New York City’s congestion pricing will add costs for businesses, but there are workarounds

Congestion pricing has entered its fourth day in New York City. While most of the talk around the tolls has been about commuters, the shipping and logistics industry will be paying the price, too.

Commercial trucks going into Manhattan below 60th Street are being charged between $3.60 and $21.60 per trip, depending on the truck size and time of day. Less traffic could mean deliveries become quicker and more cost efficient. Either way, there’s a fresh, upfront cost for businesses.

Congestion pricing is supposed to encourage people out of cars and onto public transit. But that’s not really an option for business deliveries.

“There isn’t an easy alternative to just move a box truck’s worth of goods onto the subway, for example, to get a restaurant their Pepsi that day,” said Kelly Rula, who directs the Urban Freight Lab at the University of Washington.

But there are strategies companies and customers might use to help reduce their driving and delivery costs: They could make their packaging more efficient and remap routes, expand cargo bike delivery programs, or — as Rula pointed out — schedule deliveries during the late night and early morning hours, when congestion pricing is less expensive.

“So you might see businesses starting to take into consideration some of these other programs that are in place in the city that now maybe pencil out differently now that congestion pricing is in place,” she said.

But not every business can staff a loading dock or freight elevator at two in the morning, per Zach Miller, vice president of government affairs at the Trucking Association of New York. “The challenge is that really that is on the receiver, not so much the trucking company.”

That receiver includes residents, who are probably unwilling to wake up and buzz in an Amazon driver in the middle of the night.

So, that means most deliveries will still happen during the day. That will lead to higher costs for trucking and delivery companies. And that cost will be passed on, said Santiago Gallino, a professor of operations management at Wharton.

“In the short run it’s going to increase costs and ultimately the customers are going to be paying,” Gallino said.

That might show up in a dry cleaning tab, a restaurant bill or the cost of shipping, say, that avocado slicer you ordered last night for next day delivery. So to manage costs, Gallino said retailers might have to rethink super-fast shipping.

“With the promise of fast delivery and all these things, maybe this is something that is going to be rethought by certain delivery companies,” he said.

And rethought by consumers who might be willing to wait for deliveries in batches to save a few bucks.