T0653 TLAB3009 Freight Wider Economic Impacts Study

Transport infrastructure investments are appraised using the Transport Analysis Guidance (TAG) framework, primarily capturing welfare impacts through user benefits derived from transport modelling. While these benefits typically reflect the welfare effects of transport investments, market distortions can result in additional Wider Economic Impacts (WEIs). Currently, TAG assumes a fixed freight demand for Heavy Goods Vehicles (HGVs) in future years, with cost estimations focused on journey time, fuel, and other charges. Road Freight-related WEIs (FWEI), including Employment, Induced Investment, and Productivity (Agglomeration), are incorporated under TAG but often rely on generalized assumptions, such as a 13.4% uplift in freight benefits to represent induced investment. There is growing interest in exploring areas where TAG could further develop its approach to capturing FWEI going forward, such as: 1) Considering dynamic effects, like the reorganisation of distribution centres to serve broader markets. 2) Examining how freight sectors respond to improvements in reliability and fuel cost savings compared to time savings, which could shift freight patterns. 3) Differentiating between urbanization and localization agglomeration effects to better reflect freight clustering dynamics. This presents an opportunity to refine TAG methodologies and provide a more comprehensive appraisal of road freight-related economic impacts. Through the successful completion of this project, Department for Transport aims to strengthen transport investment business cases while addressing key research questions aligned with the DfT's five strategic priorities. Key research areas within the broader DfT Strategic Priorities that align with this project include: