5.  Quantitative Results

This section presents information on the motor carriers who responded to the business case telephone interviews, followed by the economic results derived from the data collected.

5.1  Characteristics of Population Responding

All of the responding companies reported working across state lines as interstate carriers or as service bureaus that work with interstate carriers.  The numbers of states the carriers operate in ranged from 7 to 50, with most carriers reporting 48 states.  The vast majority of carriers were for-hire, as opposed to private (company-dedicated) carriers.  Fifteen respondents were primarily truckload carriers, eight were less-than-truckload, and 11 reported carrying both kinds of loads.  Most respondents used dry freight vans most commonly, followed by refrigerated vans and straight trucks.  Other trailer types were reported much less frequently.  Carriers in this population reported being responsible for between 22 and 90,000 power units, including company-owned, leased, and owner-operator power units.

Respondents were fairly equally balanced between those who recognized the term “CVISN” (16 respondents, or 44 percent) and those who did not recognize the term (20 respondents, or 56 percent).  Among those who had heard of CVISN, there were several positive descriptions.  One typical respondent said, “In terms of an information network, it sounds great. It enables technology to gather information to improve performance.”  A handful of respondents indicated that CVISN would achieve its greatest benefits if all systems used similar data formats, and that the concept would be positive for the motor carrier industry if it were used to promote consistency across jurisdictions.  Figure 3 summarizes the characteristics of the motor carriers surveyed for this study.  The figure demonstrates the distribution of motor carriers surveyed for this study is skewed towards large, for-hire carriers operating in more than 40 states.

All but one respondent reported applying for credentials electronically.  On the electronic screening side, 24 out of 32 respondents (75 percent) said that some of their companies’ trucks were equipped with screening transponders, while 8 respondents (25 percent) indicated that their company did not use transponders on any of its trucks, or did not know whether or not transponders were being used. 

5.2  Return on Investment Analysis

This section presents the quantitative economic results of the data analysis.  The return on investment (ROI) analysis relies on data collected through interviews and analysis of industry data and literature.   This analysis documents the startup and annual recurrent costs associated with CVISN deployment for motor carriers under various scenarios; documents the benefits associated with CVISN deployment; and calculates ROI ratios, net benefits, and payback periods for motor carriers resulting from participation in electronic credentialing and electronic screening programs.  Motor carriers interested in constructing their own, customized ROI analysis may do so using the simplified ROI worksheets and accompanying instructions provided in Appendix D.

Figure 3.  Characteristics of surveyed motor carriers

The benefit and cost elements considered within this report are presented in Table 5.  The benefits of electronic credentialing are tied to labor, material and postage savings to motor carriers, normalized on a per-transaction basis.  The time value of increased fleet utilization is tied to the costs of new trucks waiting to be placed into service.  That is, as new trucks sit in the yard or are otherwise unproductive while awaiting the processing of credentials, interest is accruing on the loan taken out by the motor carrier to purchase the truck.  This debt carrying cost represents a tangible cost to motor carriers and is quantified in this analysis.  The startup and annual costs associated with electronic credentialing technology were assessed for: hardware expenses, computer technical support, company registration, system training, and network connection fees.

The benefits of electronic screening considered in this analysis are entirely tied to operating cost savings to motor carriers, including those related to driver wages and benefits and fuel costs.  The types of costs associated with electronic screening considered within this analysis include those related to: membership fees, transponder hardware, other hardware, staff training time, transponder maintenance, monthly transponder fees, and fees paid on a per-bypass basis.

Table 5.  Benefit and cost elements

CVISN Functional Area	Benefits	Costs
Electronic Credentialing	Labor savings per transaction Material and postage savings per transaction Time value of increased fleet utilization per day	Startup costs Hardware expenses Computer technical support Company registration System training Network connection fees Recurrent costs Hardware maintenance Computer technical support System training costs
Electronic Screening	Operating costs savings to motor carriers Driver wages and benefits Fuel Equipment rents and purchased transportation	Startup costs Membership fees Transponder hardware Other hardware Staff training time Recurrent costs Monthly subscription of bypass fees Transponder maintenance Other hardware maintenance Staff training

Electronic Credentialing

Motor carriers contacted for this study expressed a high degree of satisfaction with their experiences in using electronic credentialing. The respondents unanimously agreed that electronic credentialing had generated net financial benefits to their company and when asked why their company had chosen to move towards electronic credentialing, most indicated that the acceleration of credentialing (26 respondents) and labor time savings (24 respondents) were the most significant reasons.  Numerous motor carriers also highlighted the benefits of integrating computing technology into the credentialing process, either through its ability to reduce errors and the number of corrections needed or the ability to store and track information electronically. Table 6 shows the number of times each reason was cited by the responding companies.  The reasons total more than 38 because a single company could indicate more than one reason.  Based on the results of the electronic credentialing ROI analysis presented later in this section, the results of the survey demonstrate that motor carriers are well aware of the benefits that accrue as a result of electronic credentialing and also understand which benefits are most relevant when making a decision to use the technology.

Motor carriers surveyed in support of this study generally agreed that electronic credentialing was faster, used less paper, was easier, and was more efficient than traditional paper filing systems. One respondent noted that in conversations with other motor carriers, all had generally positive things to say about e-filing, while those that were still using paper were frustrated by the process.  Most agreed that accuracy was much improved through electronic credentialing resulting in less time spent responding to questions raised by credentialing agencies.

Table 6.  Reasons cited by motor carriers for using electronic credentialing (N=29)

Reason	Number*	Percentage of Respondents
Acceleration of credentialing	26	90%
Labor time savings	24	83%
Reduction in errors and corrections needed	7	24%
Ability to store and track information electronically	3	10%
Savings in postage and materials	1	3%
Total	61

* Out of 29 carriers responding.  Carriers could cite more than one reason.

Most of the surveyed motor carriers indicated that both the startup and annual recurring costs associated with electronic credentialing were minimal. Based on consideration of all the data collected, Table 7 presents an overview of the typical costs incurred by a motor carrier when moving to electronic credentialing. Motor carriers reported in some cases the need to improve hardware ($50 per motor carrier), obtain computer technical support (1 hour at $75 per hour), and incur other training-related costs ($150).  Total startup costs used in the benefit-cost analysis (BCA) are estimated at $275, consistent with the data received through the surveys conducted for this study.  Annual recurrent costs are estimated at $125 per company.  It was assumed that all carriers would already own at least one computer equipped with a high-speed internet connection, which the carrier would be using in its ordinary course of conducting business, so the total cost for this equipment and service is not allocated as a startup or operating cost to the CVISN e-credentialing deployment.  This assumption is consistent with industry responses regarding the initial startup costs associated with electronic credentialing.

Table 7.  Electronic credentialing costs to motor carriers

Element	Value per Company
Startup costs
Hardware expenses	$50
Computer technical support	$75
Company registration	$50
System training	$100
Network connection fees	$0
Other	$0
Total startup costs	$275
Recurring costs (annual)
Hardware maintenance	$0
Computer technical support	$75
System training costs	$50
Total recurring costs	$125

The benefits associated with electronic credentialing, the value placed on each benefit element, and the basis of the estimated value are highlighted in Table 8. The most significant benefit is the time value of increased fleet utilization described previously within this section. The financing cost associated with loans obtained on new tractors waiting for credentials was estimated at $106 per day.  Motor carriers surveyed for this study indicated that on average, electronic credentials accelerated the time required to place new trucks into service by an average of 3 to 4 days, at a savings of $371 per truck ($106 * 3.5). The share of the fleet requiring new credentials was estimated at 15 percent based on data presented in the CVISN Model Deployment Initiative Final Report (FHWA 2002).

Table 8.  Assumptions governing electronic credentialing benefits estimates

Element	Value or Factor	Basis
Labor savings per transaction	$4.13	Product of time savings provided by CVISN business case survey respondents (10 to 12 minutes, calculation uses 11 minutes) and labor rates (plus fringe benefits) for administrative personnel provided by respondents ($22.50/hour)
Material and postage savings per transaction	$1	CVISN business case surveys
Time value of increased fleet utilization per day	$106	The financing costs associated with a 3-year loan on a $105,000 tractor waiting for credentials at an interest rate of 6.38 percent (Murray 2007)
Share of fleet represented by new trucks requiring credentialing	15%	CVISN Model Deployment Initiative Final Report (FHWA 2002)
Acceleration of trucks being placed into service	3 to 4 days	CVISN business case surveys

Evidence collected from motor carriers suggests that the level of savings associated with increased fleet utilization will differ from company to company.  For example, if there are other parallel activities required to place a truck into service (painting, equipment installation, etc.) that can be performed while awaiting credentials, the actual difference in service time between the legacy (paper-based) system and electronic credentialing may be less.  Based on contacts made with motor carriers and a credentialing broker in support of this study, additional conclusions regarding the increased fleet utilization estimate include the following:

• Motor carriers generally work diligently to ensure that trucks never sit idle for extended periods of time for any reason, including waiting for credentials
• Cost savings will vary by state based on the number and types of credentials required, and the time required for the state to process credentials and issue plates
• Temporary registrations are available in some states and can be distributed via fax or e-mail for use while the carrier waits for permanent plates to be delivered
• Larger carriers have generally streamlined the process of placing new trucks into service and would not experience long waiting periods; smaller carriers could find it more difficult to expedite the credentialing process and could wait several days for credentials
• One credentialing broker indicated that she could work with dealers to obtain copies of required paperwork with all relevant vehicle information, and obtain and send all permits and plates to the motor carrier before the new owner takes possession of the vehicle.

The second largest benefit associated with electronic credentialing is reduced labor costs.  The motor carriers surveyed for this study indicated that on average, companies save 10 to 12 minutes per transaction resulting in labor cost savings of $4.13 per transaction.  Cost savings associated with materials (e.g., paper, envelopes) and postage not used in electronic transactions were estimated to reduce costs by an additional $1 per transaction.

The economic analysis in this business case calculated the benefit of getting trucks into service more quickly for only the 15 percent of an average company’s trucks that are purchased in a given year.  However, separate dollar values were calculated on a per-transaction basis to cover all types of credentialing transactions, be they new, renewal, or supplemental transactions.  Thus, the benefits marked as “per transaction” in the Table 8 apply to all transactions, whereas the benefits tied to fleet utilization and downtime while waiting for new credentials to arrive apply to only a subset of the company’s population of power units in any given year.

To examine the ROI associated with replacing paper-based systems with electronic credentialing, mean values for the elements required to perform the ROI calculation were calculated from the surveyed motor carriers, as presented in Table 9.  The majority of the motor carriers surveyed for this study were large interstate companies operating in numerous states across the nation.  Thus, the average number of annual IRP credential transactions among survey respondents was very high (1,291), with an additional 394 IFTA transactions and 823 transactions involving other kinds of permits and credentials.  These values were applied to the transaction- and power unit-based benefits calculations outlined in Table 8 and examined within the benefit-cost framework described in Section 3 to calculate an ROI ratio, net benefits estimate, and payback period for this mean value scenario.

Table 9.  Mean values for CVISN business case survey respondents

Element	Value
Number of IRP credential transactions	1,291 per year
Number of IFTA credential transactions	394 per year
Number of all other permit and credential transactions	823 per year
Number of power units	7,451

Table 10 presents the ROI analysis results for the mean value scenario.  Increased fleet utilization is the most significant benefit associated with electronic credentialing resulting in $413,065 in savings to the motor carrier in the first year of the analysis time horizon.  The transaction-based benefits (labor, materials, and postage) result in approximately $12,855 in savings in the first year of using electronic credentialing.  In the first year of this scenario, benefits equate to $57 per power unit and $170 per transaction.  Over the 10-year ROI time horizon, total net benefits per carrier are estimated at $3.6 million ($360.5 thousand average annual), resulting in an overall return on investment of 2,971:1 and a payback period of less than one month.  These results were confirmed in some of the interviews conducted for this study. (See the example company profile on page 21).

Table 10.  Results of electronic credentialing ROI analysis, mean value scenario ($2007)4

Year	Benefits				Costs			Net Benefits
	Labor	Materials and Postage	Increased Fleet Utilization	Total	Initial	Recurrent	Total
2007	$10,347	$2,508	$413,065	$425,920	$275	125	$400	$425,520
2008	9,958	2,414	397,546	409,918	-	117	117	409,801
2009	9,584	2,323	382,610	394,518	-	109	109	394,408
2010	9,224	2,236	368,236	379,696	-	102	102	379,594
2011	8,877	2,152	354,401	365,430	-	95	95	365,335
2012	8,544	2,071	341,086	351,701	-	89	89	351,612
2013	8,223	1,993	328,271	338,488	-	83	83	338,404
2014	7,914	1,919	315,938	325,771	-	78	78	325,693
2015	7,617	1,846	304,068	313,531	-	73	73	313,459
2016	7,330	1,777	292,644	301,752	-	68	68	301,684
Total	$87,618	$21,241	$3,497,866	$3,606,725	$275	$939	$1,214	$3,605,511

 

Electronic Screening

The motor carriers contacted for this study were generally aware of the benefits associated with electronic screening and those that had chosen to equip their vehicles with transponders were confident that the decision had generated positive economic returns to their company.  When asked if their company had recovered startup costs, 90 percent of those surveyed responded positively.   Table 11 presents the reasons cited by motor carriers for participating in electronic screening programs.  The time (20) and labor cost (13) savings were the top two reasons cited for participating in electronic screening programs, though quicker delivery times (8), reduced wear and tear on vehicles (7), and enhanced safety (6) were also cited.  Numerous other benefits associated with electronic screening were cited by respondents, including: improved on-time delivery performance, toll discounts for EZPass, simplified scheduling, enhanced driver morale, increased driver retention rates, and reduced overtime pay.  There were a number of respondents, however, that argued for greater uniformity and interoperability in electronic screening programs.  One carrier noted that with competing electronic screening programs and toll roads, a single truck can be equipped with five or more transponders.  Other carriers noted that sometimes transponders interfere with each other.

Table 11.  Reasons cited for participating in electronic screening programs (N=21)

Reason	Number*	Percentage of Respondents
Time savings	20	95%
Labor savings for drivers	13	62%
Quicker deliveries	8	38%
Reduced wear and tear on vehicles	7	33%
Increased safety	6	29%
Total	54

* Out of 21 carriers responding.  Carriers could cite more than one reason.

Of the eight respondents who did not participate in electronic screening (or who did not know whether their company had any transponder-equipped trucks), three listed time and cost savings and labor savings for drivers as factors that would influence them to participate in e-screening in the future.  Quicker deliveries, reduced wear and tear on equipment, and safety received fewer votes as positive factors.  Startup costs, recurring costs, and driver issues each received only one vote each from among these eight respondents as factors that their company would count as negatives, in deciding  against adopting e-screening..

Table 12 demonstrates that of those responding carriers who claimed to be participating in an electronic screening program or partnership, 19 respondents (100 percent) were enrolled in PrePass, while 7 (36.8 percent) were enrolled in Norpass, 10 (52.6 percent) in Oregon Green Light and 6 (31.6 percent) in EZ Pass.

Table 12.  Electronic screening programs and partnerships (N=20)

Programs / Partnerships	Number*	Percentage of Respondents
HELP/PrePass	19	95%
Oregon Green Light	10	50%
Norpass	7	35%
EZ Pass	6	30%
Total	42

* Out of 20 carriers responding.  Carriers could cite more than one reason.

The ROI analysis considers a number of startup cost categories, including: membership fees, transponder hardware, other hardware, staff training time, and other costs. The majority (72.2 percent) of the respondents indicated that there were no initial startup fees associated with enrolling in an electronic screening program or partnership.  Initial costs identified by some of the motor carriers contacted for this study included transponder hardware costs of $99 per unit, staff training time of approximately 1 to 2 hours per unit, and a $2,000 cost to mail transponders to all drivers in the company.

Annual recurrent costs considered within this analysis include: monthly transponder fees, bypass transaction fees, transponder maintenance costs, other hardware maintenance, staff training, and other recurrent costs.  Of the 18 motor carriers providing sufficient data to construct ROI ratios, seven (38.9 percent) provided their own estimates of annual recurrent costs.  These costs were largely driven by the monthly transponder fees paid to electronic screening programs, though two respondents included bypass fees of between $0.65 and $0.85.  For the 11 respondents that were unable to estimate annual recurrent costs, we assumed per-company costs based on the PrePass fee schedule identified in Table 13. Note that there are no initial startup costs associated with PrePass.  Costs are variable based on the number of trucks enrolled by the motor carrier, and PrePass + includes EZPass (toll booth bypass).

Table 13.  Monthly PrePass rate schedule ($ per transponder)

Number of Trucks	PrePass	PrePass +
0-25	16	21
26-100	15	20
101-200	14	19
201-300	13	17
301-500	12	16
501-3,000	11	15
3,001-4,000	10	14
>4,000	9	13

A number of assumptions were required to calculate the benefits associated with electronic screening, including the time savings per bypass, annual number of bypasses per enrolled vehicle, number of enrolled vehicles, and heavy truck operating costs (Table 14).  The number of enrolled vehicles per company was obtained through the motor carrier interviews.  To determine the total number of bypasses, the number of enrolled vehicles for each company was multiplied by an average annual number of bypasses per truck based on PrePass data.  The time savings per bypass was estimated at 3 to 5 minutes based on a midpoint of estimates provided by the Oregon Green Light Program, PrePass, and the CVISN Model Deployment Initiative (MDI) Final Report (FHWA 2002).  The motor carriers contacted for this study, however, indicated that time savings per bypass could reach as high as 20 minutes.  This reported estimate may have included some allowance for the small portion of weigh station stops when a truck is selected for a safety inspection, which can take approximately 30 to 60 minutes.

Table 14.  Assumptions governing electronic screening benefits estimates

Element	Value	Basis
Time savings per bypass	3-5 minutes	Midpoint of estimates provided by FHWA (2002) [2.8 minutes], Oregon Green Light Program (http://www.oregon.gov/ODOT/MCT/docs/906.pdf) [3-5 minutes], and PrePass website ((http://prepass.com/whatsprepass.htm) [5 minutes]
Annual number of bypasses	135	Based on data provided on PrePass website (http://prepass.com/whatsprepass.htm) regarding annual number of bypasses and number of vehicles enrolled in PrePass
Heavy truck operating cost	$2.16 per minute	ATA data cited by Oregon Green Light Program (http://www.oregon.gov/ODOT/MCT/docs/906.pdf) and inflated from 2003 to 2007 based on PPI
Operating cost savings per bypass	$8.68	Product of time savings per bypass and heavy truck operating cost per minute

In examining the benefits of the Oregon Green Light Program, the Oregon DOT cites ATA (2003) data estimating the average motor carrier operating cost per mile at $2.80, and average speed from point of origin to delivery at 42 miles per hour (Oregon DOT 2006).  Based on these assumptions, the average operating cost to motor carriers can be computed at $1.96 per minute.  Adjusting this estimate based on four years’ growth in the PPI (from the source year of 2003 to the current base year of 2007) results in an average operating cost assumption of $2.16 per minute for motor carriers.

The results of the electronic screening ROI analysis for 18 of the surveyed motor carriers providing sufficient data are presented in Table 15.  Table 15 matches benefit and cost estimates to company data regarding the number of states in which the motor carrier operates, whether the carrier is a truckload or less-than-truckload carrier, if the motor carrier is private or for-hire, and the number of power units equipped with a transponder.  Table 15 is sorted according to the number of power units equipped with transponders. 

The results of the ROI analysis suggest that motor carriers are experiencing significant returns on their investment in electronic screening technologies, with ROI ratios for all but one of the companies ranging from 6.1:1 to 15.9:1.  (See the company profile on page 27 to review a more detailed assessment of one company’s experience with electronic screening).  In all cases, the payback period was less than one year when an initial investment was made.  Total net benefits associated with electronic screening over the 10-year analysis time horizon ranged from $3.2 million to $219.4 million per company.  The annual net benefit per transponder-equipped truck was estimated at $1,169.

Table 15.  Results of electronic screening ROI analysis

For-Hire or Private	Number of States Operated Within	Truckload, Less-than-Truckload (LTL)	Units Equipped with Transponders	Annnual Benefit	Startup Costs	Annual Recurrent Costs	Total Present Value 10-Year Benefits	Total Present Value 10-Year Costs	ROI Ratio	Payback Period
For-Hire	13	LTL	200	233,949	-	33,600	1,895,652	272,255	7.0	N/A
Both	11	Truckload	212	247,986	-	33,072	2,009,391	267,977	7.5	N/A
For-Hire	48	Truckload	475	$555,630	-	$91,200	$4,502,173	$738,978	6.1	N/A
For-Hire	48	Truckload	500	585,108	-	72,029	4,741,025	583,637	8.1	N/A
For-Hire	48	Truckload	1,000	1,169,747	657	780,000	9,478,258	6,320,862	1.5	<1 year
For-Hire	39	Not Known	1,103	1,289,646	109,148	145,530	10,449,780	1,288,352	8.1	<1 year
For-Hire	48	Truckload	1,400	1,637,646	-	184,800	13,269,562	1,497,402	8.9	N/A
For-Hire	50	Both	1,452	$1,698,473	$1,095	$192,448	$13,762,431	$1,560,468	8.8	<1 year
For-Hire	48	Truckload	2,500	2,924,368	-	330,000	23,695,646	2,673,933	8.9	N/A
For-Hire	48	Truckload	2,900	3,392,267	-	382,800	27,486,949	3,101,762	8.9	N/A
For-Hire	15	Both	3,300	3,860,166	-	396,000	31,278,253	3,208,719	9.7	N/A
For-Hire	48	Truckload	3,395	3,971,292	-	407,400	32,178,687	3,301,091	9.7	N/A
For-Hire	48	LTL	5,589	6,537,425	-	410,000	52,971,616	3,322,159	15.9	N/A
For-Hire	33	LTL	8,550	10,001,338	-	747,700	81,039,109	6,058,483	13.4	N/A
For-Hire	49	LTL	9,000	10,527,725	4,950,000	900,000	85,304,325	12,242,544	7.0	<1 year
For-Hire	48	Truckload	9,100	10,644,699	902,279	1,277,500	86,252,151	11,253,639	7.7	<1 year
For-Hire	50	Truckload	9,800	11,463,522	-	823,200	92,886,932	6,670,247	13.9	N/A
For-Hire	48	Both	25,500	29,828,553	-	2,754,000	241,695,588	22,315,184	10.8	N/A

Two anomalous values appear in the Startup Cost column of Table 15. One carrier representative responded to Question S-6a, on one-time membership fees for electronic screening, by saying that it cost their company $550 per power unit for screening, including the cost of a toll transponder system for use in the Midwest and Northeast.  This same carrier also reported operating 9,000 power units, for a total startup cost of $4.9 million.

A different carrier reported investing $900,000 in transponder hardware (Question S-6b) plus 80 hours of labor related to deploying transponders, plus 24 hours of labor related to starting membership in screening program(s), for a total startup cost of $902,279.  No further details on these unusually high reported startup costs were obtained during the calls.  The majority of carriers responding to this survey reported incurring no startup costs for electronic screening.

The results of the electronic screening analysis suggests that large operations are able to reduce the per-unit costs associated with recurrent membership fees and transponder maintenance, thus increasing their return on investment.  Figure 4 demonstrates that motor carrier operations are achieving positive returns to scale as it relates to investment in electronic screening technology.  Note that data from one company with 25,500 power units and an ROI ratio of 10.8 was excluded from Figure 4 due to its impact on the scale of the x-axis and the visual appearance of the figure.

Figure 4.  Relationship between the number of power units and ROI ratio

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