Common Problems of Lost Toll Revenue

Aug. 14, 2023
How technology is helping toll collections

By Jessica Carson and Walter Fagerlund, Contributing Writers 

Toll agencies across the nation share common commitments to safety, mobility, environmental stewardship, and customer service. Increasing adoption of all-electronic tolling (AET) has delivered significant advantages to help toll authorities fulfill that strategy and mission. Among AET’s benefits are increased customer and worker safety, reduced congestion and emissions, and a better customer experience.

AET has become the United States’ preferred toll collection method, with about 60% of the nation’s tolling agencies using the technology. But without a cash payment option, AET‘s reliance on post-travel identification and invoicing of drivers who go through a toll facility without a transponder or registered license plate connected to a valid toll account has introduced a new challenge of lost revenue.

Toll agencies face several potential challenges prior to the issue of customers paying the bill:

  • Toll facility cameras sometimes cannot obtain readable license plate images, most often due to customer related issues;

  • A department of motor vehicles may not have or be authorized to provide an address associated with a readable license plate image;

  • Outdated addresses make invoices undeliverable. 

When these three hurdles are cleared, the largest source of loss occurs when the vehicle owner receives their bill and decides to not pay the toll, forcing the tolling agency to invest time and money in pursuing collection of the debt.

Recognizing these concerns, which all toll authorities experience to some degree, the International Bridge, Tunnel & Turnpike Association (IBTTA) established the Lost Revenue Task Force in 2020. IBTTA is the global association representing toll operators and the businesses that serve them. The association’s 2020 president, Mark Compton of the Pennsylvania Turnpike Commission, proposed the initiative to bring the industry together to openly share information, define the problem, identify solutions that improve revenue collection, and apply best practices to close the revenue gap.

The task force objectives are to: 

  • Drive toward higher-revenue-guarantee products (such as transponders); 

  • Identify a range of products based on customer needs and equity (alternatives such as registered license plate-based accounts); 

  • Minimize low-revenue-guarantee products (such as unregistered customer invoices by mail); 

  • Minimize or eliminate sources of lost revenue; 

  • Share ongoing best practices from industry peers; 

  • Look to the past for lessons learned from peers; 

  • Look toward the future to ensure proper focus and planning;

Committee members include U.S. and international toll agency representatives, as well as industry consultants and vendors, both domestic and global. IBTTA also holds a “Global Tolling Summit” each year to ensure the showcasing of best practices is not limited to just the United States.

Quantifying Lost Revenue with Technology 

Initial work by the task force began with gathering benchmarking data and establishing a common language for toll agencies’ transaction sets – for example, the percentages of vehicles that are paying to drive on a toll road, across which types of products, the percentages of vehicles that fail to pay, and the common reasons for non-payment. 

All transactions were then divided into a “stack” of four categories, recommended by the task force to drive the data:

  • Those that experience lost revenue that could be eliminated or minimized;

  • High loss, low-guarantee products that can be minimized;

  • Medium guarantee products that can be right sized to fit regional customer preferences;

  • Highest guarantee, lowest-cost products that can be maximized;

Using lessons learned from the initial work, IBTTA, in cooperation with the Lost Revenue Task Force, created an online technology tool, RevFinder. The online tool provides the participating agency with a rapid initial operational self-assessment to identify the magnitude of revenue losses.

As users answer a brief set of questions, RevFinder builds a visual data stack and customizes it to the agency’s operating conditions and collection practices. Each question relates to one element of the revenue collection process and translates back to a common denominator of percentages of total transactions. With this common base, toll authorities can compare time periods within their own operations or compare with applicable peer operators’ results. Removing the volume and revenue components of the measures keeps the focus on comparable operational efficiencies.

Answers to the questions lead to two big-picture metrics that apply across the industry:

  1. Overall effectiveness: the percentage of overall transactions that realize revenue for the toll operations. This is the big-picture view – of all vehicles that drive the road, how many paid?

  2. Invoice effectiveness: the percentage of transactions that realize revenue within the subset of transactions that depend on identifying the customer and sending an invoice for payment. This metric provides a view into the most challenging form of toll collection – how well is the invoicing process performing?

RevFinder provides a starting point for operators to view an initial big picture of their revenue collection performance, which could lead to further self-performed deeper analysis into revenue accounting and other financial assessments to provide a detailed picture of where they stand.

Improving Revenue Collection with Industry Best Practices 

Besides gathering aggregate toll agency transactional and revenue collection data – which has never been done before – the Lost Revenue Task Force wants facility operators to learn from each other. The foundational perspective is that all agencies can benefit from collaboration and the breakdown of silos.

To help toll operators solve the lost toll revenue problem within their own organizations, RevFinder links each element of the revenue collection process – from license plate readers to mailed invoices –to a resource library of best practices identified by the task force. These best practices allow toll agency operators to review similar agencies’ most successful approaches. They then can identify both easily implemented and more comprehensive changes they might make to positively affect revenue collection. These links to best practices also support further dialogue between fellow agencies and operators, strengthening the industry to solve these common challenges together.

Potential for Broader Industry Impact

As technology evolves and the potential to solve the toll industry’s lost revenue problem increases, IBTTA’s Lost Revenue Task Force has expanded. Beginning with around 20 members, the task force is now comprised of approximately 60 transportation industry professionals. Task force members believe that, over time, the initiative could provide benefits beyond the toll industry.

Using the RevFinder technology, toll agencies will find better ways to collect revenue and improve collection performance. To build and maintain a reliable national roadway network, the transportation industry wants long-term solutions to replace dwindling gas tax revenue. The situation requires new ways to collect revenue from electric and alternative fuel vehicles and from gas-powered vehicles with dramatically increased miles-per-gallon efficiency. The public acceptance of the concept of user fees as shown in lessons learned from the tolling industry and early road user charge pilots provide a pathway to these future solutions. RevFinder helps to optimize user fee collection to support the path.

IBTTA and the Lost Revenue Task Force are committed to taking the data and best practices produced by the inputs to RevFinder and using that information to create a body of knowledge based on operational self-awareness, transparency and cooperation. This industry collaboration to solve a complex, common challenge like lost toll revenue also may inform road-user charging and other fee-based transportation issues, so that the industry can be forward-thinking and more resilient and infrastructure funding can be more sustainable. R&B

Jessica Carson is the E-470 Public Highway Authority Director of Public Affairs and Co-chair, IBTTA Lost Revenue Task Force.

Walter Fagerlund, is the HNTB Director of National Toll Technology Consulting Practice and Member, IBTTA Lost Revenue Task Force.

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