A Cost Model for European Road Transportation

Purpose: The purpose of the research is to setup a new cost function for road transportation in Europe. With the help of this function, companies who are buying transport should be able to estimate freight forwarder’s offer in order to check if they pay the right amount quickly. Hence, the cost function aims to provide an overview about cost in different European countries. Methodology / Approach: The research has a pragmatic philosophy since quantitative data and the author’s view are used. Due to the reviewing the literature and renewing it by investigating linkages the purpose is explanatory. Because of t using quantitative data and the author’s perspective, the research is both inductive and deductive. The strategy is based on a survey which is self-completed by internet-mediated and dichotomous as well as a secondary data analysis to support the findings. A hypothesis test is used to test the usability of the new function. Findings: In the present literature, there are many functions and models aiming to provide an overview of transportation costs. However, there is no particular estimation model for buying companies and none which takes country-specific cost difference into account. Most functions distinguish between time-related and distance-related cost components which are either fix or variable. The most common cost variables are fuel, labor, maintenance & repair and capital cost. Those add up to a total cost which can be expressed as a cost price per kilometer. Furthermore, there difference among countries which are based on those costs variables. In Europe, toll charges are different as well as fuel prices differ and labor cost are unequal. Practical implications: The new cost function is separated into two main cost parts: First, a time-related cost for the driver’s wage which includes loading time and the actual driving time. And secondly, a distance-related cost component which takes the truck expenses per driven distance into account. Both cost parts can be discounted by several reasons in order to meet cost difference between countries or truck usage. Originality / Value: As already detected in the findings, the previous functions are not really applicable to estimate costs for transport buyers. Therefore, this study produces a new view on road transportation cost to estimate transportation costs. By splitting the function into time- and distance-related cost, the function follows some theories but by adding European-specific discount rates, the function becomes unique. Further research: Further research might be interesting to extend the function to more European countries. Variables such as fuel price or toll costs are quite easy to identify but wages or material cost are harder to build in the formula. Also, it is of interest to research the possible to integrated short distances. Furthermore, the function is only applicable to fully loaded trucks. Hence, it is worth adding a factor for less-than-truckload transports. Another interesting field of research is the investigation of a discount rate for round trips. Usually it is regarded, that the back trip is around 80% of the actual price because of less opportunity risk due to fully utilized back transport