1. COST 355 WG1 – TORINO 3 OCTOBER 2007 FUEL PRICE ELASTICITY OF ROAD FREIGHT TRANSPORT DEMAND IN FRANCE Carine HEMERY – Christophe RIZET INRETS - DEST

2. COST 355 WG1 – TORINO 3 OCTOBER 2007 Objectives of the research: Petroleum price impact on road freight traffic, energy consumption and CO2 emissions Road freight demand evolution with an increase of diesel price (either petroleum or taxes)

3. facts: COST 355 WG1 – TORINO 3 OCTOBER 2007

4. Data used: - TRM : a survey of the French HDV fleet, based on registration documents. Road freight traffic published per quarter in TKM and VEHKM and a transport price index - CNR(road national committee) : price of diesel fuel for the professionals of the freight road transport COST 355 WG1 - TORINO 3 OCTOBER 2007

5. Simple models to estimate diesel fuel price elasticity of road freight transport : Road freight transport demand, in TKM and VEHKM, for own account and for hire and reward (H&R) Data in logarithm (constant elasticity) or data in level Model for Own Account : TKM t = a 1 PIB t + b 1 GazolePrice t + c 1 VEHKM t = a 1 PIB t + b 1 GazolePrice t + c 1 Model for H&R : TKM t = a 2 PIB t + b 2 ITRM t + c 2 ITRM t = d 2 + e 2 GazolePrice t VEHKM t = a 1 PIB t + b 1 GazolePrice t + c 1 ITRM t = d 2 + e 2 GazolePrice t Econometry: - unit root test(ADF, Philips Perron, KPSS...) - Cointegration test (Johansen...) - Vector error regression model COST 355 WG1 - TORINO 3 OCTOBER 2007

6. Results: 1 Logarithmic model 1.1« hire & reward » diesel fuel price elasticity of TKM = - 0.054 diesel fuel price elasticity of VEHKM = - 0.252 Elasticity of VEHKM higher than elasticity of tkm COST 355 WG1 - TORINO 3 OCTOBER 2007

7. Results: 1 Logarithmic model 1.2« own account » diesel fuel price elasticity of TKM = - 0.141 diesel fuel price elasticity of VEHKM = - 0.263 Elasticity of VEHKM higher than elasticity of tkm COST 355 WG1 - TORINO 3 OCTOBER 2007

8. Torino Oct 3rd 2007Hemery & Rizet, INRETS- DEST8 COST 355 WG1 - TORINO 3 OCTOBER 2007 Results: 1 Logarithmic model 1.3Total traffic (H&R + OA) Diesel fuel price elasticity of VEHKM = - 0.241 For Diesel fuel price elasticity of VEHKM Little difference between H&R, own account and total : -0.252, -0.263, -0.241 but high difference for TKM

9. With logarithmic models, elasticities are constant. But the non logarithmic models show an increase of diesel fuel price elasticity. TKM elast. H&R TKM elast. Own Ac COST 355 - TORINO 3 OCTOBER 2007

10. We observe an increase of the diesel fuel price elasticity of freight road transport from 1998 to 2007. Energy price has more and more impact on freight traffic level. COST 355 - TORINO 3 OCTOBER 2007

11. Conclusion - Own account or H&R : same diesel price elasticity of VEHKM - But diesel price elasticity of TKM are different : own account is more elastic to diesel price variation. Own account = 15% of road freight transport in TKM and 28% in VEHKM - for H&R, road demand in TKM is more elastic : logistician have more possibilities to optimize the vehicle load (Own account: average load = 5.5T; H&R average load = 11.5T) - When the diesel price increases, own account road freight demand decreases more than H&R : H&R recovers a part of own account road freight share. COST 355 - TORINO 3 OCTOBER 2007

12. - France commitment in Kyoto is to have in 2010 the same level of emission of CO2 as in 1990 - Applying this objective to road freight traffic (without technology evolution) implies a 45% decrease from 2007 to 2010. - Without any other policy measure, a diesel price increase of 191% would be necessary to get a fall of 45% of VEHKM (with a constant price elasticity of -0.24) COST 355 - TORINO 3 OCTOBER 2007

13. Thanks for your attention carine.hemery@inrets.fr COST 355 - TORINO 3 OCTOBER 2007