Recognising freight’s role on roads should come at a price that the users pay

IT WOULD BE a surprise to most outside observers how little the world of freight transport is embraced within the established processes for determining priorities in road investment and improvement, how they should be funded, and the active management of the network.

In fact, HGVs, LGVs, and vans combined account for approximately 23% of all motor vehicle traffic by vehicle kilometres travelled on Great Britain’s roads. A direct measure of ‘road capacity taken up’ might push that figure higher as HGVs, in particular, due to their size, mass, and performance differences (e.g. acceleration and braking), may occupy a disproportionately larger amount of physical road space and capacity relative to their numbers, particularly in urban areas and at junctions. For instance, a single HGV may use the equivalent road space of multiple cars in traffic flow models.

Van traffic has meanwhile been particularly growing in recent years (and is above pre-pandemic levels), whilst HGV traffic levels have generally remained stable.

Beyond the measure of simple vehicle movements, there is then the very important matter of the value of the contents and significance of the transfers of products being made by lorries and vans, both to the individual carriers, their customers, and the economy as a whole.

Within the overall highway system, these highly important elements are generally drowned out by perceptions of the predominant private vehicles, making trips which range from having some significance commercially, e.g. where they are carrying individuals on work trips and conducting professional service activities, to the majority of mainstream personal trips of shopping, visiting friends and relatives, leisure, etc. Whilst these are of course not unimportant, most are discretionary and do not affect the wider economy in the same way that freight-related movements do.

Against this background, it makes little sense that up to now the valuation of freight movements in highway investment appraisal have been largely related to the vehicle operating costs and the hourly pay rate of the driver. Effectively, this has ignored the shipper’s interest, the efficiency of the logistics provider’s vehicle movements, and the direct and indirect impact on the national economy.

As LTT reported in the last issue, the Department for Transport has at last begun to grapple with this neglected legacy.

To contribute realistically, the Value of Time (VOT) methodology for HGV freight movements in transport appraisal needs to better monetise the economic benefits of reducing journey times or improving reliability for commercial vehicles, as a key input for cost-benefit analyses of transport infrastructure projects.

For freight, the VOT monetary value is an economic cost to the business, not a ‘willingness to pay’ value as generally used for personal non-work travel, and is typically derived from the direct costs incurred by the carrier during transit. Key components include the driver’s time, i.e. the fully-costed wage and non-wage costs (like taxes and social contributions) of the HGV driver for the duration of the journey; Vehicle operating costs; time-related vehicle costs, such as depreciation, maintenance, and insurance; and potentially cargo (inventory) value. This latter is a much greater methodological challenge as it also aims to incorporate the value of the goods being transported, accounting for the opportunity cost of capital tied up in transit, potential spoilage of perishable goods, and the declining value to customers if delivery is delayed.

The methodology must also recognise that different interested parties and decision-makers (principally shippers, carriers and customers ) may have different perspectives on time value, which needs careful consideration to avoid both overlooking and double-counting benefits. The combined VOT, should theoretically represent a comprehensive societal and national economic measure.

The calculated VOTs are a crucial input into transport modelling and appraisal systems (like the DfT’s Transport Appraisal Guidance TAG) to estimate the user benefits, often predominantly time savings, of a new infrastructure project to be compared against project costs in a cost-benefit analysis.

The new valuations for time involved in transporting freight, being introduced by the DfT, look set to significantly increase the user benefits from highway interventions that aim to reduce congestion, raise running speeds, or shorten routes for freight movements, and therefore enhance the benefit-cost ratios and business cases for these projects.

In addition to the average time saving, the Value of Travel Time Reliability (VTTR) must also be considered, as reliable journey times are valuable to businesses for logistics planning (e.g. just-in-time deliveries).

In this context, the new valuations for time involved in transporting freight, being introduced by the DfT, look set to significantly increase the user benefits from highway interventions that aim to reduce congestion, raise running speeds, or shorten routes for freight movements, and therefore enhance the benefit-cost ratios and business cases for these projects.

The proposed revised DfT Transport Analysis Guidance on this subject says the estimated value of time for HGV freight carriers will in future be around £81 per hour – more than three times the current valuation of around £24 per hour. The proposed new value of time for LGV freight is meanwhile increased from around £16 to around £21.

The research behind the proposed changes, Freight value of time and value of reliability, was commissioned jointly by DfT and National Highways. It includes results of a survey of businesses, and was produced by Arup, Aecom, the University of Leeds and Significance in 2023. The peer review was by Ian Williams.

Though it set the scene for the consequent updates to TAG, it appears that DfT most particularly lighted upon the new headline HGV Value of Time figures, which were not directly derived from any actual new research, but from widely -used industry estimates of the direct costs that carriers incur. These were seen as in line with its expectations and within the range of valuations seen in the literature from other countries’ studies, says DfT.

The outcome means the value of time for freight HGV trips has more than tripled, whilst the increase applied for LGV trips is less dramatic, but still considerable at 30%. This lower value simply reflects the fact that most van trips are mainly passenger carrying, for personal business, or for service-related tools and equipment needed by the driver and crew for their work, rather than moving goods per se. Indeed, this is a little researched or measured sector of activity, and we do not generally know what the main journey purpose of any LGV actually is.

As well as the time savings themselves, the research looked at the value carriers and shippers put on journey time reliability (JTR). The TAG method of valuing road JTR uses a parameter called the ‘reliability ratio’ (RR) which essentially says how the value of JTR relates to the basic Value of Time for a particular mode and purpose. Currently, TAG recommends an RR of 0.4 for all journey purposes by car, and has no recommendations for HGVs or LGVs. The research indicated a freight RR of 0.58 for HGVs and 0.70 for LGVs. This will now be the TAG recommendation.

Because the RR is applied to the basic VOT, which has now tripled, the monetised JTR benefits will increase too.

In recognition of the traditional shortcomings, the current TAG advice to modellers is to double the HGV VOT for assignment purposes, reflecting the limitations of the current valuation. This advice becomes redundant and will be withdrawn, reducing the direct impact of the higher proposed values.

The changes concern road traffic. Modelling and appraisal of rail, maritime and aviation freight tends to have its own methods, and DfT currently doesn’t propose to change the advice on them.

In general, the new valuations will lead to increased user benefits from interventions that aim to reduce congestion or shorten routes, and therefore increased benefit-cost ratios for these. Most HGV traffic is on motorways and major A roads, and these are generally where the impact will be felt most – especially on routes to major ports or warehousing and distribution areas. LGV traffic is much more diffuse.

DfT estimates that the average VOT across all traffic will increase by a range of 15-40%, with motorways at the top of this range, and minor rural roads at the bottom. In appraisal terms, in a typical road scheme, user benefits are the biggest single category of benefit and time savings are the lion’s share of that.

There will be a consequential bonus increase if journey time reliability is also being monetised. And if, under the wider economic impacts heading, output change in imperfectly competitive markets is being monetised through the basic TAG method of uplifting the business and freight user benefits, then there will be a bonus here too.

Appraisal and business case specialist Graham James in his commentary on the changes in the last LTT issue points out that there is still work to do on the trickier aspects of freight considerations in road planning , particularly to fully reflect the ‘shipper’ element representing the economic value of speed-of-delivery, or reliably hitting particular delivery windows, over and above the direct transport costs, but sees the changes as a major step forward.

As Graham James put it “The value of travel time savings for road freight is one of the long-standing loose ends in UK transport modelling and appraisal practice. The existing approach in the DfT’s TAG guidance is based purely on the value of the driver’s wages and oncosts, plus an element of time-related vehicle costs that technically come under vehicle operating costs”.

“Other matters are not reflected in the current practice. For example, journey time savings may allow smaller fleets or wider coverage areas, and hence savings in depot or other overhead costs. And there is economic value in speedy delivery of the goods themselves. Value is lost from goods deteriorating or being stolen, capital is tied-up in transit, and consumers often choose to pay extra for next-day delivery. All these factors could flow through to journey time reliability valuations as well.”

This discussion must logically now go beyond the question of simply appraisal inputs and outcomes, to the wider topic of freight considerations in the funding for roads, and the implications for new forms of road user charging. Something that might well be part of the Chancellor’s thinking due to the declining income from fuel duty.

“This matters at the sharp end,” says James. “If you are developing a project aimed at reducing road congestion, or reallocating roadspace or kerbspace between freight and other modes, the existing practice means you will have impacts that aren’t currently being fully captured – particularly on the major roads where freight traffic is most significant.”

This discussion opened up by the DfT must logically now go beyond the question of simply appraisal inputs and outcomes, to the wider topic of freight considerations in the funding for roads, and the implications for new forms of road user charging. Something that might well form part of the Chancellor’s quest for new form of tax revenues to meet her budgetary pressures and the shrinking income the Treasury gets from fuel duty.

Road user charging is in some ways stuck as far in the past as the approaches to freight analysis within the appraisal framework. It would be a major step forward if they were both to be addressed at the same time.

The freight transport sector is highly, and almost wholly, commercial. Goods move for reasons of business necessity with the costs ultimately reflected in prices charged for goods. The sector is highly responsive to market signals and adaptable to new regulatory and fiscal landscapes as long as they are fairly applied across all players, and are predictable and stable.

By the same token, if an advantage is to be offered through the price mechanism bringing greater reliability and efficiency to freight movements the sector is generally willing to pay for it. This can be either improvements to speed and predictability of journey times, and efficiency in delivering and unloading — at both distribution points and in urban areas. ‘Time is money’ for a truck stuck on a motorway, waiting at a loading bay, or searching for a parking spot outside a retailer’s premises or a domestic customer’s home.

In road use in the UK, goods vehicles are generally not treated any differently to other vehicles and not given priority lanes like buses, and are in fact subject to more lane restrictions than cars, particularly on motorways (e.g. banned from the far-right lane of motorways with three or more lanes). Even where mixed user HOV (High Occupancy Vehicle) Lanes have been trialled , for example on Stanningley Road in Leeds, HGVs over 7.5 tonnes were not permitted in the lanes that were available to buses, coaches, and cars with two or more occupants.

To reflect more deeply on these issues LTT collected the thoughts of several transport experts.

Amongst their comments were that if the values of time for freight-related movements are so much greater than thought, that must mean that the usefulness of making time savings is much greater. This would challenge an established presumption in DfT modelling and assessment procedures, including that there is no induced traffic for freight vehicles. This effectively implies there is nothing useful the lorry operators can do with any time savings in their business, and that the vehicles made available by greater efficiency will not make any additional journeys.

This seems clearly not to be the case. A reduced fleet requirement will at least help freight carriers (and their users) reduce their costs and make more profits (if they get the time savings from new public investment in roads effectively for free). Or are they are prepared to pay more to make the highly valued time savings, by paying a greater share of the costs of a road improvement project through appropriate higher road user changes, society as a whole will benefit.

This consideration in turn raises the question of how the freight sector might properly pay for an increase in the road space which is so useful/valuable to them, especially if it is to increase capacity at the margin for that main purpose?

Likewise, if lorries and their movements are so important, why don’t we look after them better on the existing road network by protecting and prioritising their space (e.g. HGV lanes like bus lanes) so we don’t need ‘new’ capacity, but more efficiently used existing capacity.

And, alongside this, how do we suppress the use of valuable new road space intended to help freight, from simply being absorbed by newly generated low-benefit non-work car trips, for which extra capacity was not intended/justified (e.g. for trips to further flung shopping centres), causing delays to important truck journeys for which the capacity WAS intended.

This suggests there is surely an urgent need for more efficient management of the existing network considered by journey purposes, and values, not just by the number of vehicle units that can be accommodated.

In June, alongside the Chancellor’s announcement of the government’s five year spending plans, and the objectives underlying them, the Treasury published its latest review of the Green Book with the promise that a new version will be available in early 2026 to help drive investment decisions in the desired direction of boosting productivity, achieving economic growth and re-balancing the distribution of national prosperity.

Alongside the Green Book changes and the significant new approach to the valuation of freight within appraisal, the DfT has also been consulting on its new Appraisal Modelling and Evaluation Strategy (AMES), which will set out the priorities for improving its Transport Analysis Guidance (TAG) over the next five years. This offers a significant opportunity to trigger beneficial changes in transport appraisal principles and practice.

To explicitly “better prioritise economic growth,” one key is for appraisal to rigorously identify, quantify, and value impacts that foster growth, such as the productivity gains to be achieved by quicker and more reliable freight movements on improved infrastructure, including the employment effects and the social value attached to job creation, alongside regional or sectoral growth that aligns with specific government economic objectives , including national or regional economic growth goals. In essence, how the standard appraisal formulas (NPV and BCR) are used, and their inputs are expanded to incorporate a fuller, evidence-based assessment of all factors contributing to broader economic growth.

These events present an important opportunity for positive change, if DfT is ready to seize the moment to engage in the process holistically, prompted by, but not limited to, forthcoming TAG changes relating to freight time valuation due to go live next May. It surely means working with the Treasury on both revisions to the appraisal process, how road investment is to be funded, and the way freight vehicles properly contribute to the benefits they get from it.

Peter Stonham is the Editorial Director of TAPAS Network

This article was first published in LTT magazine, LTT926, 12 November 2025.