Traffic downturn widespread but holding at 3% to 6% down many places, worse in CA, FL

Macquarie's diverse tollroad holdings and their quarterly reporting provide a convenient sampling of toll traffic trends to start with. September quarter (Q3) data they've just released show the biggest decline in the commuter-heavy barrier section of the Indiana Toll Road with average daily transactions 81k 2008Q3 (third quarter) vs 105k 2007Q3 or a drop of 23%. By contrast transactions on the long rural ticket system are hanging in, level-pegging last year at 29k/day. Revenue is 5% up because of toll rate increases at an annual $170.5m vs  $162.4m 2007Q3.

M6Toll in Birmingham UK is down big time too - traffic at 43k/day 2008Q3 vs 49k 2007Q3 or 12% lower, but revenue is only down 1% to 62m pd annual vs 62.7m pd the same quarter last year.

Chicago Skyway is down 6.1% from 55k ADT in 2007Q3 to 52k this year. With strong toll increases revenue is up 24% over last year at an annual rate of $72.3m vs $58m 2007Q3.

In Virginia Dulles Greenway is down 4.3% to 52k tolls/day vs 55k/day 2007Q3. Without a toll increase in that time revenues are down by a similar amount, 4.0% to an annual $56.2m from $58.4m last year.

APRR Autoroutes Paris Rhin Rhone measures traffic by vehicle-km traveled. Light vehicles are down 2.5% to 5.25m and heavies (tractor trailers etc) are down 3.5% to 823k from 852k. Revenue is level pegging at E181m/yr following toll increases of similar 3% to 4% proportions to the traffic declines.

407ETR in Toronto saw traffic vehicle-km  in 2008Q3 at 613.6k down 1.1% on the 620.5k 2007Q3. By trip numbers - it's an all-electronic ticket system - daily traffic grew a tad (0.7%) to 324k from 322k 2007Q3. Toll revenue was running at C$607m 2008Q3 vs C$575m in 2007Q3. an increase of 5.5% because of solid toll rate increases early in the new year.

Australia patchy

Westlink M7 in Sydney a new western peripheral road does well adding 5.6% to traffic 2008Q3/2007Q3 with revenues up 11% to A$180m annual rate. (Can't Australians build a road without naming it XYZ-Link?)

South Bay Expressway in San Diego is not a year old yet so there are no year-over comaprisons but it's doing a modest 26k tolls/day and bringing in $21.2m/yr in tolls.

The Lusoponte bridge in Lisbon Portugal is down in single digits, while the Warnow Tunnel in Germany that Macquarie has written off totally as an investment level pegs at 11k/day.

Away from Macquarie now the Pennsylvania Turnpike's traffic is down 1.6% 2008Q3 over 2007Q3.

MTA Bridges and Tunnels in New York City reports traffic the last several months running in the range 4 to 5% below the same month last year.

West Virginia Turnpike and Ohio Turnpikes are in the same range.

The Toll Roads of Orange County publish very detailed monthly stats. The Foothill Eastern TR traffic Oct 2008 (200810) is down 4.4% over 200710. That's less of a drop than in July 7.8%, Aug 12% and Sept 6% over the same months a year earlier.

The weaker San Joaquin Hills TR is down more strongly at 9.4% under 200710 not much better than the 2008Q3 on 2007Q3 (7133.6k vs 7953.7, a 10.3% decline.)

91 Express Lanes have been dropping toll rates in line with their congestion pricing principles. Tolls are down 50c on many time slots. Traffic has been running in the range 14% to 22% lower this year than in the same week last year since the summer - at around 33k/day vs 39k/day last year. See weekly data nearby.

Orlando Orange County traffic in September was down 4.45% over the same month last year, but that's less bad than it's been. The first nine months of 2008 are down 8.36% on the same months of 2007.

In Melbourne Australia Transurban's CityLink is running average daily toll transactions of 666.3k 2008Q3 vs 680k 2007Q3 a decline of 2.1%. Tolls are up 4.5% to an annual A$350m vs $335m same quarter 2007.

Traffic on the Hills M2 motorway in Sydney is up to 92.7k from 91.1k, a 1.8% rise. Revenues are running at an annual A$126.2m up 5.6% on a year earlier.

M1 Eastern Distributor, the road to Sydney Airport is just up a tad 2008Q3/2007Q3 daily traffic this year being 47.4k vs 46.9k.

M5 the southwestern radial out of Sydney showed a small increase in traffic from 114.9k daily to 117.7k this year, up 2.3%. M4 the westerly radial is up 2.2% with 112.8k daily this year vs 110.4k last year in Q3.

Transurban's Pocahontas Parkway across the southern portion of Richmond VA USA is down 9.4% to 16k daily 2008Q3 vs 17.6k Q3 last year.

(NOTE: All our annual revenue numbers are 365x the average daily for the quarter. There is no seasonal adjustment, so they probably overstate real annual because Q3 is slightlly above average.)

Depression likely (COMMENTARY)

Traffic dropped in the US in the late spring (May, June) mainly a reaction to higher gasoline prices. Those prices of course are now falling but so is the economy, bigtime. So traffic has stayed down and will now go down further as employment, incomes, and confidence drop.

Some kind of depression appears to be in the works based on these propositions:

1. The financial system is in dire straits having shown an overleveraging and a fragility no one anticipated and the 'real' economy of consumer and business spending are now following downward

2. No one knows what to do, certainly not the US Treasury which flounders from one absurd idea (buying 'toxic' assets) to another (propping up select banks, selection by hunch)

3. Government which was a large source of the problems looks likely to make things worse, much worse

4. There's an irreconcilable tension between the economy's need for toughminded 'triage'  (supporting the strong) and the political imperative of 'equity' (helping the weak)

5. The Obama Administration represents business-as-usual in Washington, the blather about "change" (see New Yokrker cover nearby) being just that - blather

We are plagued by economic fantasies, for example the "stimulus fantasy."

The $700 billion rescue package passed by the Congress a month ago was supposedly to provide "stimulus." It can't be a stimulus because it's just a redistribution.

These pseudo-stimuli measures can only be financed by higher taxes or higher government borrowing. Higher taxes reduce private consumer spending. The alternative of financing government stimulus spending with arger government borrowing increases demands on the capital markets and hence handicaps the private sector.

For every stimulus dollar spent there will be a corresponding dollar dampener imposed by government.

There cannot be any net stimulus from any government spending. Government is a redistributor without the power to inject any resources of its own.

Housing and other bloated asset markets have to clear dead stock and non-viable businesses have to be liquidated and the faster that occurs the sooner reconstruction can begin. Government interventions almost always delay these processes, add to uncertainty and risk, and so they delay the recovery.

Meanwhile these stimulus fantasies and the reality of gaining a competitive advantage through gaining government handouts distract business management from taking action to preserve their business. They get focussed on how to join the government gravy train. Think GM.

The same is happening at lower levels of government. State and local government and their agencies too are joining in the lobbyist swarm in Washington.

If this thesis is anywhere near the mark the economic prospects are grim and a depression is on the cards.

Even in a depression there's going to be traffic, but our hunch is it could go down 20% to 25% many places. It could drop more where the toll facility is dependent on discretionary and luxury business such as with toll express lanes and tourist areas.

TOLLROADSnews 2008-11-13 EDITING, GRAPHICS2008-11-14 11:00 COMMENTARY 16:00