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Talking Trade blog

The costs of inefficient road transport


Published 14 April 2015

JAKARTA--This blog post almost didn’t get written. I was stuck in a taxi for three hours trying to get back from an interview at a factory just outside the city. The total distance was 39 kilometers and there was absolutely no reason for such a relatively short journey to take so long. Google maps suggested that the route we travelled should take 45 minutes without traffic.

Anyone who has ever visited Jakarta (or Manila or Bangkok) will smile knowingly at this story.  They may feel the urge to swap their own personal horror moment about sitting for long stretches without going anywhere.  Such anecdotes can be told without references to terrible traffic accidents or road construction.  These are just examples of the normal, daily operation of the roads.

Clearly, a big part of the problem is simply too many vehicles and not enough capacity.  Poor mass transit systems do not help the situation.  Both of these challenges are difficult and expensive to sort out and address properly.

However, poor road design also contributes to traffic woes.  For example, in Jakarta, it is often impossible to turn onto a road at an intersection in the direction you actually want to travel.  This means that you are forced to drive for potentially long distances in the exact opposite direction.  (Or, even more frustratingly, to sit for long stretches of time--not moving--while pointed in the wrong direction.)

The only way to get going in the right direction is to do a U-turn at the next available opportunity. 

Here is where a bad design situation gets much worse.  With heavy traffic, safely executing a U-turn takes time.  There are generally no traffic lights at these road breaks.  In Jakarta, at least for now, there may be some enterprising young man who acts as an informal traffic policeman to stop traffic long enough to get a few cars turned around (for which he accepts a small payment from grateful drivers). 

Given the length of time needed to turn, the traffic quickly backs up even worse as impatient drivers line up to wait until they can head back in the correct direction. 

It really ought to be possible to fix some of these problems by using roundabouts, more U-turn breaks, more traffic lights, or some combination of all three.  The economic incentives alone ought to be driving governments to sort out any potential barriers to the smooth movement of vehicles as quickly as possible. 

Another significant cause of delay is the time needed to pay the road tolls.  The backup for the toll roads can stretch for kilometers.  The toll payment may be as little as 50 cents.  But the economic costs associated with having traffic not move for 15 minutes or more must surely outweigh whatever toll amount is collected. 

At a minimum, more toll booths could be automated or converted to system where drivers do not have to stop completely and hand over a few notes.  If the problem is getting drivers to start using such a system and stop paying cash, perhaps cashless cards could be given a discount or some other incentive to induce drivers to make the switch.  At least all taxis and commercial vehicles should be required to use the automated system.

The situation here is not just frustrating for drivers and passengers.  It imposes huge economic costs on the country, including acting as an informal tax on business operations for every firm trying to operate in the city.  (Being stuck in traffic also increases pollution and contributes to environmental damage.)

What I found very striking in today’s case study interview was a comment that the firm spends 20 hours shipping products between their factories in Jakarta and Central Java.  No one seemed at all surprised by this schedule either. 

For the firm, the costs of such delays can undermine their competitiveness on international markets.  Their margins are quite thin, so they do not have a lot of room for additional costs.

Yet just getting from their factory back to the first intersection of any kind took nearly 15 minutes.  I would guess that the distance traveled was less than a kilometer?  To reach the main road, which was about 2 kilometers from the factory gate, took a total of almost 25 minutes.

What was really astonishing about this timeline is that the factory is located in a bonded zone, specifically designed for export firms.  So, in this specially created district full of factories of all sorts, it still took 25 minutes to get to the main road on an apparently ordinary day—no rain, no car accidents, no construction. 

This road is the main means for the factory to get supplies in and final products out.  The firm, like most in Indonesia, does not have the option of using rail transport.  The trains do not, apparently, go where the firm needs them to travel. 

Very bizarrely for a country of 16,000 islands, cargo is not moved much by sea between domestic ports.

Air transport for cargo is expensive.

This leaves road transport as the primary means of moving goods around Java.  But given the state of the roads, firms cannot use large trucks either.  Hence, the company ships goods between its factory facilities in relatively small trucks over small roads since the highway system does not connect together well. 

Without traffic, the company estimates the drive could be done in 13 hours.  But for planning purposes, the firm usually assumes a trek of 20 hours.

This kind of inefficiency adds up.  To get anywhere remotely on time, everyone has to budget in all kinds of extra traffic delays into their schedules.  This results in additional wasted time if the traffic does not, for some reason, materialize as expected. 

Traffic delays are not just irritating.  They are costly and can seriously undermine economic competitiveness.  Firms will think twice about locating facilities in places that suffer from regular gridlock.  

Fixing transportation problems can be extremely expensive.  Not every remedy, however, requires substantial investments of resources.  Wherever possible, officials should move correcting inefficient transport higher up their priority lists. 

In a world increasingly operating along just-in-time systems, it will not do to miss your shipping deadline because you are stuck in a massive jam behind a toll booth collecting 50 cents.

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Dr. Deborah Elms is Head of Trade Policy at the Hinrich Foundation in Singapore.  Prior to joining the Foundation, she was the Executive Director and Founder of the Asian Trade Centre (ATC). She was also President of the Asia Business Trade Association (ABTA) and the Board Director of the Asian Trade Centre Foundation (ATCF).

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