“Demand Management”, “Supply Utilization”, and “Supply Optimization”Next Generation Transportation Policy Discussions and Research

3G Mobility January 6, 2010Transportation policy debates and research have traditionally focused on new supply (addingcapacity), rehabilitation, reconstruction, maintenance, operations, etc. Only in recent years hasthe conversation started to shift to customers and end use. The most prominent of thesemovements has seen the rise of concepts such as “demand management”, “land use”, and“transit-oriented development”. Beyond end use, the conversation is shifting even towardrelationships with other, traditionally separate, considerations—such as the environment,resource use, health, and communities. All of this, I believe, is part of a “next generation of transportation” that is moving us beyond traditional transportation, to becoming smarter abouthow we can both a) improve the physical transportation infrastructure and design, and b) usewhat we have efficiently, and manage the system better.How do we make transportation faster, more accessible, cost-effective, ecological, resourceful,environmentally responsible, and better integrated both between modes and also with ourcommunities? How do we improve the infrastructure (from roads, rail, and paths, to vehicles)?And, how can we better approach the system/network to achieve efficiencies and operate best?I believe that one important nuance still missing within the emerging progressive transportationpolicy discussions is “supply”. The point is that for economically efficient outcomes, we need toconsider both demand and supply. Consider that even if demand does decline or is managedlower, what are we doing with the supply?! This is the point. And whether we increase ordecrease supply is missing the entire issue of whether we are even utilizing what we already have,and whether our supply is optimally-oriented.Regarding supply, the purpose of this paper is to introduce two new concepts that should beconsidered throughout transportation, both a) in policy discussions and debates; and b) by TRB indetermining research needs. The two concepts are “supply utilization” and “supply optimization”.

Supply Utilization

: Putting existing supply to use (more of a unit-by-unit approach)Supply utilization is working on strategies to use the supply that we already have. Utilizationmeans simply "to put to use". For example, consider our buses. On many routes, and many timesof day, buses are running near empty. There is a lot of available supply. Supply utilization asks:how can we

attract

riders to utilize the empty seats?Another example is cars. In the U.S., about 76% of commutes are in a single occupancy vehicle. Onaverage, this implies nearly 3 empty seats on these trips. Looking at all car trips in the U.S., the

average number of people in the car is 1.63. This implies about 2 empty seats in every car trip.

Any way you slice this, with about 4 trillion vehicle miles of travel every year this is a lot of existingsupply for transportation.Instead of thinking in terms of managing demand the real question here is: How can we utilize thissupply? That is a very complex question in need of a lot of analysis and research. Reinventingcarpooling is definitely one place to start. And the benefits of carpooling can compound as the useof supply in vehicles opens up available space on crowded highways. Another way to look atutilization is that it is essentially finding, even creating, demand to fill existing supply.

Supply Optimization

: On a system-level, running efficiently, making better useSo now that we have considered how to utilize the supply that we have, the related step is toconsider how to optimize transportation supply. Conceptually, to me, optimization implies abroader system-level approach. How do we make the transportation system the best and mostefficient possible? Optimization means simply “making the best of anything and using mostefficiently”. So whereas optimization is simply

using

, optimization is

using the most efficiently

.Great, we can utilize the passenger space and share a ride, but how can we now optimize thatride share? Another example, sure, we can utilize the available right of way by adding HOV lanesbut how then can we optimize that solution? Where should the HOV lanes start and end? And willthat lead to improved, free traffic flow? How do the lanes integrate into the broader system?What are the rules and restrictions to using the HOV lanes? These are topics we are of coursediscussing in transportation; just that the concept of transportation/supply “optimization” mightattract different minds and better solutions.Regarding buses, maybe it is not optimal to run buses on certain routes, and/or at certain times,until it is known that the demand is there. Optimization is an approach readily adopted in supplychains. In this respect, optimization for buses can also mean analyzing the transportationnetworks (maps) and studying how to fix bus routes to make them the most efficient—matchsupply to places people are most likely to want to use the bus. Even create demand by optimizingroutes. Thus, supply optimization is about efficiency.

Next Steps

It is not that these efforts are not going on. They are. Of course we are trying to utilize supply andoptimize the transportation network. We just have to do more. And we need to be thinking about“supply”, “supply utilization”, and “supply optimization” more directly.

Of course, some cars have just 2 seats (meaning room for just one passenger), while some SUV’smay have room for more than just 3 passengers. Not to mention your work bag or car seat thatcould be taking up space!