Exploring the Use of Systems Dynamics for the Valuation of Freight Transport Time Changes

This article aims to explore the use of System Dynamics modeling as a tool to assess the impact of changes in Freight Transport Time (FTTC) on transport companies. After conducting a thorough literature review, it became clear that there is no consensus on the appropriate methods used, and the estimates of freight travel time values vary significantly. The two primary tools currently employed in Benefit-Cost Analysis (BCA) to estimate the value that shippers and carriers place on FTTC are the Factor Cost and Willingness-to-Pay methods, akin to valuing travel time changes in passenger transport. However, due to the distinct characteristics of freight transport, traditional methods are less effective in accurately gauging FTTC values. In this paper, we adopt a methodological stance grounded in Systems Thinking. In contrast to existing methods, which primarily rely on event-oriented thinking and perceive freight transportation as an activity isolated from the broader company ecosystem, we consider the interconnections between freight transportation and other business operations. Lastly, to demonstrate the application of the Systems Thinking approach, we utilize Systems Dynamics modeling and simulation in a typical retail company that forms part of a traditional supply chain to determine the value of FTTC.