Last reviewed 24 July 2012

A report published in June 2012 by a High Level Group of academics for the European Commission has recommended that road haulage cabotage should be opened up in order to achieve a Single European Transport Area. Neil Baylis reports.

Background

Cabotage refers to domestic road haulage operations undertaken by non-resident hauliers on a temporary basis. The most recent revision of cabotage rules took place in 2009, when Regulation (EC) 1072/2009 was adopted. This regulation stipulates that an international journey which takes place within seven days cannot comprise more than three consecutive operations; in certain circumstances, the regulation also provides that transporters can carry out cabotage en route back to their country of origin.

On 20 June 2012 the High Level Group on the Development of a Single European Transport Area produced a report which recommended relaxing the current cabotage restrictions in order to assist in improving efficiencies in the sector and creating a Single European Transport Area. The report analysed the economic, social and environmental benefits of opening up the road transport market, where cabotage operations are currently restricted to around 2% of all national transport operations.

The Group was charged by the European Commission to produce the report, with the intention that its findings would be considered by the Commission when it prepares its own report on cabotage. The Commission's report will decide whether it is appropriate to open up national markets to cabotage and whether new laws are needed.

Proposals to ease the restrictions on cabotage are not without precedent. In April 2011, a White Paper on transport was published which recommended the abolition of cabotage restrictions. At that time, the measures proposed to increase flexibility were politically contentious. France and Germany argued against the proposals on the grounds that operators from the new Member States would threaten their domestic operators. However, the European Parliament was in favour of liberalisation of the market and obtained a “rendez-vous” clause for 2013.

Article 17(3) of the regulation therefore requires the Commission to produce a report on the EU road haulage market by the end of 2013 in order to examine whether certain market conditions, including the effectiveness of control and employment conditions, road user charges, and social and safety legislation are sufficiently integrated to enable a further opening of road transport markets. It is improbable that any revised legislative measures will enter into force before mid-2014.

Summary

The report focuses on the economic, social and environmental benefits of opening up the road transport market with the aim of encouraging the Commission to develop a Single European Transport Area. The Group's primary recommendation is that there should be a flexible and gradual opening of national road transport markets, and that this be accompanied by a platform of measures "to ensure that sufficient labour forces are available, that rules are applied fairly and that innovation can be promoted". The report's specific proposals extend to the creation of two separate types of cabotage: linked cabotage (ie cabotage that is linked to international movements) and non-linked cabotage. Linked cabotage will be restricted to short periods and relate to international haulage. Non-linked cabotage will be independent from international haulage, may be performed over a longer period and will be subject to a registration procedure.

The report

In addition to the report's recommendations for a gradual opening-up of national road transport markets and cabotage gradually, there are also proposals to:

  • improve the attractiveness of the job of drivers

  • ensure fair competition through efficient enforcement

  • ensure that hauliers carrying out cabotage operations not linked to international transport apply the same employment legislation of their local competitors according to the principles of the Posting of Workers Directive (Directive 96/71/EC)

  • encourage innovation in road transport in order to achieve a more sustainable and efficient road freight transport system.

Linked cabotage

The report recommends that linked cabotage should be defined to refer to international operations. Linked cabotage would be restricted to four days from the point of crossing the border into the country where the cabotage is to be conducted. There would be no restriction on the number of cabotage operations that could be performed during this period. Further, there would also be no requirement that the vehicles be fully or partially unloaded before the cabotage operations could begin on immediately crossing the border. The broad purpose of this reform is to ensure that maximum flexibility is available to reduce empty running.

Non-linked cabotage

Non-linked cabotage refers to cabotage which occurs:

  • after an international movement

  • after an international movement plus linked cabotage, or

  • entirely independently of these two types of operation.

In practice, this provision will allow a company engaged in road haulage to enter another Member State and participate in its domestic market. In order to avoid operators in Member States with weaker employment regulations and artificially lower costs from exploiting their cost advantages against foreign competitors, the Group proposes that the fundamental conditions of Directive 96/71/EC must apply to all cabotage operations. This effectively removes the requirement for an employment relationship between the undertaking making the posting/temporary employment or placement agency and the worker during the period of employment for the provisions of the directive to apply. As a result, the report's proposals intend the directive to apply to all cabotage arrangements. The directive was introduced to protect the rights and working conditions of a posted worker across the EU. (A posted worker is defined as a worker who is employed in one Member State but sent by his or her employer on a temporary basis to perform a function in another Member State.) The principle of the directive is to ensure that where a Member State has certain minimum terms and conditions of employment, these must also apply to workers posted to this State.

Non-linked cabotage would be limited to 50 days per annum per driver in any Member State on the condition that Euro V vehicles are used. Where Euro V vehicles are not used then the period is reduced to 30 days.

The report suggests that the 50-day limit could be extended in order to provide for increased flexibility and market liberalisation. This form of cabotage would be conducted as a matter of right. However, the regime would be subject to pre-registration and infringements would attract severe penalties.

Conclusion

The report proposes substantial changes to cabotage practices which would effectively open up national markets to increased competition from other Member States' haulage operators. In some respects this may be beneficial to domestic markets.

For example, in the UK, the car transporter industry experiences two major seasonal peaks in demand every year connected to the issue of new car registration plates. Although the industry's demand can be satisfied by the domestic car transportation companies for the rest of the year, at these two periods it is severely strained and employs foreign transporters. This kind of logistical difficulty would be eased by the softening of market restrictions on cabotage. Equally, however, the reforms may dismay those domestic hauliers that fear increased competition from foreign road haulage companies.

The Commission's report, due in 2013, is awaited with interest.