost of their use will not be willing to pay their share of the fixed costs.