Self-supported freight demand management: pricing and incentives

Abstract

The paper designs and assesses the effectiveness of a self-supported freight demand management system that uses a small toll surcharge to generate an incentive budget that, in turn, is used to induce receivers of goods in congested urban areas to accept unassisted off-hour deliveries (OHD). To this effect, the authors use a behavioral micro-simulation that incorporates the chief principles that govern the joint decision of carriers and receivers about delivery times, including an ordinal discrete choice model to represent the receivers’ decisions concerning OHD in response to an incentive; and a cost function to estimate the carriers’ decisions. The paper analyzes the effectiveness of different combinations of toll surcharges (to only freight vehicles, or to all vehicles traveling in the regular hours) and incentives to receivers. The paper ends with a summary of the key findings and policy implications.