"The Impact of Increasing Traffic Congestion on Logistical Efficiency" by Professor Alan McKinnon, Heriot-Watt University, Riccarton Campus, Edinburgh, EH14 4AS - Tuesday 19th October 2004

Professor Alan McKinnon is a well respected figure in Logistics Research and gave a detailed presentation on the problem of traffic congestion and outlining the work being undertaken at Heriot-Watt University.

He began his lecture by pointing out that traffic congestion is one of the major issues facing Scotland and the UK. Figures from the Commission for Integrated Transport (CfIT) comparing congestion throughout the EU shows that the UK has the worst congestion, with virtually none in Scandinavia.

There is much empirical data to support the figures, for example, Trafficmaster has been monitoring traffic congestion through its national network of scanners since 1990. By 2002, congestion had increased by 40%. Forecasts suggest that congestion will worsen in the next few years. In Scotland, the M8 and Kingston Bridge have the worst congestion, being the 10th worst road in the UK. The remaining areas with heavy congestion are in the Midlands and South of England.

A key question is how much does traffic congestion cost? There are a number of differing figures that are widely used. The Confederation of British Industry (CBI) estimated in 1989 that the cost to the country was in the region of £15 billion, but this figure was based on a small French study. Taking inflation into account, the cost would be between £18 and £20 billion today. The Freight Transport Association(FTA) estimates that the cost is in the region of £20 - £30 billion. However, Phil Goodwin, Professor of Transport Policy (TSU), University College London, thinks that this figure is not realistic. National Economic Research Associates (NERA), part of the ECGD, the Export Credits Guarantee Department, has estimated the cost to be about £6.9 billion. A key point to note is that these figures all relate only to direct costs relating to vehicles and drivers and do not take into account the costs incurred by delays to deliveries.

Most congestion is predictable and companies can build allowances for congestion into delivery schedules. It has been estimated that the average delay to a lorry is only 14 minutes in the morning peak, 4 - 6 minutes during off peak periods and 10 - 12 minutes in the evening peak. A study has shown that there is some £350 million worth of inventory on lorries at any given time and that this costs around £35 million in financing costs. The study showed that if vehicles are delayed by 10 minutes, the financing costs would rise by £4 million per annum.

Congestion is not regular and as the road network reaches capacity, traffic slows down and once at capacity any incident will have a disproportionate effect on traffic flows. Research undertaken at 7 distribution centres on the M1 and M25 corridor into what measures were being taken to alleviate the effects of congestion found that some delays were accommodated within normal procedures, but others required the redeployment of resources, such as staff being used for different tasks. More severe congestion required the employment of additional resources, such as bringing in additional staff or paying overtime. At distribution centres, congestion could lead to delays of outbound goods, incomplete loads and leading to a reduction in products in shops, in turn reducing sales.

At these centres, the relative importance of cross docking was considered, as were the internal process times. Vehicle pre-loading was important, but congestion had a major impact on this. Most retailers have strict booking times, usually 30 minute "slots" and if a vehicle was delayed, it could miss it's slot, resulting in having to wait until the next available "slot" became available. Geographic location was also found to be important as was "just in time" replenishment as this reduced inventory levels. However, if deliveries are delayed, this could lead to disruption in the production process.

During KPI surveys covering 53 fleets of vehicles in the food supply chain over a 48 hour period looking at both primary and secondary distribution, it was found that the peaks were between 0600 and 0930 as retailers stocked up for the day. During this period, the average speed of vehicles was 25% less than at other times. Of the 15,252 journeys analysed, 71% had no delay and 29% were delayed. Out of the journeys delayed, 31% were due to traffic congestion and the remainder were due to other causes, mainly unreliability in the supply chain. This shows the results of cumulative delays. looking at the transit times for products, it was found that the average time for delivery of a product from the supplier to the retailer is 46 days. The transport time is a very small part of the overall process, as goods spend most of their time sitting is store.

What can companies do to reduce the impact of traffic congestion? There are a number of possible solutions, but no one answer to the problem.One suggestion is to switch mode and make more use of railways. This is one of the governments policies and it is planned to increase rail freight from 7% to 10% of the total at a cost of some £4 billion. However, this is not a panacea and it would be better to free road space by moving passengers from road to rail, as this has a greater effect in reducing traffic congestion. Another solution is to schedule vehicle movements to make "out of hours" deliveries. Many companies have already adopted this approach and the number of such deliveries had increased from 8% in 1985 to 20% by 2002. However, many Councils have curfews on heavy goods vehicles at night, making deliveries impossible. These were in many cases introduced due to noise levels, but vehicles have become much quieter over the years. The forthcoming Working Time Directive will also have an impact on such deliveries as it will restrict the hours drivers can work.

Increased use of telematics and dynamic scheduling can also be used to reduce the effects of congestion. The government plans to use telematics for road tolling of lorries and it is planned that all vehicles over 3,500 kg would be subject to the tolls. however, this is planned to be tax neutral with revenue refunded via fuel duty rebates. however, there will be additional costs incurred by the collection and reimbursement of tolls, and this does not appear to have been taken into acccount.

So overall, this is a highly complex issue and Professor McKinnon provided an insight into the various aspects of the congestion problem and looked at some of the possible answers. What is clear is that we will have the problem of congestion with us for some time to come, and that we will all be affected by it, either directly as we sit in a traffic jam, or indirectly through higher product costs. For further information, please visit the Logistics Research Centre website where you can download various papers on the issues discussed above.

Report by John Fender.