Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2014:26: Does fuel price affect trucking industry’s network characteristics?: evidence from Denmark

Megersa Abate ()
Additional contact information
Megersa Abate: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: The 2000s were dominated by rising fuel prices and economic recession. Both had an impact on the structure of the trucking industry and how freight was moved. This paper examines how fuel prices shaped trucking industry’s network characteristics such as the average length of haul, average load, and capacity utilization. In particular, we show the effect of fuel price on average length of haul using 29 quarterly independent surveys from the Danish heavy goods vehicle (HGV) trip diary from 2004 to 2011. The results show that the average length of haul is sensitive to changes in fuel price: a DKK 1 (0.18$) increase in diesel price/liter leads to a 4 percent decrease in the average length of haul in the 2004-2007 period. This implies that firms improve transport efficiency by reducing the number of kilometers needed to transport a tonne of cargo as a short run response to fuel price increases. This result, however, is not confirmed for the years following the 2008 financial crisis. It also depends on where in the distribution of the average length of haul one looks.

Keywords: Fuel Price; Networks; Trucking industry; Capacity utilization

JEL-codes: L92; Q41; R40

34 pages, December 12, 2014

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CTS2014-26.pdf PDF-file 

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