Road freight demand in Australia: Key drivers and forecasts

Trucking is the dominant freight mode in Australia's domestic freight market. During the past several decades, we have witnessed substantial growth in road freight demand in Australia. This paper provides an overview of road freight demand in Australia using currently available data. The key drivers associated with growth of the road freight task over the past decade are also identified. A number of time series models to forecast the future demand for road freight, including trend-fitting models, an autoregressive integrated moving average model (ARIMA), a vector autoregressive model (VAR), a vector autoregressive model with exogenous regressors (VARX) and a Bayesian vector autoregressive model (BVAR) are specified and estimated. The evaluation of forecasting performance shows that the VARX and BVAR models are statistically best, in terms of forecasting accuracy. Hence, a range of forecasts between them are suggested to predict the medium to longer term trend of Australian road freight demand.