Bringing infrastructure into pricing in road freight transportation – A measuring concept based on navigation service data

Abstract

Differences in road infrastructure, such as capacity, congestion, speed limits affect the productivity and the costs of short-distance freight operations. This article introduces a novel methodology that is based on navigation service data to measure the effects in terms of cost per kilometer using navigation and shipment data. The methodology is applied to five terminals of a forwarding cooperation and has been able to document significant differences in cost per kilometer across the terminals. The research results can be used by logistics service providers to better understand how productivity and thus profitability is affected by the quality of the transportation infrastructure in the particular areas they operate in. Furthermore, the insights will help these companies for better, i.e. cost-based pricing and will allow to document why and where prices need to be adapted.