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Truckers in the European Union may have won some concessions during
the recent spate of fuel tax protests, but, as Bruce Barnard reports, the price
of diesel may soon turn out to be the least of their worries. Europe's small and medium-sized trucking firms could soon be erecting
blockades again as the recent fuel tax cuts will provide only temporary relief
to an industry under siege. The modest reductions in operating costs won by truckers in France,
Belgium, the Netherlands and Italy will probably aggravate the key problem of
overcapacity, by delaying the bankruptcy of companies operating on the margins
of profitability. Truckers across Europe are now rallying against a new "threat" - an
invasion of low cost truckers from eastern Europe quoting bargain basement
rates to haul cargoes across European Union borders, and increasingly within
national markets. The east European invaders are mostly active in Germany, the
Netherlands, and Belgium - siphoning off traffic from the ports of Rotterdam,
Antwerp and Hamburg. But they are now also moving into more distant markets,
including the UK, where truckers say they are being undercut by Bulgarian and
Hungarian operators. Some small EU haulage firms have responded by hiring drivers from
eastern Europe, many of whom were stranded in the west after Russia's financial
crisis in September 1998. Bulgarian or Lithuanian drivers who were accepting as
little as $200 per month for working a 16-hour day are now earning more driving
for western firms, but still a lot less than their EU counterparts. There is a
particularly active black market for cut-price drivers in the Netherlands,
where more than 60 hauliers have been prosecuted for hiring non-licensed
drivers from non-EU countries. Some savvy EU truckers have established bases in eastern Europe to
get a competitive edge in western haulage markets. Willi Betz, a privately-held
Stuttgart transport firm, was ahead of the pack, buying Somat, Bulgaria's
state-owned trucking company, back in 1994, the year Germany's protected
trucking market was deregulated. Now its 4,000 trucks and 6,500 trailers
registered in Germany and other EU countries as well as Bulgaria operate across
Europe, some with EU drivers, others with drivers from eastern Europe. And they
are among the most competitive in the EU. The east European "threat" is greatly exaggerated, but reports of
non-EU drivers cutting rates to get business are feeding resentment in an
industry characterized by wafer thin margins and a high drop out rate. The fact
that the EU's eastern enlargement will give east European truckers access to
its liberalized trucking market is creating a paranoid atmosphere that could
trigger a backlash, mirroring the protests against high fuel prices. Farmers,
who supported the recent truckers' blockades, are among the most vociferous
critics of eastern enlargement, and will probably link up with them again in a
new campaign. Meanwhile, the widening gap in fuel taxes and vehicle excise duties
across the EU is distorting the trucking market, particularly in the northern
countries. The average annual tax and vehicle duty for a 40 tonne truck in 1999
ranged from around $10,200 in Greece to $14,930 in France and a whopping
$36,235 in Britain. The British truckers enjoy lower taxes and social security
charges, but they are still at a disadvantage to their continental rivals:
Dutch operating costs are about 10% lower, while the French have a 5%
edge. These modest margins are having a disproportionate impact on a tight
market: the number of foreign-owned trucks travelling between Britain and the
continent soared by 24% in the first quarter of the year, while British
journeys stagnated. Foreign trucks now account for over 40% of trucks
travelling from Britain to the mainland. These figures were released by the UK
government barely two weeks after a parliamentary transport sub-committee
rejected claims by UK hauliers that they are losing business to foreign
operators. British truckers are also incensed that they must pay motorway tolls
in some continental countries while there is no charge on foreign operators
using British roads. The liberalisation of the EU's trucking market in July 1998 has had a
muted impacted on the industry. Trucks that once returned empty from foreign
"jobs" are now picking up backleg cargoes, often at giveaway rates that enrage
local operators. But there hasn't been a noticeable increase in trucks carrying
cargoes within foreign markets - so-called cabotage - although Dutch operators,
who account for 25% of EU cross-border traffic, are working inside
Germany. Truckers have tried to cut costs by moving fleets to cheaper
countries - the Danes to Luxembourg and the British to France. But the extra
administrative and legal costs deter small and medium-sized operators from
making the move. Truckers are also facing a new problem: a growing shortage of
drivers. With unemployment falling across the EU the industry has to compete
with better-paying and less-demanding occupations. And it's already having an
impact with containers piling up at British ports due to a lack of
trucks. The bigger players like Frans Maas of the Netherlands, Britain's
P&O and Eddie Stobart, Willi Betz of Germany and the top French duo,
Norbert Dentressangle and Giraud, can survive by maximizing economies of scale
and trading up market by investing in logistics, distribution, warehousing and
other add-on services. Owner operators and medium-sized firms, in contrast, are
restricted to carrying loads from A to B. Yet despite the difficulties, trucking remains one of Europe's
success stories, overcoming rising fuel and vehicle taxes, deregulation, low
cost east European competition, the wrath of the green lobby and pro-rail
initiatives, to boost its share of the EU freight market from 50% to 75% over
the past 30 years.
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