Decoupling of Road Freight Transport and Economic Growth Trends in the UK

Introduction:

In this article, Alan McKinnon uses economic trend analyses to attempt to explain why GDP in the United Kingdom was growing while road freight, measured in tonne-km, was not. This trend, called positive decoupling, hypothetically represents a positive economic shift as GDP grows without the need for costly transportation. This theory goes against prior theories that state that, as wealth and economy grow, transportation needs and costs will grow with them. From 1997 to 2004, the United Kingdom experienced decoupling according to its statistics, and McKinnon set out to use trend analysis to explain why.

Summary:

McKinnon’s task is to explain why decoupling appears to be occurring and, to some degree, forecast the future of this factor, especially as road traffic accounts for an important amount of pollution that European states were trying to reduce to counter climate change. In order to find out how road freight in the United Kingdom was not increasing while the economy was growing, McKinnon studied trends in several key factors from the 1970s up to 2004.

The 12 primary factors McKinnon considered were:
1. Change in the systems of statistical accounting (changes in the way statistics were counted)
2. Dematerialization (a “reduction of material resources required per unit of GDP” by either seeing decreased weights or increased values of goods)
3. Change in the composition of GDP (an increase in the services sector over other sectors)
4. Decline in road’s share of the freight market (more use of railway or waterway transportation)
5. Increase in the penetration of UK markets by foreign operators (Foreign operators went uncounted in UK statistics of road freight)
6. Displacement of freight from trucks to vans (Vans were not counted in UK statistics)
7. Reduction in average number of links in the supply chain (Fewer stops meant a lower tonne-km figure)
8. Diminishing rate of spatial concentration (Due to a number of factors, companies could have been reducing concentration, expanding out of centralized locations to include smaller subsidiaries, reducing transportation times and distances)
9. Improvement in the efficiency of vehicle routing (Fewer vehicles or shorter routes to save time and money)
10. Domestic supply chains becoming fully extended (There is nowhere left for road freight to expand to)
11. Erosion of industrial activity to other countries (As industry is outsourced, the transportation needs linked to that industry are outsourced as well)
12. Increase in the real cost of road freight transport (Increasing costs to transport using roads could force companies to consider alternatives)

McKinnon looks in detail at trends in each of these factors. While some, such as declines in Road’s share and increases in penetration of UK markets by foreign operators are relatively easy to follow or provide accurate figures, others are much more difficult to track or carry incomplete data sets. Nonetheless, the article looks back to the 1970s as a start point for many figures and statistics while comparing the United Kingdom to similar economies, especially in Europe, to find comparisons and related research. The trends are intended to indicate which factors have been growing, declining, or unchanging over the years, especially from 1997 to 2004. The trend analyses give baselines of what should be expected in growth and change in the market to help account for the changes McKinnon was investigating.

Conclusion:

After throwing out some reasons as either too limited in data or simply impractical reasons, McKinnon finds that many of these reasons must have some effect on the change in road freight growth – to – economic growth ratio he set out to study. However, only three factors have actual quantifiable figures to back these findings. They are increased penetration of foreign operators, railways and waterways increasing their share of the freight market, and increasing real costs of road freight transportation. Statistics collected by other institutions proved that these three factors accounted for two-thirds of the decrease in tonne-km growth. While one-third remained attributable by hard figures, McKinnon suspects that trends point to erosion of domestic industrial activity and a diminishing rate of spatial concentration play significant roles.

While this article uses market trend analysis to account for the diminishing growth of the statistic in question, there are a few key weaknesses in the method. First, while the method can address a variety of issues, it is heavily quantitative and often relies on the collection key statistics and data over long periods of time by outside sources, such as censuses collected by the USCB. Second, even McKinnon realizes the limited forecasting ability of the technique. Citing an earlier analysis, the author points to the dangerous assumption that trends will continue. In the prior study, a 1970s report stated that the United Kingdom would experience 3% growth in GDP “in perpetuity,” resulting in a society of millionaires by 2200. The technique presents the dangerous assumption that future trends will be like the present and past, and does not account for “Black Swan” events.

Source:

McKinnon, A. C. (2006). Decoupling of road freight transport and economic growth trends in the UK: An exploratory analysis. Transportation Reviews, 27(1) pp 37-64.

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