Clearing the road ahead: How congestion pricing is easing New York’s traffic woes

Since January 5, 2025, New York has introduced a congestion pricing strategy to reduce gridlock in its Central Business District (CBD) area — officially named the congestion relief zone (CRZ) — and early results are quite promising.

A week-one update provided by the Metropolitan Transport Authority (MTA) for New York City revealed that in the first week of implementation, the number of vehicles in the CBD area has dropped by around 8 per cent compared to the baseline estimate.

On average, travel times have reduced by 30 to 40 per cent for inbound river crossings, with the most reduction recorded at the Holland Tunnel — 65 per cent. Interestingly, reduced traffic has also improved bus speeds, leading to shorter journey times for commuters. For example, travel time on the B39 route has decreased by almost 28 per cent.

Innovative pricing strategy

New York has adopted a pricing strategy that varies based on vehicle type, time of day and payment method.

The peak period toll rate applies from 5 am to 9 pm on weekdays and 9 am to 9 pm on weekends. Peak toll rates range from $9 for cars (including sedans, SUVs, pick-up trucks and small vans) to up to $21.6 for trucks and buses. At all other times, vehicles are charged an overnight toll rate, which is 75 per cent lower than peak period rates. Additionally, vehicles without an E-ZPass must pay the Tolls by Mail rate, which is up to 50 per cent higher.

Taxis and for-hire vehicles licensed by the NYC Taxi and Limousine Commission are subject to a smaller per-trip charge on journeys to, from, within, or through the CRZ instead of paying the daily toll. Taxi passengers bear this per-trip charge, which is set at $0.75 per trip for green and yellow taxis and black cars, while app-based for-hire vehicles incur a charge of $1.50 per trip.

To efficiently manage the CRZ during peak hours, the city authorities have also introduced crossing credits based on vehicle type for those entering the zone via E-ZPass at four specified locations. These crossing credits range from $3 for passenger vehicles to $12 for large trucks and tour buses.

Similarly, all residents living within the CRZ with a New York State adjusted gross annual income below 60,000 US dollars may qualify for a tax credit equivalent to the tolls paid.

To ensure social equity, low-income vehicle owners already enrolled in the Low-Income Discount Plan (LIDP) receive a 50 per cent discount on the tolls. However, the discount applies only after the first 10 trips in a calendar month and is valid for all peak-period trips thereafter within that month.

In addition to discounts for low-income groups, exemptions have been provided for individual or organisational vehicles transporting people with disabilities, emergency vehicles, school buses contracted under the NYC Department of Education and publicly owned vehicles specifically designed for public works, such as garbage trucks, street-cleaning trucks, snowploughs and pavers, among others.

However, recent developments indicate that President Donald Trump is considering actions that could potentially halt this programme.

Further demonstrations of this strategy

Although congestion pricing as a strategy to reduce traffic bottlenecks is not new, it was first implemented in Singapore in 1975 under the Area Licensing Scheme (ALS). Under this scheme, each vehicle had to pay a flat fee to enter the “restricted zone” an unlimited number of times from Monday to Saturday. This led to a 20 per cent reduction in congestion within the first few months. 

However, the system was labour-intensive and unable to address the issue of multiple entries by the same vehicles. Thus, in 1998, Singapore replaced ALS with the Electronic Road Pricing (ERP) programme, which employs advanced technology to set road-use rates based on location, time of day, vehicle type and real-time speeds.

Similarly, in 2003, London introduced a congestion charge — a daily fee for driving or parking a vehicle on public roads within central London between 7.00 am and 6.30 pm on weekdays.

In 2006, Stockholm introduced a congestion tax on each Swedish-registered vehicle entering the city centre between 6.30 am and 6.30 pm on weekdays. Each vehicle had to pay a fee equivalent to $3 at the time.

In 2012, Milan introduced a congestion charge in Area C — essentially a limited traffic zone (LTZ) — which is active from Monday to Friday between 7.30 am and 7.30 pm

All congestion-pricing zones have demonstrated almost immediate effects following implementation. However, for congestion pricing to be truly effective, it must be complemented by strengthened local mobility services and the creation of adequate non-motorised transport infrastructure.

India at a crossroads

Severe traffic congestion is worsening in Indian cities. The 2024 TomTom Traffic Index highlighted that three of the five slowest cities globally are in India. A 2018 estimate by the Boston Consulting Group (BCG) revealed that the cost of congestion in four major Indian cities — Delhi, Mumbai, Bengaluru and Kolkata — amounts to approximately Rs 1.47 lakh crore per annum.

While congestion pricing is not a silver bullet, global success stories prove that it has the potential to revolutionise urban mobility. Indian cities currently stand at a crossroads — by learning from global pioneers and tailoring solutions to local contexts, they can pave the way for greener, more efficient and equitable urban transport systems.