Traffic Growth

Document Sample
Traffic Growth Powered By Docstoc
					Traffic Growth

Traffic growth on the Coquihalla is shown in the following chart of average summer daily traffic.
The Hope-Merritt section handled about 6,000 vehicles per summer day when it opened in 1986.
Volume increased to 8,000 when the Merritt-Kamloops section was completed, and then to 12,000
with completion of the Okanagan Connector.1 Total volume on the system now amounts to about
14,300 vehicles per day during the summer months – with 12,200 paid and unpaid vehicles through
the toll plaza and roughly 1,900 that use only the Merritt-Kamloops and/or Okanagan Connector
sections and do not pay a toll.2

                                 Average Daily Traffic in July and August



                                                                                  The Connector



Recent growth has been weak. Summer traffic on the Hope-Merritt section fell by an average of 1
percent per year between 1995 and 2000 and returned to 1993 levels. Volume on the Merritt-
Kamloops section has also fallen since 1995. There was strong growth on the Okanagan Connector
over the first three years of operation, but growth has since slowed to about ½ percent per year.

Average growth rates for Coquihalla traffic are shown below for 5-year and 9-year periods ending in

1. Traffic volumes are measured at Ministry of Transportation “permanent” count stations at the following
   locations: Hope-Merritt - 2.4 kilometres south of the toll plaza (station P-27-2); Merritt-Kamloops – just
   south of the junction with Highway 1, west of Kamloops (station P-21-3); and the Okanagan Connector –
   just west of Westbank (P-25-7). The dashed lines bridge years for which no count data is available.
2. As discussed earlier, the estimate of 1,900 trips that use only the Okanagan Connector and/or the Merritt-
   Kamloops section of the Coquihalla is inferred from available traffic data.

                                   Summer Average Daily Traffic

                                     Summer Avg. Daily Traffic           Traffic Increase
                                                                      Average          Average
                                   1991        1995        2000
                                                                     over 9 yrs.     over 5 years
           Hope-Merritt           11,530      12,815      12,175       0.6%             -1.0%
           Merritt-Kamloops         n.a.       9,995       9,670       0.2%             -0.6%
           Merrit-Westbank         5,540       6,185       6,325       1.6%              0.5%

There is no evidence that the weakness in Coquihalla traffic growth is caused by diversion to other
routes. As shown below, summer traffic on the Trans Canada Highway has been falling since 1995
and there has been little growth on Highway 3 since the Okanagan Connector went into service.1
Those trends do not reveal any extra-ordinary growth that might be the result of diversion from the

                                Summer Average Daily Traffic
                              Coquihalla and Alternative Routes


                                                                                   Hwy. 1
                   6,000                                                           Hwy. 3



Truck Traffic

Although overall traffic growth has been weak, there has been steady, strong growth in the number of
large trucks using the Coquihalla route. As shown below, semi-trailer traffic and other heavy truck
traffic increased by 40 percent over the 5-year period between 1996 and 2001. This growth stands
out as an apparent anomaly, and it will be important to determine what is driving that growth before
recent trends are used as a basis for longer-term traffic projections.

1. The Highway 1 data is from “permanent” count station P-27-1, located at the north end of the China Bar
   Tunnel, about 58 kilometres north of Hope. Highway 3 data is for P-26-1, located at Allison Pass in
   Manning Park.

                            Paid Traffic on the Coquihalla Highway -
                                       Total Annual Traffic
                 300                                     3,000

                 250                                     2,500
                                                                              2-axle Trucks
                 200                                     2,000                3-axle Trucks
                                                                              4- & 5-axle Trucks
                 150                                     1,500                > 5 Axles
                 100                                     1,000                Cars and RV's
                  50                                     500

                   0                                     0

In addition to outstripping growth in passenger traffic and light truck traffic, the increase in the
number of heavy trucks using the Coquihalla is out of line with developments in the trucking industry
in general.

There has been a major shift in trading patterns through the last 10 to 15 years. That shift has seen
rapid growth in north-south trade across the Canada-U.S. border with limited growth in
interprovincial trade. Although data is limited, it appears that close to half of the semi-trailer units
and other heavy trucks on the Coquihalla are moving goods between British Columbia and the other
provinces, and very little is moving to or from the United States.1 As a result, it would be expected
that any weakness in inter-provincial trade by truck would be reflected in Coquihalla traffic.
Although it cannot be directly linked to the Coquihalla, trucking activity between points in B.C. has
been even weaker than inter-provincial trucking. This is apparent in the following chart of B.C.
trucking activity and heavy truck traffic on the Coquihalla.2

1. In a 1995 survey at the Kamloops weigh scale station, about 47 percent of trucks that used the Coquihalla
   were travelling to or from another province. About 4 percent were travelling to or from the U.S., and the
   remaining 49 percent were intra-provincial trips.
2. Figures for tonnage are based on data from the Statistics Canada for-hire trucking survey as reported in
   Trucking in Canada, Catalogue No. 53-222-XIB. This does not include “private” truck traffic -- freight
   moving in trucks that are owned and operated by the owner of the goods.

                        Annual Growth in For-Hire Trucking Activity


                       300                                           Between B.C.
                                                                     To/from the
                       200                                           prairies
                                                                     To/from all other
                       150                                           provs.
                       100                                           Coquihalla heavy


There are three possible explanations for the exceptional growth in truck traffic:
1. Strong, sustained growth in one or more primary truck movements on the Coquihalla;
2. Increased congestion on other routes that has made them more expensive as truck routes; and/or
3. Diversion of truck traffic from other routes and particularly from the Trans Canada Highway.
There is no dominant, high-growth truck movement that would explain the growth in Coquihalla
traffic and we have already seen that traffic (and congestion) on other routes have not increased to the
point where traffic would be diverted to the Coquihalla. There is, however, a strong indication that
growth is linked to change in the relative cost of hauling goods over the Coquihalla and alternative
routes. Comparison of truck traffic growth with changes in the Consumer Price Index, for example,
points to a remarkably close relationship between price/inflation shifts and truck traffic on the

                                Growth in Truck Traffic and the CPI

                 250                                           130
                 200                                           120
                 150                                           110           4- & 5-axle trucks
                                                               105           6+ axle trucks
                 100                                           100           B.C. CPI
                  50                                           90
                   0                                           80

This relationship suggests that the rapid growth in truck traffic represents a diversion from other
routes. That diversion could be driven by:
1. The effective reduction in highway tolls that has taken place since 1987. (Tolls have remained
   unchanged since 1987, effectively reducing them by 25 percent and making the Coquihalla more
   competitive with alternative routes.)
2. Increases in time- and distance-sensitive costs (e.g. fuel and labour) that have “forced” drivers
   who prefer driving conditions on the TCH to use the Coquihalla for all of their trips or whenever
   traffic and weather conditions are favourable.
In either case, the rapid increase in truck traffic suggests that the split of truck traffic between the
TCH/Fraser Canyon route and the Coquihalla is highly sensitive to cost.1 If this is the case, toll
increases would tend to dampen or reverse traffic growth and could, at some point, produce a net loss
of revenue. This also raises the question of how much truck traffic is susceptible to diversion onto the
Coquihalla. (Little data is available on the division of traffic between the Coquihalla and the TCH.
As noted earlier, however, surveys carried out in 1988 suggest that 65 to 70 percent of traffic was
using the TCH route at that time. Seven years later, 1995 surveys indicated that the TCH share had
fallen to 50 to 60 percent.)

Assuming that the shift has continued at the same rate, the TCH would now be carrying only 35 to 45
percent of truck traffic in the Vancouver-Kamloops corridor. Some of this truck traffic is “tied” to
the TCH because it serves shippers and consignees along the route or because of the nature of the
loads (e.g. heavy loads that may be more difficult to haul over the long, steep grades on the
Coquihalla). All of this suggests that the rapid growth that has been experienced over the last 15
years may “bottom out” in the foreseeable future – even if toll charges for truck traffic continue to
fall. In any event, it is clear that forecasts of truck traffic and related toll revenue cannot be
determined by simply projecting recent growth.

Passenger Vehicle Traffic

Travel markets can generally be related to indicators such as population, GDP or other measures of
economic activity, or growth in the tourism market. As shown below, however, no clear relationship
can be drawn between these measures and passenger-vehicle traffic on the Coquihalla.

Growth rates on the Coquihalla have generally fallen behind population growth. This is illustrated by
the following comparison of population and passenger vehicle traffic on the Hope-Merritt section of
the Coquihalla Highway. As shown, traffic volume during the summer months generally followed
population growth from 1991 to 1995 but fell off sharply between 1995 and 1997. While traffic
lagged, population of the Central Okanagan grew by about 35 percent between 1991 and 2000. In the
Thompson-Nicola region (and the province overall) population increased by about 20 percent over
that period. Passenger vehicle traffic on the Coquihalla increased by only 10 percent.

1.   This shift occurred during a period of intensifying competition in the trucking industry, forcing trucking
     companies and owner/operators to put increasing emphasis on cost control.

                                  Passenger Vehicle Traffic
                                   and Population Growth

                                                                       Annual pass.
                      130                                              veh. traffic
                      120                                              Okanagan RD
                      110                                              Nicola RD



Several observations can be drawn from the information shown in this chart:
-   Traffic volumes generally followed the growth in Okanagan Valley population between 1991 and
-   There is an apparent relationship between traffic volume and population growth once again
    between 1996 and 2000.
-   Other factors have had a strong impact on traffic growth – by producing a peak in 1994/1995 or
    by triggering a sharp decline in 1996.

Much of the traffic on the Coquihalla is long-haul, inter-provincial traffic, and one might expect to
find a strong relationship between traffic volume and population or economic activity in other
provinces. As shown in the following chart, traffic volume has generally followed population growth
in Alberta and Ontario. However, it is clear that growth trends in other provinces do not explain the
1994/1995 peak in traffic or the sharp decline that occurred in 1996.

                                       Passenger Traffic
                                and Population in Other Provinces

                                                                         Annual pass.
                                                                         veh. traffic
                          115                                            Alberta
                          105                                            Sask. & Man.

A similar review showed that fluctuations in Coquihalla traffic are not related to GDP or tourism
activity (as measured by tourism room revenue). Clearly, Coquihalla traffic has been affected by
other factors.

The peaking and decline of traffic in the mid-1990’s was a year-round occurrence rather than a sharp
increase and decline in traffic during the summer months. This is apparent in the following chart of
monthly traffic volumes over the 13-year period from 1988 to 2001.1 Apart from a periodic shift of
traffic between July and August and a few “spikes” that likely were caused by road conditions on the
Coquihalla or alternative routes, the year-to-year pattern is relatively stable. The general absence of
peaks and valleys in this chart suggests that heavy traffic volumes in 1994 and 1995 were not caused
by short-term factors or major events such as the Commonwealth Games. (Growth trends and
seasonal patterns are explored in greater detail in Appendix 3 for each vehicle class.)

1. Includes all paid traffic.

                          Monthly Traffic as a % of Annual Traffic


                  16                                                                   Jan
                  14                                                                   Mar
                  12                                                                   Apr
                  10                                                                   June
                   8                                                                   July
                   4                                                                   Oct

In most cases, other travel modes and the quality of service they provide have little effect on highway
travel. However, there is evidence that this is not the case on the Coquihalla and that airlines can and
have drawn traffic from the highway mode.

When the Coquihalla Highway and the Okanagan Connector were opened, they both had an
immediate effect on airline travel between Kamloops and Vancouver and Kelowna and Vancouver.
Airline traffic from Kamloops and Kelowna fell in 1987, and there was a further sharp decline in
traffic through Kelowna Airport in 1992.1 The new highway shifted the balance between highway
and airline travel and made it more attractive to drive to Vancouver to conduct business or connect
with long-haul flights.

The competitive position of the highway shifted once again when WestJet began offering airline
service from Kelowna at rates that were far below those offered by Air Canada and Canadian
Airlines. WestJet’s service to Vancouver started at the end of February 1996 and Victoria was added
to the system one month later. This new style and standard of service established an entirely new
market for social/recreational airline travel and undoubtedly had an effect on Coquihalla and
Okanagan Connector traffic volumes.

Westjet has upgraded its service since 1996. By February 2002, it was operating 35 flights per week
between Kelowna and Vancouver and the Island at rates as low as $57 one way.2

1.  ‘External’ Traffic on the Trans Canada Highway: Kamloops to the Alberta Border, Actran Consultants et
    al for the Ministry of Transportation and Highways, 1998.
2 . As one indication of airline/highway competition, WestJet’s current advertisements in the Vancouver press
    carry a “leave the driving to us” message and refer to winter driving conditions and tolls on Coquihalla.

                        WestJet Service to Vancouver and Vancouver Island

                             Route            Flights per   Number of        One-way Fares
                                                 Week         Stops
                    Victoria-Kelowna               9            0                $72 to $86
                    Kelowna-Victoria               7            0                  $119
                    Comox-Kelowna                 11            1                  $120
                    Kelowna-Comox                  2            1                  $165
                    Vancouver-Kelowna             31            0                $57 to $85
                    Kelowna-Vancouver             26            0               $57 to $105
                    Source: WestJet’s web site.

WestJet is also well established in the Vancouver-Calgary/Edmonton market. With 62 non-stop
flights per week from Vancouver to Calgary and 32 per week to Edmonton with $150 fares, WestJet
may also be diverting long-haul B.C.-Alberta traffic from the highway system.1

The following chart shows that the 1996 drop in Coquihalla traffic coincided with the start-up of
WestJet’s operations. No information is available on WestJet’s traffic volumes on particular routes.
However, passenger volumes at Kelowna Airport increased by about 500,000 people over the 5-year
period between 1994 and 1999 while the number of passenger vehicles on the Coquihalla fell by
125,000. If half of the increased airline traffic was destined for Vancouver and the Island and the
average passenger vehicle on the Coquihalla carries two people, then the 5-year increase in airline
travel is roughly equivalent to the traffic that was lost from the Coquihalla.

                                         Shifts in Highway and Airline Travel

                              1                                             3

                            0.8                                             2.8

                            0.6                                             2.6               Kamloops a/p
                                                                                              Kelowna a/p
                            0.4                                             2.4               Coquihalla

                            0.2                                             2.2

                              0                                             2
                                  1994 1995 1996 1997 1998 1999 2000 2001

With this background, it appears that the mid-1990’s downturn in Coquihalla traffic may be the result
of competition from the airline industry and particularly from WestJet. Considering the fact that
traffic growth on the highway has generally followed population growth since 1997, it appears that
population may provide a sound basis from which to project passenger traffic on the Coquihalla –
with appropriate adjustment for airline competition. Factors to consider include: WestJet’s ability to
maintain its current cost structure; the effect of new or increased taxes and fees on airline travel (e.g.

1. February 2002 from WestJet’s web site.

for airport security); the prospect for low-cost airline service to Kamloops at some point in the future;
and the effect of any change in highway tolls.

As a further consideration, it will be important that any long-term, population-based projections take
account of demographic change and the extent to which travel habits may be affected. The extent of
those changes is apparent in the following chart of “dependency ratios” – the number of people of
“dependent age” per 100 of “working age.”1 As shown below, a substantial shift is expected as the
population “ages” in B.C. and across Canada. Today there are twenty people over the age of 65 for
every 100 of working age in B.C. In 25 years, there will likely be 35 for every 100. Changes of this
magnitude will have a marked effect on travel habits and highway use.

                                           Dependency Ratios

                           25                                                B.C. Elderly
                                                                             Canada Elderly
                                                                             B.C. Child
                                                                             Canada Child
                                2001 2006 2011 2016 2021 2026

1. Definitions for the B.C. and Canada statistics are not the same. The B.C. child dependency estimates are the
   population aged 0 to 17 divided by the population aged 18 to 64 whereas the Canadian figures use 0 to 14
   and 15 to 64. The elderly dependency estimates for B.C. use 18-to-64 as “working age” while Statistics
   Canada uses 14 to 64. Sources: BC Stats population forecast 01/04 and Population Projections, 2000-2026,
   Statistics Canada Catalogue 91-520.