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Sunday, 10 December 2017

Should we lay down more asphalt in The Netherlands? Or should we think about different, more efficient delivery methods for trucks and delivery vans in order to reduce the amount of traffic?!

The call for more asphalt in The Netherlands, in order to mitigate the damage caused by the current large traffic jams, is at least partially driven by the ubiquitous ‘Just In Time’ delivery method for factories and stores. Even though JIT is very successful as a way to reduce the safety stock for companies and stores, it should not be a logistical dogma, as it has some sturdy drawbacks that rear their ugly heads in this time of year.

Last Friday, the Dutch newspaper Telegraaf printed an alarming news message about the 'cost for society' of the daily traffic jams in 2016, with respect to the road transport. 

"Over one billion of euro’s in economic damage" was caused by these traffic jams in The Netherlands, according to a spokesman of Transport and Logistics The Netherlands (TLN) in The Telegraaf:

The economic damage, caused by delays in road transport, has [in 2016 - EL] increased by roughly €100 million to a record level of €1.2 billion. In order to turn the tides, more asphalt is very necessary.

This becames clear after research, executed by TNO and commissioned by Transport and Logistics The Netherlands (TLN). The data are presented on this Friday.

“These are alarming results and we therefore urge the Cabinet to carry through the mitigation of the traffic bottlenecks at the highest possible pace”, according to TLN chairman Arthur van Dijk.

“On a number of routes more asphalt is very necessary and at the same time we want a number of new roads to be added to the investment program of the State – MIRT”.

The rest of the article consists of a description of the presumed financial damage that is caused by overtime delivery. One snippet is standing out here:

In the so-called Economic Roadmap (i.e. Economische Wegwijzer), it has been calculated which were the most expensive traffic jams for companies  in The Netherlands. 

Van Dijk: “Traffic jams not only cause annoyance, but also substantial financial damages for the whole logistical chain. Delays during the shipping process cause the required supplies to arrive too late in the stores and factories. This strongly delays the whole production process”.

Before I will give my opinion about this plea for more asphalt in The Netherlands by Arthur van Dijk, I want to take ourselves back to 2011, when the mortgage crisis had just grown into the longlasting economic slump that we came to know as the Great Recession of the 21st Century. It was one of my early articles:

The combination of increased road transport and passenger traffic led to roads and highways that were constantly overcrowded.

After the beginning of the credit crisis (in The Netherlands mid-2008), however, one could notice a clear decrease in the number of trucks on the road. Less visible but probably even more important is the substantial decrease of the average number of driven kilometers per car since 2005.

As a consequence there has been a dramatic decrease of the number and length of traffic jams in 2009, that is not at all compensated in 2010. Although the official figures from the CBS about road transport in 2010 are only presented in December 2011, a prognosis based on the core data of SME (Small and Medium Enterprise) showed an increase of 3.5% for road transport (see graph 1). This is clearly growth, but the total is still well under the total of 2007, the last year before the credit crisis.

Looking at the transport growth figures over the last three years (see graph 4), it shows clearly why the highways were less crowded, with especially 2009 being a disastrous year.

This brief view back into the economic situation of 2011 shows that the current traffic jams – irrespective of how damaging and annoying they are for the chauffeurs, the logistical companies and the big retail and wholesale companies – are first and foremost a sign of the longlasting economic growth and resulting success for these same companies after the recession.  

This is shown by the following chart, based upon data of the Dutch Central Bureau of Statistics. 

The development of truck transport and courier activity since 2005
Data courtesy of
Chart by Ernst's Economy
Click to enlarge
When the roads seemed much less crowded during the early crisis years (2008 – 2011), that came because they WERE much less crowded. 

Both the number of trucks and delivery vans, as the number of passenger cars were reduced in those difficult years. This happened as a consequence of the diminished economic activity, as well as the mounting unemployment in those years. 

Those crisis years are definitely over for the transport and logistics companies...

This is clearly shown by the growing numbers of trucks and other means of (goods) transport on the road (i.e. delivery vans and minivans of freelance construction workers). This in spite of the fact that it sometimes seems differently for the average lower and middle class people, who still not seem to be out of the crisis yet. 

Many lower and middle class workers are still struck by a challenging labour market and stable or even diminishing purchase power, due to the tax increases during the last 7 years. But for transport and logistics companies the acute economic crisis is already finished for years.

The question now at hand is, however, whether we should meet the desires of the transport and logistics companies – as expressed by the spokesman of TLN  to lay down enough asphalt to meet the growing road transport demands for the future.

Apart from the infrastructural, nature and environmental challenges (“Is this small and already densely populated and quite polluted country meant to be a country for the people to live in or solely for the companies to build their business upon?”), there is the following very important question:

Are we already close to ‘peak transport’ (i.e. a natural "ceiling" in the now growing need for transport and logistics) or are we only at the beginning of a longterm period of economic growth, that will lead to much, much more road transport in the foreseeable future?!

And also this question: Is it not bad infrastructural planning and execution to create a massive road grid in The Netherlands, especially for the (indeed traditionally disastrous) months September – December? Months that stand out, due to their difficult weather situation with much rain, snow and wind, alltogether causing dense traffic and hence traffic jams? Or with their upcoming national holidays (i.e. Sinterklaas and Christmas), that bring their own logistical challenges? 

This question is especially topical, as during the remaining months of the year (January - August) the traffic is normally far, far less problematic for both trucks and passenger cars. 

Everybody, who drives to his work in the spring and the summer, understands what I mean! Traffic jams are mostly non-existent and when there, they are mostly provoked by car accidents, police speed traps and road works!

I think ‘we’ (i.e.The Netherlands) should not create such a monstrous road grid in our country, as this inevitably leads to a deteriorating living situation for most Dutch citizens, due to the expansive traffic and the accompanying exhaust and noise pollution. According to myself, we should first and foremost look to the few notorious intersections, where the situation is dramatic throughout the year and can be improved quite easily.

The addition of new asphalt to the already vast and dense array of highways in The Netherlands is in most cases only a temporary solution for an eternal problem, as it only discloses the next bottleneck and congestion-prone spot on the roads. And more and better roads often provoke further growth in (fossile fueled) traffic, that in the process tends to drive with higher average speeds, due to wider and better roads.  

And there is something more...

In the Nineties, there has been the worldwide rise of Just In Time delivery (i.e. JIT), as the panacea for the logistical problems of factories, distribution centres and (large) stores.

Instead of factories and individual stores keeping up large warehouses and storages in order to maintain the necessary stock for their production and sales process, the stocks were minimized dramatically, thanks to Just In Time delivery.

Stocks were closely monitored by the Enterprise Resource Planning (computer) systems of such stores, distribution centres and factories and as soon as certain thresholds in the stocks were reached (i.e. below the established ‘safety stock level’), a purchase order was placed to replenish the stocks within an agreed, relatively short amount of time. A truck or delivery van came running in that brought the necessary parts in time to let the sales or production process run unhampered and without delays.

This JIT delivery method dramatically diminished the necessary safety stocks for factories and stores and henceforth moved the costs for maintaining storages and warehouses from the companies itself to their suppliers and logistical partners, that were bound by very strict contracts.

The factories, distribution centres and stores were extremely happy with JIT, as their safety stock diminished strongly and so did their risks with respect to stock challenges (a.o. theft, fire, loss and unsaleable out-of-fashion stock).

So all is well that ends well?! Not for every aspect... 

As JIT urged the delivery of products and semi-manufactured goods at exactly the right time and in exactly the right amount, this led to more traffic of trucks and delivery vans; much more traffic, as a matter of fact.

There is quite a difference between trucks loaded to the brim with products and semi-manufactured goods for one particular company (i.e. factory or store) at one particular spot (i.e. warehouse or storage) at one hand and trucks that are either loaded with only a few products or semifabricates for one company or with goods for twenty-odd delivery addresses at the other hand. 

In both latter cases, JIT is here less efficient than the first mentioned 'old fashioned' delivery method.

Fully loaded trucks for one particular delivery address, with only a limited number of kilometers to drive, are much more efficient than half-loaded trucks or trucks (delivery vans) that have to deal with a large number of delivery addresses.

To these eyes, this is the fatal flaw of Just In Time delivery: less efficient delivery per truck or delivery van requires more trucks and delivery vans for the same amount of goods and semi-fabricates delivery and hence to more traffic on the road.

So where JIT is the most efficient delivery method for the receiving parties, as it reduces their cost of stock, it is definitely not the most efficient delivery method for the shipping companies, as it increases their amount of trucks and delivery vans and thus the traffic in general.

Whether stores, distribution centres and factories should maintain their JIT as the most efficient delivery method for them, or should be pushed by politics to keep up larger stocks in their own warehouses and storages, in order to reduce the number of trucks on the roads, is a political question. But it is a very important question to these eyes.

It is an undeniable fact that the roads are (over)crowded with trucks and delivery vans during the last months of the year, especially when one takes the more difficult traffic situation on the roads into consideration.

However, it is much too easy to just throw down extra asphalt, in favour of the transport and logistics companies, in order to solve this problem the easy way.
This country and especially its citizens won’t really benefit from this extra asphalt at all.

To these eyes, it is much better to look at more efficient ways of delivery, that reduce the necessary number of trucks and delivery vans, while eventually maintaining the current service level for factories, distribution centres and stores. 

This is a social, political and economic problem that should be solved by politicians and economists. Not just by infratructural construction companies alone.

1 comment:


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