New York, November 4, 2003 — It’s no secret that people around the world are choking on traffic gridlock. A new study from Deloitte, "Combating Gridlock: How Road User Pricing Can Ease Congestion," however, suggests a possible remedy: pricing road use in the same way as utilities, food and other goods. The study details the success road user pricing has achieved in reducing congestion in London, Singapore, Oslo and other global cities.

According to the study, the number of road users and motor vehicles is increasing faster than new roads are being developed and congestion is destined to dramatically increase in the next 10 years unless fundamental changes are made in how roads are priced and how drivers are charged. Costs related to congestion include unpredictable travel times, environmental damage, property damage, delays and lost production. In Western Europe, for instance, forecasts show that gridlock will rise 188 percent on urban roads by 2010. Overloaded roads in the industrialized countries of the Organization for Economic Cooperation and Development (OECD) cost nearly three percent of GDP, or US$810 billion. The situation is even worse in Asia, with the Korean cost of congestion now equaling 4.4 percent of total GDP.

"Effective management of a region’s transportation resources includes new options to enhance mobility and freedom of movement within gridlocked communities," said Greg Pellegrino, global consulting leader of Deloitte’s public sector practice. "A well-managed road pricing program has the potential to provide tremendous economic, time-saving and safety benefits for road users whether they are commercial drivers who conduct business or commuters who travel to work."

In February of this year, the largest and most extensive road pricing project in the world launched in London. Vehicles were electronically charged a flat fee between the hours of 7 a.m. and 6:30 p.m. during weekdays. Eight months after the program’s inception, the London Congestion Charge project is considered a successful example of how area road pricing can effectively reduce overcrowded roads. According to the study, traffic speeds have increased 37 percent, congestion has dropped 40 percent during charging hours, and round-trip journey times have reduced 13 percent.

The results have prompted Paris, Stockholm, Sydney and other major cities to explore the possibility of adopting the London model. A Deloitte survey of major cities in 15 European countries found that more than 72 percent of them are either interested in or already proceeding with a road pricing scheme.

"Momentum is building from Sydney to Stockholm to relieve traffic congestion and its associated costs," according to study author William Eggers, director of Deloitte Research for public sector. "A number of efforts underway across the globe show that curbing gridlock comes down to the proper pricing of road space."

In addition to London, Deloitte examined a number of other road pricing projects. One project was in Singapore, where as early as 1975, the country introduced a plan that levied a charge for the right to enter a 2.3-mile restricted zone within the city’s busiest central area during morning peak travel hours. Singapore’s pricing approach successfully reduced traffic by 45 percent and the number of cars traveling into the city center by 70 percent. According to the study, there are four major stages of road user pricing:

• The corridor approach  The traditional revenue-generating single road toll system. Today’s electronic tolling technologies allow conventional toll roads and new HOT (high-occupancy tolling) lanes to play a broader role in congestion management.
• The area scheme  Charges users to drive in an area that has a closely integrated road system. Norway has four area charging schemes in place in the form of toll rings around Oslo, Bergen, Trondheim and North Jaerd. In Trondheim, traffic across the ring has dropped by about 10 percent during toll hours. Companies inside the ring have made up for the reduction by conducting more business in the evenings and on weekends.
• National and transnational systems  Include charged areas that extend to a larger road network than just an individual zone. Austria, France, Germany, Switzerland and the United Kingdom all have or plan to implement this type of system nationwide for trucks/lorries.
• Integration  A future stage that allows drivers to make informed choices at every step of the journey. The road user charge is meant to provide incentive for the customer to make the most efficient transportation choice. 

The Deloitte study is the first to offer detailed lessons for successfully implementing road user pricing from London and other leading cities. Some of the recommended tips include achieving buy-in from local businesses, citizens and consumer groups, and creating convenient alternative transportation options so commuters who choose not to drive and pay the charges still have a way to get to work. Learn more by reading Deloitte's 44-page study, the Executive Summary and our Top 10 tips to reduce road congestion.

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