Vanpooling in North Dakota: Feasibility and Operating Scenarios
TOC | Next >

Executive Summary

Vanpooling is generally defined as 5 to 15 people commuting to and from work together in a van. The vehicle's capital costs and all related fuel, maintenance, and insurance expenses are paid by the participants. Vanpools are most successful in situations where one-way trip lengths exceed 20 miles, where work schedules are fixed and regular, where there is a sufficient number of workers from the same residential area to form a pool, where public transit is unable to satisfy worker needs, and where there is some parking or traffic congestion.

North Dakota operated a successful commuter vanpool program from the late 1970s through the mid-1980s. That program gradually declined and was eventually discontinued, however, as fuel prices and interest rates declined and as major energy industry construction projects were completed. North Dakota's experiences mirrored national trends, where the number of operating vanpools declined from approximately 15,000 in 1980 to about 8,500 in 1999.

This national trend has, however, been reversed. Pool numbers have increased along with fuel prices and the total number of pools in operation again stands at over 10,000. This study focuses on the feasibility of reestablishing a commuter vanpool program in North Dakota.

Vanpool ownership options are largely unchanged since the late 1970s but the utilization rates of each option have changed considerably. In the 1970s and 1980s, most commuter vanpools were organized and operated either by individuals or employers. Liability issues and reluctance on the part of employers, drivers, and riders to make related long-term commitments have, however, discouraged these types of ownership.

There has, however, been a corresponding increase in programs that are operated by third-parties such as state and local units of government (departments of transportation, transit operators, transportation management associations, etc.). Some of these operations are run in-house while others are managed on a contract basis with commercial service providers.

Most publicly sponsored vanpool operations provide some level of subsidy to underwrite pool operating costs. These subsidies encourage participation by enticing commuters to give up the freedoms associated with commuting via personal automobile. In exchange for these freedoms and slightly longer commute times, participants typically achieve lower commuting costs (fuel savings, reduced vehicle depreciation, lower toll and parking fees, etc.), a more relaxing commute, and an alternative means of commuting.

In exchange for providing a subsidy, program operators receive benefits associated with:

In rural areas like North Dakota, vanpooling may also increase the viability of rural communities and increase the number of workers that are available for employers.

The federal government has recognized the benefits associated with commuter vanpools and encourages employer and employee participation. Income and related payroll tax incentives are available for employers and their employees when employees commute via vanpool. Congress has also enacted legislation which gives state and local units of government the discretion to use funds appropriated for various programs to establish and operate commuter vanpool programs. Additional non-federal incentives are sometimes offered by state and local units of government and by participating employers.

This study reviewed the operations of eight state-run vanpool programs and another seven programs that are run by local units of government. This review focused on the size of each program, funding sources, passenger fares, and overall operations. Some of these services are run with in-house personnel while others contract with commercial vanpool companies to administer and promote their programs. The experiences of these programs may be beneficial if North Dakota decides to reestablish a vanpool program for the benefit of its business community and state residents.

Several of the state's major employers were surveyed to determine their receptiveness to vanpooling. Surveys were sent to 56 employers, all having more than 100 employees. Twenty-seven employers responded to the vanpool survey. This total represents a response rate of 48.2%. Of these 27 responses, 20 entities provided positive or non-negative responses to questions concerning their possible involvement in vanpool promotional efforts and/or the provision of incentives to participating employees.

These 20 respondents were subsequently contacted and asked to participate in a personal interview; 17 responded to this invitation. As a result of subsequent contacts and visits, 11 of these 17 major employers indicated that vanpooling may hold potential for their company. The major reasons for nonparticipation included seasonal schedules and unscheduled overtime.

These 11 employers employ approximately 5,550 people in North Dakota and operate 19 worksites in the state. It is anticipated that additional employers and individual commuter groups would participate if the state reestablishes a vanpool program. It does appear, therefore, that there is a potential market for vanpooling in North Dakota.

It should also be noted that there are several major energy-related construction projects being proposed for western North Dakota (ethanol plants, biodiesel plants, electrical generating facilities, etc.). This situation is very similar to the one that existed when North Dakota initiated its original vanpool program in the late 1970s. If any of these facilities become a reality, multiyear construction programs and long distance commutes may be involved. These projects would, in all likelihood, create additional demand for a state vanpool program.

Based on the availability of federal funding, employer support, and the experiences of other government-run vanpool programs that were analyzed as a part of this study, a set of recommendations was developed concerning a new vanpool program in North Dakota. It is recommended that North Dakota reestablish a vanpool program using 100% federal funds and that the program contract with a commercial vanpool operator to initiate a turnkey service on a three-year trial basis.

This approach would result in higher passenger fares than comparable government programs that are run with in-house personnel who are responsible for procurement (vehicles, fuel, insurance, etc.), administration, and promotions. This approach is, however, very low risk and allows for an almost immediate start-up.

Based on the program's achievements during this three-year trial period, it can either be continued or terminated. If it is continued, the state may decide to retain the services of the commercial service provider or it may decide to assume all or some of related procurement, administrative, and promotional functions. State and local entities that perform these functions in-house tend to achieve lower costs which translate into lower participant fares. This should presumably result in higher participation.

The following is a list of related study recommendations:

It is estimated that this program will cost approximately $112,700 during its first year of operations. Second and third year operations are estimated at $171,200 and $243,600, respectively. Subsidy costs are estimated at $2.73 per ride during Year One, $2.08 during Year Two, and $1.98 during Year Three. These subsidy levels are well below the $2.91 per ride achieved by the state's publicly supported transportation programs in 2004.

The end results of this phase-in approach would be an enhanced personal mobility program for state residents and the achievement of many of the attributes that are traditionally associated with ridesharing via vanpool. This approach will also put the state in a better position to determine if its residents and its business community want and need vanpooling. The responses from both should ultimately determine what, if any, long-term role the state should play in commuter vanpooling.

1. Vanpooling in North Dakota

Vanpooling is generally defined as 5 to 15 people commuting to and from work together in a van. The vehicle's capital costs and all related fuel, maintenance, and insurance expenses are paid by the participants.

Some vanpools are independently organized by their participants and operate with a vehicle that is owned by one of the pool's members. Most vanpools, however, are part of larger programs which involve employers and/or third parties such as government transit organizations or commercial service providers. Typically, vanpool programs are most successful in situations where one-way trip lengths exceed 20 miles, where work schedules are fixed and regular, where there is a sufficient number of workers from the same residential area to form a pool, where public transit is unable to satisfy worker needs, and where there is some parking or traffic congestion (Evans and Pratt).

High fuel costs and double-digit interest rates contributed to a massive growth in vanpooling in the 1970s and early 1980s. From the start of the first vanpool program by 3M Company in 1973 until 1980, it is estimated that approximately 15,000 vanpools were placed in service around the United States. Most of these pools had some form of employer involvement; some were of the owner-operator variety (Evans and Pratt).

North Dakota had an active, state-sponsored vanpool program of its own during this time. The North Dakota State Highway Department (now the Department of Transportation) used federal highway monies to provide interest-free loans to help individuals purchase vans for use in vanpooling. At its peak, the department had over 30 vanpools in operation around the state. Each pool was independently owned and operated, either by an individual or an employer. Given the double-digit interest rates that were prevalent at the time, the department's interest-free loans helped reduce the cost of operating and participating in vanpools.

As was the case around the country, participation in North Dakota's vanpool program declined as fuel prices and interest rates dropped in the 1990s. These factors and the completion of several major power plant construction projects contributed to the program's discontinuance.

The situation facing many North Dakota commuters has now changed again. Fuel prices have again risen to historic levels and the cost of commuting is consuming a greater and greater portion of their personal income. Vanpooling at the national level is again increasing, up from 8,500 pools in 1999 to 10,000 pool in 2005 (Evans and Pratt).

This study identifies changes that have taken place relative to vanpooling since North Dakota's program was discontinued in the mid-1980s. This identification process includes a review of operating characteristics of several state and local vanpool programs that are in operation around the country and discusses federal incentives that have been created to encourage vanpooling.

The ultimate goal of this study is to determine whether or not North Dakota should renew its vanpool program and, if so, in what form. This study furthers a related recommendation in the August 2005 report, "Personal Mobility in North Dakota: Trends, Gaps, and Recommended Enhancements," which was prepared for the North Dakota Department of Transportation (NDDOT) by the Small Urban & Rural Transit Center (SURTC). That report recommended that NDDOT encourage and facilitate ridesharing to help meet commuting-related transportation needs in both urban and rural areas of North Dakota (Mielke, Miller, Ripplinger, Peterson, and Hough).

The vast majority of the vanpool programs that are in place in the United States involve pools that originate or terminate in urban areas. This study will consider not only the feasibility of this type of pool, but also pools that start and end in small urban and/or rural areas.

This approach is considered vital because commuters in small urban and rural areas have very few mobility options relative to traveling to and from work. In many instances, existing public transportation systems are designed to transport students and/or to meet the needs of elderly and disabled residents. Quite often, there are no commercial transportation services available. The distances involved and extreme climatic conditions may make walking or bicycling seasonally attractive, at best. This often leaves the personal automobile as the only viable option for getting to and from work.

Commuting by personal automobile is becoming increasingly expensive as vehicle and insurance costs rise and as fuel costs sometimes exceed $3 per gallon. Related costs are especially high given the fact that one-way commutes of 25 to 75 miles or more are common in North Dakota.

Vanpooling may be one way of addressing the mobility needs of some of North Dakota's commuting population. This population includes two primary groups of people. The first group entails individuals who live in small towns or rural areas and commute to urban sites or to employer locations in another small town. Rather than relocating, these people choose to commute, either for cost of living reasons or because of perceived quality of life considerations. The availability of housing may also be a factor.

The second group of long-distance commuters includes individuals who are employed at sites that are situated in smaller communities but who choose to live in an urban area and commute out to their work site. Again, availability of housing and perceived quality of life concerns may be contributing factors.

Ultimately, the decision of where to work and where to live will vary with each and every individual. Freedom of choice is, however, important to each person involved. Having this freedom may also make a significant contribution to local economies, especially in rural areas. Given the cost of commuting, long distances involved, and lack of other alternatives, vanpooling may hold significant promise as a component of a comprehensive mobility program to meet the needs of North Dakota residents.

Except for the impact of lower interest rates, the inherent economic advantages that were associated with vanpooling in the late 1970s and early 1980s still exist today. In addition to these advantages, the federal government has also created new incentives to encourage individuals to commute in something other than single-occupant automobiles. The federal rules and related funding which facilitated North Dakota's vanpool program in the 1970s and 1980s are still in place and have been augmented by Internal Revenue Service provisions which provide tax incentives to participating commuters and their employers.

It also appears that the energy-related construction environment that existed in western North Dakota in the 1970s and early 1980s may be reemerging. There is considerable speculation regarding the construction of several ethanol, biodiesel, and electricity production facilities in the western half of the state. The construction of any of these facilities could result in numerous long-distance commutes during related multiyear construction schedules.

There are numerous private and publicly supported vanpool programs in operation in the United States. In a 2004 "Best Workplaces for Commuters" brochure, the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Transportation (USDOT) estimate that just a portion of these programs:

The benefits outlined above are typically associated with vanpools that are affiliated with major employers in urban areas. It is worth noting, however, that vanpooling is not just an urban phenomenon. To the contrary, the EPA states that, "Vanpools . . . are particularly well suited for areas with limited mass transit and long distance commutes." (www.ergweb.com/projects/ccli/empkit/files/section3/vanpool_benefit_brief.pdf).

Given all these factors, it may be appropriate to reinstitute a publicly supported vanpool program in North Dakota. Having an attractive and aggressive vanpool program available for state residents could:

This study will help determine the feasibility of vanpooling in both urban and rural North Dakota. To aide in this determination, this study will:

The study will hopefully provide North Dakota commuters, employers, and government policymakers with information that will lead to more informed decisions concerning commuting and the use of vanpools to satisfy a portion of the state's personal mobility needs.


TOC | Next >