Truckers put EU on the road to chaos

Date: 03/02/2000

By Bruce Barnard

Truckers are preparing for battle with Europe's legislators and regulators, fuelling fears of more blocked borders and hijacked highways in the coming months.

France is bearing the brunt of the industry's ire, with truck owners mounting blockades to protest against the 35-hour working week and steep hikes in fuel taxes. Prime Minister Lionel Jospin's government quickly caved in, exempting the industry from the controversial measure and agreeing to finance extra payments for drivers working above the threshold. But the country's labour unions, which support the 35- hour week, were not consulted by the government and promptly counter-attacked by staging their own nationwide protests this week.

These actions, once limited largely to France, are spreading across Europe, even to the UK, where militant truckers brought London to a standstill recently in a dramatic escalation of their campaign against higher taxes. Dutch truckers are demanding compensation from the government for fuel and road-tax rises, Danish firms are re-registering their fleets in low-tax Luxembourg and German companies have considered legal action against the authorities.

The rebellions are centred mainly on fuel taxes, vehicle duty, road charges, working conditions and the spread of uncoordinated weekend-driving bans across the Union. But they also reflect a deeper disenchantment among truckers, who are angered at their lowly status in national capitals and in Brussels.

Truckers feel they do not get the recognition due to an industry which hauls more than 70% of the EU's total freight traffic. Instead, it is damned as a polluter whose market share must be cut back in favour of more politically-correct transport modes, notably the railways. Yet despite years of government largesse and positive discrimination, rail's share of the freight market has tumbled from 32% in 1970 to barely 13% in 1999.

Short-distance sea shipping is also a favourite in Brussels, but it has had only localised success in linking northern and southern Europe as truckers cut their rates to safeguard their traffic.

The EU's last big rendezvous with the road haulage industry was back in mid-1993 when transport ministers agreed to throw open the market to full cross-border competition and cabotage (the right of truckers from one country to operate domestic routes within another member state) before the end of the decade.

The sector is now officially open, but there has been a slow take-up of the new freedoms. Cross-border competition has increased, with lorries able to pick up cargo for the return journey from foreign trips instead of going home empty, as in the past. But cabotage barely exists thanks to language difficulties, lack of local market knowledge and low rates.

The Dutch, who account for more than a third of the Union's cross-border road transport, and to a lesser extent the Belgians, are the only ones to have taken full advantage of the market openings and can count on their governments to fight their corner in Brussels.

The EU currently lacks a single trucking market because member states failed to flank liberalisation with harmonisation of standards. An agreement on Union-wide working hours remains elusive and industry officials privately admit that it could not be enforced.

Few industries have such wide differences in operating costs as trucking. In the UK, it costs more than €9,000 to register a 40-tonne truck, compared with €2,150 in Ireland, and British road tax stands at more than €5,400, compared with €775 in France. The gap in diesel prices is so high that customs officials at Dover, the UK's main ferry port, regularly discover trucks with concealed tanks which are used to smuggle fuel into the country.

Overall operating costs even out in northern Europe, with British truckers paying much less in social security and income tax than their continental rivals. But that does not mean there is a single market.

As a result, the industry remains extremely fragmented, dominated by small family-owned operators or owner-drivers, characterised by overcapacity, wafer-thin margins and high failure rates. The cross-border mergers and acquisitions which have reshaped scores of European businesses, from banking to telecommunications, have so far largely bypassed trucking.

There are a few companies with pan-European coverage, such as Frans Maas of the Netherlands, the UK's P&O Trans European and German logistics giant Stinnes. But they work mainly on regular high-volume contracts with blue-chip customers and only have an impact on national markets when they need subcontractors.

Even the biggest companies have extremely modest market shares: industry leaders Stinnes and Deutsche Post have 6%, followed by Switzerland's Kuhne & Nagel and Panalpina with 3% each.

The fragmentation of the trucking industry is a major headache for companies operating on a pan-European basis. Firms such as the German electronics group Siemens and the Japanese car firm Mazda have centralised their European warehousing and distribution but they have yet to establish a pan-European transport system, more than seven years after the creation of the single market.

An efficient trucking market is a vital ingredient for Europe's economic success because transport still offers huge potential for cost cutting. In recent years, transport and distribution costs in Europe have averaged between 18% and 20% of gross domestic product, or €600-800 billion, according to Prologis, a US firm which is building the first pan-European warehouse network.

The potential of this huge market has attracted a new breed of so-called logistics providers which are targeting the entire supply-chain operations of the world's top 500 multinationals.

United Parcel Service (UPS), the world's largest delivery company, has set up a stand-alone logistics division which is scouring Europe for big-ticket contracts and the US conglomerate General Electric has moved into logistics in a big way. So too have the Dutch-owned express carrier TNT and Germany's Deutsche Post, which is building a global transport network.

The small trucking companies which meet more than half the Union's road transport requirements are only bit-players in this fast-growing multi-billion-euro market.

And now they have a nagging new fear: that the enlargement of the Union will open the floodgates to hordes of low-cost trucks from eastern and central Europe. Some see the future in the yellow liveried juggernauts operated by Willi Betz, a savvy German firm which snapped up Bulgaria's state-owned transport company and is operating more than 4,000 trucks, some with Bulgarian drivers, across Europe.

The paranoia is being stoked by reports of trucking companies hiring illegal and unqualified drivers, mainly from the east, to undercut their competitors or simply to stay in business. Thirty Dutch hauliers are currently being prosecuted for using non-EU drivers, but the authorities fear this may be only the tip of the iceberg.

Some truckers reckon they face a greater threat from enlargement than the Union's farmers. With average operating costs in the east just a tenth of German levels, they may be right.

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