Vehicle activity in the ‘home’ country – the real problem

11 Oct 2019

One of the gemstones of the European Parliament agreement on the Mobility Package is this: all heavy goods vehicles shall perform at least one loading or one unloading of goods every four weeks in the Member States of establishment. This comes in the context of the revision of Regulation (EC) 1071/2009, establishing conditions for access to occupation of road transport operators. This is also called the letter-box regulation, not because it facilitate the setting up of them but because it aims to prevent them being established in the road sector.

 

From the very start, we would like to point out that the European Parliament proposal is the only effective measure to fight letter-box companies in our sector. All the other proposals on the table, imposing road operators to have premises packed with documents, will unfortunately result in a different more sophisticated kind, just a bit bigger, to fit all these documents in. 

 

The above-mentioned European Parliament proposal will also put an end to fishy social practices and employment schemes that come with this highly unsustainable business model. Letter-box companies keep road transport services artificially cheap, thus leaving no chance to other inland modes to have their share in transporting goods across Europe. 

 

And because this proposal is so effective, and puts so much at stake, it has recently become subject to attacks as the Mobility Package enters now the critical stage of Institutional negotiations. Despite its potential to restore economic sustainability for a sector struggling with a bad record in just about every respect, its opponents say the proposal will generate empty runs and thus will be disastrous for the environment. Policy makers see themselves pushed in a corner and forced to make their choice: “More pollution or more letter-box companies?”

 

Here are some clarifications on the topic, to show why the European Parliament proposal, tackling one of the most toxic business models of our sector, will bring ample social and climate benefits.

 

1.   When economic sustainability sets the scene / Road freight operators based in Central and Eastern Europe have long played a dominating role on the EU international haulage market. That is because they made it very cheap to transport goods across Europe. Loopholes in the EU legislation allow hauliers from Western Europe to set up letter-box companies in low-income Member States, recruit low-paid labour and operate on Western markets on low prices. Obscure employment schemes, and a considerable deficit in cross-border enforcement and controls, enable these operators to circumvent equal pay rules and social contributions, the latter topping up their “savings” by up to 40%. Meanwhile, local road companies from the East claim a share of this lucrative Western market too. And they get it via subcontracting! Transport activities which are less profitable for Western hauliers – be they cabotage or international transport – are “generously” subcontracted out to eastern companies on a fraction of their real cost. Both business models are based on the same principle: having an establishment in a Member State where there is no vehicle activity, while operating entirely in Western Europe. Hauliers wanting to compete on this market in full compliance with EU rules, social provisions included, stand less and less chance to do so. Making it mandatory to have vehicle activity in the country of establishment will put a stop to this. The European Parliament proposal has great potential in restoring fair competition and a culture of law compliance in our sector. It will leave room for every business to operate on fair grounds.

 

2.   No letter-box companies – a fairer-priced road transport and huge social and environmental benefits / Road transport is cheap mainly because operators, via their letter-box companies, fail to pay legally set wages and social contributions to professional drivers. And because it is cheap, transport by road grows fast leaving no chance to other inland modes. Unsurprisingly, latest statistics show that road accounts for more than three quarters of the total inland freight transport in the EU (Eurostat, data for 2017). By putting an end to letter-box companies, the European Parliament proposal will help the sector walk out the low-cost zone it has plunged into for the past decade. True, by picking up its real social and labour bill, transport by road will be pricier than today, but that will be its fair price! And equally true, by being so, users and clients will definitely have to use this transport mode in a more responsible way. Will this mean less road transport? Perhaps, but it will also mean ‘better’. Will less road transport mean less jobs? Maybe, but it will certainly mean better jobs. Will “less jobs” be a problem for our sector? Rather not, in the context of the current driver shortage across Europe. “Less road transport” will on the contrary mitigate the shortage of drivers the sector constantly complains of. Will “less road transport” have a positive environmental impact? Undoubtedly. 

 

To conclude, we salute the European Parliament position. It shows practical and progressive thinking. It is the best proof that economic sustainability is strongly interconnected with social and environmental durability.

 

Any effective measures tackling the current untenable business models in road transport are welcome and must be urgently adopted.

 

By way of conclusion, it is not that the European Parliament leaves no room to hauliers from across the EU to operate wherever they want: under this particular EU regulation called ‘access to occupation’, if a haulier wants to operate in Belgium, Czech Republic, France or Denmark, they can establish their operational centre there. And it’s guaranteed: there will be no empty runs coming in and going out these countries. So, what’s the real problem?

 

 

Brussels, 11 October 2019

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