Freight and Passenger Modeling Using Hybrid Econometric–Network Models

The experience of the past several years for toll roads in the Americas and Europe has been sobering, with generalized declines in traffic after years of consistent growth. The twin effects of high fuel prices and economic recession have resulted in year-over-year traffic declines for some facilities of well over 10% and in some instances as much as 20%. Analysis suggests that the focus of passenger and freight traffic modeling needs to include the impact of economic variables more comprehensively, because this area is responsible for substantial variability and economic risk to a project's financial returns. This risk is greater in the case of freight traffic, which is more prone to economic cycles than passenger traffic. This paper describes an approach that incorporates both econometric models (which explicitly model the relationship between economic variables and traffic) and network models (which account for changes in the network and relative congestion on alternative routes). The paper illustrates several examples of mature facilities for which the risk from economic uncertainty far outweighs the risk from network changes. The principal focus of the paper is a description of how network and econometric models can be combined into a single model, with an assessment of how this combination results in improved forecasting tools. Case studies are included to outline the settings to which combined models are most readily applied, and calibration results are reported to illustrate the soundness of the approach.