TRANSPORT MARKETS Anne-Elisabeth Gautier

THE PROGRESSIVE INTEGRATION OF EUROPEAN INLAND
TRANSPORT MARKETS
Anne-Elisabeth Gautier-Dugor
BCEOM
1.
PREAMBLE
This paper on the progressive integration of European inland transport markets
presents the completion of work carried out within the frame of the European Union
Phare Programme on the Conditions for the Progressive Integration of European
Inland Transport Markets (Phare contract N°96-0822, August 1996).
The scope of the study covered all modes of inland transport i.e. road, rail, combined
transport and inland waterways, for both freight and passenger carriage. This includes,
in geographical terms, the eleven Phare countries (Albania, Bulgaria, the Czech
Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Romania, the Slovak Republic
and Slovenia) and the 15 European Union Member States.
The objectives of this paper are to present the barriers which limit the access to the
European transport market for transport operators from the Central and Eastern
European Countries (CEEC), to examine means/measures for coping with these
barriers and to present suggestions made for a progressive integration of European
transport markets.
To define the conditions of integration and the actual situation of the sectors involved
the following steps were taken :
, / Review of the legal, commercial, financial and operational conditions faced
by the Central and Eastern European transport operators.
Through all the information obtained and through holding workshops, it
was necessary to measure what particular difficulties are faced by transport
operators in the CEEC in coming close to or achieving the standards of
quality of service reached in the European Union.
, / Identification, analysis and evaluation of the different barriers obstructing
the integration of transport markets for each mode of transport
, / Identification of measures to be taken to improve operators access to
transport markets and to facilitate the progressive removal of existing
barriers.
,/Finally, to try to answer the central question : "How Can Conditions for
Integration of European inland Transport Markets Be Improved ?"
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2.
ORGANISATION A N D METHOD FOR STUDY IMPLEMENTATION
The means applied to fulfil the objectives were of four types:
,t Organisation of a data collection review gathering all relevant different
international regulations as well as various social, economic, financial, and
commercial data.
, / Preparation and distribution of questionnaires to obtain information from each
of the Central and Eastern European countries and from the European Union
countries.
, / Organisation of regional seminars, bringing together transport operators from
Central and Eastern European countries in order to review the difficulties met
in international transport practices and procedures.
, / Establishing relationships between state and professional representatives of
European Union Countries, and international institutions
To that end we put in place :
- A core team of experts whose mission was to collect, analyse and summarise
all legal, economic, financial, commercial, social and technical data.
Four teams of regional correspondents, backed up with a network of national
correspondents in the various Central and Eastern European countries in the
scope of the study. The division of responsibilities for the regional
correspondents was based on the following geographical areas:
Geographical
Geographical
Geographical
Geographical
area n°l
area n°2
area n°3
area n°4
: Lithuania, Latvia and Estonia
: Poland, Czech Republic and Slovak Republic
: Hungary and Slovenia
: Romania, Bulgaria and Albania
Tasks of regional correspondents were:
- to collect national data for cotmtfies of their geographical area
- to organise regional workshops in their geographical area at the end
October and November 1996
2.1.
Data Collection
Complete legal documentation had been put together and a collection of socioeconomic, commercial and financial data as well as useful statistics issued by
international institutions and non-government organisations was also being carried out
at the same time.
- International regulations from:
European Union (Directives and Regulations)
ECMT (Resolutions)
EEC - ONU (International Conventions)
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Institutional and socio-economio data and analysis in inland transport prepared
by International institutions (European Commission, ECMT, OCDE, BEI,
EBRD, World Bank) or by non-governmental organisations (IRU, UIC,
CLECAT ...).
Data from some European Union Countries and in particular those countries
bordering Eastern and Central European Countries (e.g. Germany, Austria,
Italy...).
2.2.
Questionnaires
Central and Eastern European Countries
At the beginning of the Study a questionnaire on all inland transport was prepared.
Answers to this questionnaire were given by the regional and national counterparts in
close liaison with the institutions concerned. A period of about two months was
necessary to obtain the replies. The questionnaire was divided in two main parts.
The frrst part dealt with <<general data ~ including Legal and Institutional Framework,
infrastructure and inland transport data and general transport policies.
The second part dealt with <<detailed data collection in inland transport subsectors ~),
distinguishing road, inland waterway, combined transport, railway transport and lastly
border crossings.
On the basis of the information obtained, observations were synthesised in the form of
tables and comparison files showing the content and progress of legislation and
regulations (for example, for road transport, access to the profession, access to
national and international markets, technical conditions, circulation, weight and size,
social and driving rules, bilateral agreements, road user charges, firm charges, etc.).
The same approach was applied, to a large extent, to the socio-economic data
collected.
European Union countries
At the same time, a questionnaire aimed at European Union countries was sent to the
Ministry of Transport of EU member countries.
Its formulation, which took into account the existence of community regulations and
their future developments, was centred on the conditions of carrying out international
transport between European Union countries and Central and Eastern European
countries. These conditions are still mainly managed by bilateral dispositions as wetl
as application measures specific to each State.
The drawing up of the questionnaire was carried out in direct cooperation with the
following :
- representatives of Administrations of European Union countries directly
concerned by inland transport relationships with Central and Eastern European
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countries (Austria, Germany, Finland, Italy, Netherlands, Belgium, France,
Greece) ;
representatives of specialised international institutions (European Commission,
European Conference of Ministers of Transport, United Nations European
Economic Commission, Rhine Central Committee ...) ;
representatives of European organisations (International Road Transport
Union, Permanent International Association of Navigation Congresses,
International Union of Combined Road-Rail Transport Companies, Inter
Container Frigo, Union Internationale des Chemins de fer) and transport
operators.
2.3.
Regional Seminars
Four regional seminars grouping together operators of all types of transport in Central
and Eastern European countries were organised in order to identify and list obstacles
and barriers met by them in the carrying out of international transport.
They were respectively held in:
- Riga (Estonia, Latvia, Lithuania).
- Sofia (Albania, Bulgaria, Romania).
- Budapest (Hungary, Slovenia) ).
- Prague (Poland, Slovak Republic, Czech Republic).
They all included a "road transport" workshop, a "railway" workshop and a
"combined transport" Furthermore, a "waterways transport" workshop was held in
Budapest with operators from Slovak Republic, Hungary, Bulgaria and Romania
including forwarding agents, shippers and port operators.
3.
SPECIFIC
BARRIERS
WATERWAYS
TO
ROAD/RAIL/COMBINED/INLAND
A thorough review of these data pointed to the main specific barriers to inland
transport presented as follows.
For Road Transport :
Conditions o f access to international markets
The conditions of access for companies from the different countries to the
international transport market are determined by agreements between the States in
accordance with modalities which may be more or less restrictive. The current
regimes, in general, limit as far as possible the possibility for CEEC hauliers to
engage in international transport to and from the EU or between CEEC and that this is
not the case for EU hauliers.
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Legal barrier dealing with Vehicles
Important difficulties are encountered regarding regulations on emissions given the
age of vehicle fleets used by CEEC hauliers and the low number of vehicles meeting
EURO 1 and EURO 2 Standards. This situation is, in certain cases, a physical obstacle
to movement (Austria) and often leads to pollution checks which particularly affect
vehicles registered in those countries.
Commercial barriers
There is good control of international freight generated in the haulier's country but
difficulties in controlling return freight. Use of EU forwarders by CEEC hauliers is
systematic. This is not the case for EU hanliers who often meet the difficulty of
finding return loads in the countries they go to by picking up return loads within the
Union. The overall conditions of competition, favourable to CEEC hauliers have the
effect of low profitability for companies involved in international transport.
Financial barriers
Labour cost weighs, undeniably although with significant differences, are in favour of
CEEC hauliers. However, these hauliers have to absorb various production costs
which weigh as heavily, if not more so, on their operations than in the EU.
Operational barriers
These barriers are linked to the inadequacy of the road infrastructures, in organisation
of border crossing points and installations for entry into an withdrawal from customs
bond, as well as difficulties associated with customs formalities.
For Railway Transport :
Financial barriers
Loss of traditional markets caused a drop in CEEC railway revenues. Consequently
the CEEC railways have no money left to invest in new technologies and they are not
prepared to face more competitive western markets.
Secondly, CEEC railways do not have enough autonomy in their financial
management, hence CEEC railways do not have a clear view of their financial
situation and are not free to invest and diversi~ in promising activities.
Lastly, the private sector remains uninterested in investing in CEEC railways and
consequently the CEEC railways have no money available from external sources and
cannot benefit from private sector skills in modern management.
Operational conditions
CEEC railway infrastructure is outdated which implies that they offer precarious
safety conditions; put up with slow average speeds; and have unadapted infrastructure
in freight terminals.
International traffic suffers from technical incompatibilities. The consequences and
barriers for the CEEC railways are as follows: CEEC railways cannot run direct traffic
with Baltic States (different track gauge); lack sophisticated engines to stand various
currents and signalling systems.
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Rolling stock is unadapted to modem operation, there is a lack modem specialised
wagons.
Border crossings may be long and complicated. The consequences and barriers for the
CEEC railways are as fully wrong organisation of customs controls at the borders;
shortage of customs personnel and of veterinary and phytosanitary inspectors; lack of
uniformity in the status of the declaring bodies; weak technical knowledge of transit
company employees; lack of harmonisation in the procedures of taxes, duties,
guarantees (transit system and suspensive system).
Commercial conditions
CEEC railways have no clear commerciaI objectives. As a result the CEEC railways
do not know in which fields they should develop; have few financial or volume
targets; and do not try to obtain reliable forecasts.
The quality of service is often poor and tariffs are complicated and sometimes
exaggerated. Hence CEEC railways cannot offer international competition quality
standards. This discourages partners and customers faced with complicated and
exorbitant tariffs, especially in transit.
For Inland Waterway Transport :
Legal barriers
The main problems facing central inland navigation operators, when law and
regulation act as a barrier to the integration of Europe, are described below.
The ftrst is a problem of technical regulation (vessel, equipment, crew ...). In the EU,
this comes under safety regulations and EU countries cannot accept a reduction in
their established standards. The problem could perhaps be resolved though evening
out of discriminatory restrictions.
The second problem is the opening of the EU market which is presently protected.
This protection has been set up in order to avoid an introduction of CEEC vessels into
the EU market which, in the opinion of the operators, would create dramatic results,
especially when taking into account the overcapacity of the existing fleet.
At in the same time, however, the CEEC operators fear that the EU fleet will operate
in the Danube River in a competitive manner, and that their vessels on the other hand,
are not adapted to Rhine navigation.
The decision which must be taken by the EU is of a political nature. The EU inland
navigation transport operators have the possibility of operating in the Danube market.
In reciprocity, the existing legal barriers must be transformed in order to offer CEEC
operators new possibilities of access to the EU market. This, however is a risk of
conflict with the EU operators as the EU is simultaneously financing a costly plan to
reduce the overcapacity of the EU fleet.
Main commercial, financial and operational barriers
The commercial barrier mainly affects CEEC enterprises. Their structure is still close
to that of the former structure and is hardly suited to the rules of a market economy.
The almost exclusive recourse to agents and forwarding agents weighs heavily on
profit margins and increases financial difficulties.
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Those which form the financial barriers are considerable and weigh heavily on CEEC
efiterprises. Nevertheless, the following can be distinguished :
- difficulties linked to State policies which do not budget siafficiently for
development and maintenance of their networks ;
- difficulties specific to enterprises which are not able to finance their
development and equipment renewal costs.
These two types of difficulty are found, of course, in operational terms. The problems
connected with infrastructure of course, weigh on all transport operators, whereas
problems of organisation and equipment weigh particularly heavily on CEEC
operators.
For Combined Transport :
Before the COMECOM (Council for Mutual Economic Assistance) market collapsed,
combined transport by 20' or 40' ISO (International Standard Organisation)
containers, was quite important. So the technical framework, set up to operate this
technology, still exists today, but it is largely out of date and inadequate to serve the
new exchanges flows and the new operators' objectives.
Technical and financial obstacles are the two aspects of a main problem : how to update the operational framework.
Railways companies which were the major actors in the past, are today not able to
conduct important investments programmes, because they are facing a lot of needs
without sufficient financial resources.
The setting up of independent operators by privatisation or creation in some countries,
can certainly improve the management of the terminals, allow the successful operation
of some specific services. However, these operators are often small and medium
enterprises and their investment capacities are very limited.
Partnerships with European Union operators are the only way (not always in the best
conditions) to get more wagons at disposal and to operate trains.
So for some operators, there is in Central and Eastern Europe an <<existential >>
problem for combined transport, like in Western Europe a few years ago, which could
be the most important one.
Obviously, if the legal framework of Transport organisation can be considered on the
way, step by step, the future of combined transport is not really implemented by the
different States general policies of transport. These ones are not clear enough to allow
operators and road hauliers to develop a long term investment strategy in order to
transfer a significant part of traffic from road to combined transport.
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4.
HOW
TO
IMPROVE
CONDITIONS
FOR
INTEGRATION
OF
EUROPEAN INLAND TRANSPORT MARKETS?
Concerning Road Transport, the main recommendations have been as follows.
A.
To improve operation of the international agreements and conventions.
Better implementation of the CMR necessitates to take into consideration
the two following points: 1) conditions for bringing actions for liability
before the competent legal authorities and, on which information could be
given by professional organisations; 2) lack of knowledge of this instrument
on the part of the legal authorities in some CEEC. Improvements to be
made in this area would stem directly from the administrative bodies
responsible for development of commercial law ; etc.
Fuller application of the AETR supposes development and implementation
of conditions comprising: 1) the obligation of drivers, under the authority of
their employers to fill out the required documents; 2) the obligation to
install a standard monitoring device aboard vehicles engaged in
. international transport; 3) the obligation to carry out periodic checks; 4)
designation of approved installers and checkers; etc.
Better application of the ADR requires the development or renewal of rules:
1) training of agents responsible for transport of dangerous substances and
other parties participating in loading and unloading operations; 2) setting up
of institutions responsible for this training, with all of the accompanying
conditions (definition and checking of training, approval of bodies
authorised to provide training); 3) companies' obligations: training
requirements; etc.
- Better application of the ATP requires national measures on implementation
which include: 1) information and training for transport companies; 2)
setting up of bodies responsible for carrying out of the technical inspections
of vehicles; 3) clear determination of the administrative bodies and
authorities responsible for intervening in implementation of national
conditions regarding transport of dangerous substances and their respective
areas of competence; 4) organisation of monitoring; etc.
B.
Fuller exploration of international resolutions and recommendations and in
particular the instruments developed by the ECMT. The ECMT has for a long
time been making a contribution to the liberalisation of international road
transport by adopting two instruments in particular: the multilateral ECMT
quota for road freight transport and the ASOR agreement for occasional
international passenger transport.
C.
Europe Agreements should lead the CEEC to develop a strategy with two
distinct parts:
-
Realisation of the legislative adjustments for implementation of existing
international agreements and ensuring appropriate application to
international transport operators carrying out their activity within their
territory.
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-
Implementation of legislative adjustments aiming to bring about legislative
approximation under the Europe Agreements. It should apply to: 1)
inclusion in the conditions of implementation for international agreements,
additional requirements brought by corresponding EU legislation to
harmohise application between Member States; 2) extension, in certain
cases, of the conditions of international agreements to domestic transport;
3) implementation of conditions for legislative approximation in areas
where Community legislation is more complete than other international
instruments or has no equivalent in the existing international instrtunents;
etc.
D.
To implement methods to make the existing mechanisms of bilateral agreements
more flexible. For example: 1) systems aiming to simplify short-haul
international transport could be used between neighbouring countries; 2)
liberalising of own-account transport, among the freedoms specified by the
ECMT; 3) examination of the development of quotas should be ensured in
relation to commercial developments between parties to the bilateral
agreements. 4) cooperation agreements between companies could be concluded
outside of normal bilateral quotas; 5) adequate possibilities for transit should be
reserved by the bilateral agreements, so as not to raise barriers to access to the
international markets of peripheral countries.
E.
Other possible measures are: 1) development of knowledge of conditions of
integration for road transport market; 2) development of concerted action in
labour relations; 3) development of professional training; 4) implementation and
application of regulations contributing to market integration; 5) measures
aiming to reinforce SME; etc.
Concerning Railway Transport, the progressive integration must start with the
application of EU Directives and international agreements. These Directives include a
set of measures which serve as a basis for identifying those barriers to be removed or
reduced through strict application thereof: 1) management autonomy for railway
companies; 2) separation between management of infrastructure and transport
operations; 3) drawing up of an access policy to the railway infrastructure; 4)
improvement of the financial structure of the networks; 5) COTIF; 6) 1992
convention; 7) AGC.
After identification of barriers which could be removed in the short and medium term
without modifying the existing legal framework regulating international transport
operations, the main outcome is that the strategy for implementation of such projects
should be based on the following recommendations : 1) application of Directive
N°91/440 (where needed); 2) development of public/private partnership; 3)
development of railway partnership; 4) improvement of services through upgrading to
AGC standards; and 5) improvement of procedures at border crossing.
Concerning Inland Waterway Transport, in spite of numerous barriers inherited
from previous centuries, the legal situation is perhaps not the major obstacle to
increased participation of inland waterway transport in EU-CEEC exchanges. Physical
and institutional barriers have far greater weight and certainly provide a better
explanation of the present situation. It can be considered that the essential part of what
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could be done in the short term from the legal point of view regarding access to
markets has been done.
The main recommendations can be grouped by major theme as follows:
Infrastructure constitutes a major problem, but one which is not unsolvable
in the mid term, at least where the Danube is concerned. This, overall,
constitutes one of the nine "Crete Corridors", mtmber 7. Its development is
therefore accepted as a priority not only in the EC, but by all European
countries who have renewed this priority in Helsinki, and recent studies
showed that the various obstacles encotmtered could be removed at
relatively low cost.
Attending to the CEEC fleets needs, firstly to overcome the technical
problem of unsuitable equipment with the support from European
institutions: attribution of subsidies, special term loans, etc. Secondly to the
question of organisation of enterprises in a market logic, the adaptation
requires moving from a market managed by a single enterprise to a lot of
competing enterprises.
The re-organisation and re-equipping of ports necessitate financing either
from European Community or from private investment.
-
Institutional framework: In many cases, various ministries are involved.
This is especially the case for infrastructure which, depending on the
country, may depend on the Ministry of Transport, Agriculture or
Environment, so the recommendation is that, in each country and in a form
to be defined, a body should be designated as responsible for the
Development of Inland Waterway.
Concerning Combined Transport, it can be considered that a real execution of the
existing agreements could help to remove legal or operational barriers with:
-an
achievement of the general legal transport framework: Europe
Agreements will provide formal implementation, but enforcement of the
legislation will have to be ensured ;
-
the setting up of a general strategy for the promotion of combined
transport ; and
the setting up of a Trans-European combined transport network: AGTC
provides a selected scheme of lines and a list of relevant installations
already used or to be used by international combined transport services. EU
with the TEN Pan-European Transport Conferences and the list of
corridors, has pointed out priority routes for each transport modes including
combined transport.
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The strategy to
recommendations:
implement measures could
include
the
three
following
- Application of free-market principles to combined transport within the
framework of the pre-accession strategy.
Promotion poIicy included in a Basic Paper to clarify the European Union
policy towards "Combined Transport" and to provide the market actors with
announcements of concrete measures.
Announcement of a plan of urgent optimisation of combined transport
flows through the present CEEC network. The objective is to rapidly
influence a rational development of combined transport by encouraging
cooperation between Eastern and Western operators in order to provide
each with easier access to the market through the existing network.
Such a review mode by mode is perhaps insufficient and a multimodal approach was
then made.
Firstly, it appeared that a fuller use of the various existing international instruments
have helped to improve access to the European transport markets. Two main points
must be highlighted:
The common European framework for international transport implemented in
the CEEC has been improved but needs to be consolidated.
It can be considered that all the CEEC - by endeavouring to adhere to the
various existing international agreements when necessary, and whatever the
case, by trying to take the necessary measures to guarantee the effective
implementation of these agreements on their territory
have greatly
contributed towards the setting up of a common European framework for
international transport which did not exist before.
This framework must nevertheless be consolidated to extents which vary from
one country to another, because the national implementation measures assume
that statutory administrative and technical means of guaranteeing correct
territorial application of these instruments are in effect in each country.
The implementation of Europe Agreements, and especially the legislation
harmonlsation process, is an essential move for market integration.
Unlike international agreements, which only deal with the performance of
international transport, the effects of Europe Agreements extend to the
organisation of domestic markets in different domains.
Particular attention must be paid to this dimension which constitutes a
particularly important aspect of Community integration in the transport sector.
It also seemed appropriate to stress that the legislation harmonisation
programme was not to be conducted in a purely sectoral context based solely
on the implementation of the "transport" part, but that it was necessary to
restore its intermodal dimension by firstly giving all the necessary weight to
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the horizontal measures which aim at organising competition between modes
of transport, and secondly by adhering to the measures associated with policies
other than transport but which have significant consequences on the transport
policies.
Secondly complementary accompanying mechanisms should be introduced:
Implementation of measures for overcoming the barriers associated with the
existence of bilateral agreements governing international transport between
countries.
Progressive integration of European transport markets does not necessitate to
modify the present system of bilateral agreements.
A number of existing means could be implemented to overcome the barriers
associated with the existence of bilateral agreements governing international
transport between countries. These agreements constitute a sufficiently flexible
framework to enable the countries to gradually reduce the restrictive or
discriminatory consequences. As the various forums existing between the EU
and CEEC are related to the increase of market integration, they could be used
to periodically measure progress made in this respect. Among these forums,
the meetings of Association Councils, the joint-meeting of the Ministries of
Transport of EU and CEEC, ECMT Council of Ministers are particularly
appropriates.
-
Implementation of accompanying measures affecting the transport operators
directly.
Recourse to various types of accompanying measures has also turned out to be
essential for the creation of European transport markets that operate under
good conditions. These concern domains such as the development of
cooperation and partnerships between transport operators, acquiring better
knowledge of the conditions of operation of transport markets between the ELI
and CEEC, the development of professional training, measures in favour of
small and medium-sized companies, the development of concerted actions in
the field of working relations, recourse to innovative technologies, etc. They
can also be of a structural nature.
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