With little to no flexibility in driving new revenue by adjusting toll rates, many owners and operators are now focusing on the cost side of the equation.
Owners and operators of toll facilities have two levers for improvingoperating results: increase revenues or decrease costs. However, the vastmajority of respondents say they have little to no flexibility in driving newrevenue by adjusting toll rates. As a result, many are now focusing on the costside of the equation, where new collection and back office technologies arecreating opportunities as well as challenges.
According to our survey, just 20 percent of tolling agencies and operators are currently free to set their own toll rates and discounts based on market acceptance and competition. The other 80 percent say their rates are fixed by either an authority or by contract.
Yet our survey suggests that tolling organizations are increasingly looking to move towards more market-based approaches for setting toll rates. In fact, when asked what approach would best allow them to improve the cost efficiency of their road assets, 60 percent recommended a change towards greater rate setting flexibility, albeit within certain limits. Only one respondent suggested that changing to a regulated asset base (RAB) system would improve efficiency.
Our survey also demonstrates that many are implementing a wide array of toll collection approaches. Indeed, 91 percent of all respondents said that they now offer some form of ETC. Forty-three percent say their agency uses ORT and 23percent said they use some form of video billing mechanism.
Interestingly, despite the widespread acceptance of electronic modes of toll collection, almost two-thirds of respondents said their facility still offered a cash option (whether on or off the main line or at walk-in centers) and more than one-third say they offer automatic toll payment machine (ATPM) options.
Two factors are likely saving the toll booth from certain demise. The first is that – in many jurisdictions – the provision of a ‘cash option’ is mandated through regulation in order to improve access to those without credit and to provide a level of anonymity for users. The second factor is the prevalence of trade unions within the sector (almost two thirds of respondents said they were either fully unionized or partially unionized), which often influences the ability of toll organizations to remove toll plazas entirely.
While the range of approaches for collecting tolls has certainly increased, our survey suggests that operators continue to face some significant challenges when collecting tolls.
Revenue leakage was cited as a major challenge by a third of respondents. While revenue leakage is often considered to be associated with technological issues or with users out of the jurisdiction, nearly half (47 percent) also pointed to legislative challenges associated with toll collection. Consider, for example, the leakage faced by operators in the US State of California where provisions exist for cars to temporarily operate without license plates when being transferred to new owners.
But a third of respondents also said they were challenged by rising toll collection costs which, given that most are operating tightly-controlled pricingschemes, suggests that margins are being squeezed.