The break-even distance of road and inland waterway freight transportation systems

Abstract

Road transportation inevitably causes environmental problems such as air pollution, congestion and accidents. In contrast, inland waterway transportation is a cost-efficient and environmentally friendly alternative to road transportation. Cost is usually the most critical factor in selecting a mode of freight transportation. With a greater focus on the externalities of transportation systems, the European Commission advocates the idea that the impacts on society and the environment should be reflected by the costs of transportation. As a result, the full costs of a given transportation system should include both the internal and external costs. In this study, we develop a model for calculating the internal and external costs of road and inland waterway freight transportation systems and use the model to determine the break-even distance of the two systems. The model was applied to the Yangtze River Delta in China. Our key finding is that handling rates have a great effect on the break-even distance. In addition, the policy of internalisation of externalities clearly decreases the break-even distance and reduces the market share of road transportation.