Silviase/jgov_v1.4_full_ann huggingface dataset:
comfortably above the previous peak of 132 billion tonne kilometres recorded in 1989. This rise in road freight between 1993 and 1994 was larger than the increase in GDP (up 3.8 per cent) and the increase in manufacturing output (up by 4.1 per cent) (Department of Transport 1994d).

##### 2.3.5. Length of haul

The average length of haul has risen each year between 1979 and 1994, from 70 km in 1979 to 86 km in 1994. This is due to a shift in fleet composition, specifically the steady rise since 1983 in the number of vehicles over 33 tonnes, when the maximum gross weight increased from 32.5 to 38 tonnes. Since 1983 the number of 38 tonne goods vehicles has grown to about 76 thousand, representing 18 per cent of the total HGVs in 1994. These vehicles lifted some 38 per cent of total tonnes and accounted for 60 per cent of the total tonne kilometres. They have the longest average length of haul of all vehicles. About 55 per cent of goods are carried less than 50 kilometres. The commodity group with the highest proportion of long distance travel is food and drink; 20 per cent of this type of freight is carried more than 200 km compared with an overall figure for all commodities of 13 per cent.

Growth in the international transport of freight by road has been rapid. Roll-on-roll-off traffic to and from the continent has doubled since 1982. Production and distribution of the most everyday goods may now involve a series of long-distance movements across national boundaries (Royal Commission on the Environment 1994, 165).

##### 2.3.6. Changing patterns of work

Deregulation has had a number of effects on patterns of work. Statistics show that between 1979 and 1994, own account tonne kilometres fell by 2 per cent from 38 billion to 37 billion, while public haulage tonne kilometres grew from 61 billion to 101 billion, a rise of 64 per cent over the same period (Department of Transport 1994d).

Easier market entry created by the liberalisation of the road freight market has had a profound effect on the suppliers of haulage services; fierce competition in general haulage forced many operators, especially the larger ones, to specialise more than they did before deregulation. A highly competitive and open market has also stimulated the demand for third-party services. In a liberal market, manufacturers and retailers are more likely to replace in-house operations with distribution companies offering storage, stock control and transport. One example of a user of such services is Marks and Spencer (M&S), the food and clothing retail firm. This company does not own or operate vehicles but its goods are transported in vehicles which have the M&S livery owned by a dedicated contractor.

Other new patterns of freight transport have emerged, such as long hauls from a small number of distribution depots serving the whole of Britain, and just-in-time (JIT) logistics. JIT involves precise planning of deliveries to match production or sales needs. A further change, and one which has been stimulated by the creation of the Single European Market, is the move by many companies to concentrate their production and inventory holdings at a smaller number of locations.
Inevitably, concentration of production and distribution centres will lead to an increased need for transport - and the transport will need to be, in many cases, faster and more reliable in order to maintain customer service levels. The move towards concentrated storage started some time ago in the UK and explains in part why the growth in freight transport measured in tonne-kilometres has been outstripping growth in tonnes lifted.

Table 3: Road Freight Traffic - All national and international haulage by vehicles registered in the country, 1989

(1000 million tonne-kilometres)
Country	Hire and reward	Own account	Total
Belgium	19.2 (63)	11.1 (37)	30.3 (100)
Finland	19.6 (78)	5.4 (22)	25.0 (100)
France	79.0 (68)	37.7 (32)	116.7 (100)
Germany	74.9 (60)	49.3 (40)	124.2 (100)
Greece	9.6 (70)	4.2 (30)	13.8 (100)
Ireland	2.0 (50)	2.0 (50)	4.0 (100)
Italy	110.6 (82)	23.8 (18)	134.4 (100)
Netherlands	14.3 (65)	7.7 (35)	22.0 (100)
Portugal	7.2 (50)	7.1 (50)	14.3 (100)
Sweden	21.6 (86)	3.6 (14)	25.2 (100)
UK	98.8 (72)	37.2 (28)	132.0 (100)
(percentages in brackets)
Source: ECMT: Statistical Trends in Transport, in Cooper 1994
NB: Hire or reward: goods vehicle operators who only carry goods in the course of their own trade or business
Own account: Goods vehicle operators who only carry goods in the course of their own trade or business

#### 2.4. The European market

The UK is a dominant player in European markets. It had the second largest volume of road freight traffic in Europe behind Italy (Table 3) in 1989. In 1991, NFC was the sixth largest road based transport company in Europe (Table 4). The UK has two other companies in the top ten and a total of six in the top 20.

The market is perhaps best seen as Europe as a whole, rather than just as a domestic market. It is predicted (Cooper 1995, 24) that continued growth, rather than market dominance, is the prospect for the largest companies in road transport. Official forecasts of the growth in HGV traffic predicted that growth would be slow but would increase by 140 per cent between 1989 and 2025 and that there would be a further increase in the proportion of freight carried by road (Royal Commission on the Environment 1994, 163). This growth is likely to be underpinned by a number
Table 4: Top 20 road-based transport companies in Europe

Rank	Company	Country	Revenue (£millions)	Market Share (%)	Cumulative Market Share (%)
1	Danzas	CH	3424	3.8	3.8
2	Schenker	D	2555	2.8	6.6
3	Nedlloyd	NL	2033	2.3	8.9
4	Kuhne and Nagel	D	1881	2.1	11.0
5	SECTA	F	1774	2.8	13.0
6	NFC	UK	1672	1.8	14.8
7	Panalpina	CH	1567	1.7	16.5
8	Bilspedition	S	1068	1.6	18.1
9	LEP	UK	1101	1.5	1.97
10	Ocean Group	UK	1101	1.2	20.9
11	Interforward	S	1068	1.2	22.1
12	TNT Europe	Australia	969	1.1	23.1
13	Internatio Muller	NL	894	1.0	24.1
14	Wincanton	UK	698	0.8	24.9
15	ASG	S	685	0.8	25.7
16	Gefco	F	667	0.7	26.4
17	SCAC	F	613	0.7	27.1
18	TDG	UK	581	0.6	27.7
19	Thyssen Trading Group	D	575	0.6	28.4
20	POETS	UK	557	0.6	29.0

Source: Cooper 1994

of continuing features of the European market place. For example manufacturers and other uses are rapidly rationalising their carrier base in the wake of rationalising their European logistics systems. Increasingly, users are finding it more beneficial to work in a more involved way with fewer, but larger companies. Moreover, continuing deregulation in the road transport sector has enabled companies to grow more easily, either organically or by merger and acquisition. The recession rather than regulation has restricted market growth for no longer are permits such an expensive impediment to growth, whether on a national or an international basis. It is predicted that by 2001, the top 6 European road-based companies will have captured around 23 per cent of the market. This, however, represents only a relatively small increase in concentration, compared to the current situation.

##### 2.4.1. External dis-economies: Environmental costs

Recent controversy over road building, size of freight vehicles and mix of transport has been added to by the Report of the Royal Commission on Environment Pollution; Transport and the Environment published at the end of 1994. Its recommendations include steep tax increases on
Table 5: Estimates of environmental costs of the transport system (1994/95)

Costs attributable to road transport are shown in parentheses	Lower End of Range	Upper End of Range
Air Pollution	2.4	6.0
Climate Change	1.8	3.6
Noise & Vibration	1.2	5.4
Accidents	5.5	5.5
Total quantified environmental costs	10.9	20.5
Among environmental costs for which it has not been possible to estimate a money value and which are not therefore included above are: losses of land	severance of communities
loss of access to land visual intrusion	loss or disruption of

Source: Royal Commission on Environmental Pollution 1994

fuels, over and above the 5% a year to which the government is already committed, and a big growth in the amount of freight carried by rail from 6.5 per cent in 1993 to 10 per cent by 2000 and by 20 per cent by 2010.

Table 6: Tax revenue from road users in relation to quantified environmental and public costs, by vehicle class (1994/95)

£ billion

Cars and light goods vehicles	Heavy goods vehicles	All vehicles
Infrastructure costs	3.7	2.8	6.9
External costs of accidents $ {}^{a} $	3.7	0.9	5.4
Other quantified environmental costs $ {}^{b} $	3.5 - 9.6	0.9 - 2.7	4.6 - 12.9
Total quantified costs	10.9 - 17.0	4.6 - 6.4	16.9 - 25.2
Infrastructure costs $ {}^{a} $	16.6	3.1	20.4
Revenue as percentage of quantified costs	152% - 98%	68% - 49%	121% - 81%

$ ^{a} $ The external costs of accidents have been allocated between vehicle classes in proportion to the involvement of each type of vehicle

$ ^{b} $ HGVs have been allocated 30% of noise and vibration costs; in other respects environmental costs have been allocated between vehicle classes in proportion to fuel used.

Source: Royal Commission on Environmental Pollution 1994
ones in which free market conditions could be said to apply, with hauliers deciding how many vehicles they should operate (subject to safety standards), and hauliers and their customers together deciding prices for services.

The driving force behind the deregulation of international haulage in the EU relates to the Treaty of Rome, and the right of an individual from any member state to provide goods and services anywhere in the Community. The EU observed that the system of bilateral permits which controlled international haulage in the Community during the mid-1980s amounted to cargo reservation. If a cargo needed to be moved from, say France to Italy, the bilateral permit system made cargo more available to a French or Italian international haulier than to one from say, Belgium. This was contrary to the Treaty of Rome and deregulation was seen as an effective way of ensuring that EU international hauliers were not restricted in their access to markets.

Since the mid 1980's the position in the EU began to change and there has been a gradual harmonisation of transport policies with the completion of the internal market, although it has only really developed in the early to mid-1990's. Deregulation for international haulage was agreed by the Council of Ministers in 1987 (and became fully implemented at the end of 1992). A further measure to increase access to domestic markets of member states initiated by the Council of Ministers was with respect to cabotage i.e. journeys entirely within another country. By 1995, there is about 80% harmonisation within the EU - systems of regulation are similar but implementation varies. There have been fears within the EU that moving to the implementation of regulations to open markets would cause a significant increase in competition within domestic markets. The evidence above suggests that although the market is large enough to accommodate a large number of firms there has been, as was pointed out above, some moves towards an increased concentration within the UK industry.

##### 2.5.1. EU regulations

The regulations which govern the movement of vehicles and goods between countries, focusing particularly on the EU, are now described. Further changes being planned include those on drivers' hours (to be extended) and speed limits (to be reduced). International requirements on special loads include regulations on the transportation of dangerous goods, perishable foodstuffs and customs.

##### 2.5.2. Customs

With the completion of the single market on 1 January 1993, goods in free circulation in the EU may travel freely between member states without customs intervention. However, goods not in free circulation remain under customs control and normally move under the community transit system. The goods are accompanied by Community transit documents and both goods and documents must be extended to customs at destination. The Community system has been extended to European Free Trade Association (EFTA) countries.

Many countries including the UK are parties to the Customs Convention on the
International Transport of Goods under cover of TIR Carnets (TIR Convention) 1959 and 1975 and The Customs Convention on Containers 1956 and 1972.

A TIR Carnet gives no right to operate, it merely provides a special customs facility which allows goods carried in officially approved vehicles or sealed containers to cross intermediate countries with the minimum of customers' formalities. The TIR Carnets cannot be used for journeys wholly within the territory of the EU. TIR Carnets can, however, be used for journeys which start or finish outside the EU. In the UK, the Road Haulage Association (RHA) and the Freight Transport Association (FTA), as guaranteeing associations, are authorised to issue TIR carnets and give guarantees.

Certifying organisations authorised by HM Customs and Excise are responsible for the approval of all new containers and any application is made directly to them. The Department of Transport is responsible for the approval and re-approval of all vehicles including trailers and semi-trailers.

Vehicles moving between EU Member States do not need any import customs documentation. Vehicles temporarily imported into the EU from third countries may be relieved of duty and VAT without the need to present any customs documentation, subject to certain operating conditions, such as restrictions on cabotage. Most European countries readily allow temporary importation of a container free of customs duty under the Container Convention 1956.

##### 2.5.3. ATA carnets

ATA carnets are international customs documents issued by Chambers of Commerce in most major countries throughout the world. The Carnets allow customs clearance of certain classes of temporary imports and exports by replacing:

- normal customs documentation in the country of temporary exportation; and,

- normal customs documentation and security (e.g. by bond or deposit) in the country of temporary importation.

Carnets do not however, give immunity from other conditions of temporary exportation and importation. For journeys to non-EU or EFTA countries, when a TIR carnet is not used, the customs requirements of each country through which the goods are passed must be obeyed. A deposit or guarantee instead of import duty is normal needed before the goods are allowed entry (carnet de passage en Douane).

##### 2.5.4. EU community authorisations

Hauliers wishing to make international journeys for hire or reward within the EU must hold a Community Authorisation. It is issued under Regulation (EEC) 881/92 and is valid for all journeys to or through Member States. These include transit through a Member State on a journey to any other country, whether or not it is a Member State, and journeys between two Member States.
However, Community Authorisations do not allow cabotage, i.e. journeys made entirely within one Member State (see section below). Community Authorisations are issued by Traffic Area Offices to all operators who hold a Standard International Operators Licence. They are valid for up to five years and there is no limit on the number of journeys which may be made during that period.

##### 2.5.5. Road haulage permits

Under 7 of the Agreements and Arrangements (mentioned above) goods vehicles from the UK must be previously authorised by a permit. On production of a permit at the border the haulier is allowed to pass through that country, although, depending on the terms of the Agreement, he may still have to pay local taxes. All permits are issued by the International Road Freight Office (IRFO). A fee is charged for each permit issued. Whether a permit is necessary depends not only on the country of destination but also on the size of the vehicle and the goods being carried. There are some exceptions for small vehicles and certain loads as well as for other types of operations.

Each single journey permit is valid for one return journey, with outward and return transit trips through a country counting as one complete journey. Multiple journey permits are available for Turkey, authorising four return trips during the validity of the permit. Most permits incorporate space to record details for the vehicles and journey.

##### 2.5.6. ECMT (European Conference of Ministers of Transport) permits

A small number of ECMT permits is allocated to the UK each year. They are valid for haulage between ECMT Member States (EU Member States and Austria, Bulgaria, Croatia, Czech Republic, Estonia, Finland, Hungary, Latvia, Lithuania, Norway, Poland, Romania, Slovakia, Slovenia, Sweden, Switzerland and Turkey). ECMT permits allow journeys between member states, including laden or empty transit journeys and third country journeys to other ECMT states, which are prohibited by certain bi-lateral Agreements. However, they cannot be used for transit of ECMT countries on journeys to non-ECMT states or for cabotage. They are for hire or reward journeys only and may not be used by unaccompanied trailers or semi-trailers. ECMT permits are valid for one calendar year and allow an unlimited number of journeys within that period. They can be used with only one vehicle at a time. There is an administration fee of £40 per year. The quota is limited, so these permits are allocated before the beginning of the year in which they are issued. Usually no further permits are available during the course of the year.

##### 2.5.7. ECMT removals permits

These permits are quota free and can be used for international removals between ECMT member states or crossing ECMT member states. They are available only to firms employing the specialised equipment and staff needed to undertake such operations. They are valid for one year from date of issues and the fee is £5 per permit.
##### 2.5.8. Own account traffic

Operators carrying goods in connection for their own business are exempt from Community Authorisation requirements in the EU and permit requirements in certain other countries, but may need to carry an own account document.

##### 2.5.9. Cabotage permits

Cabotage - i.e. journeys entirely within another country, is generally prohibited under bilateral Agreements and Arrangements. However, cabotage is allowed within the EU under cover of a cabotage permit. These are issued by the IRFO and allow the holder to make an unlimited number of cabotage journeys during the period of one month. There is a £5 fee for issuing cabotage permits.

There is a quota of cabotage permits and usage is monitored. Under-use of the permit or non-compliance with the conditions of issue could lead to its withdrawal. Operators may pay VAT on cabotage in the Member State in which the journey is made. Cabotage by own account operators was permitted from January 1 1994. Cabotage within the EU will be liberalised from 1 July 1998, when all permits and quotas will be abolished.

A cabotage agreement is not needed where there is a certain combined transport operation. Goods must be carried between Member States, by rail, sea or inland waterway services, in a lorry, trailer, semi-trailer (with or without a tractor unit), swap body or containers of 20 feet or more. If the non-road leg exceeds 100 km, as the crow flies, and the initial and final road legs are within a radius of 150 km of the port of loading or unloading, as the crow flies, then a cabotage permit is not required for the road legs of the journey. In theory there is a numerical control on the number of permits, but in practice demand lags behind the opportunity. The allocated number of permits has not been taken up. However, there had always been the opportunity for UK firms to bring back a return load from a destination to which a load had been taken. Cabotage allows carriers freedom of access within countries. For example a UK carrier could take a load to France, pick up and deliver within France, then move to another country within the EU.

It is illegal not to be in possession of the documentation for the journey undertaken. Fines of up to $ £2000 $ may be imposed where documentation is not carried, or if documents are forged or misused. A conviction is grounds for an operator's licence to be revoked, suspended or curtailed under section 69 of the Transport Act 1968 as amended.

##### 2.5.10. Third country traffic

In some cases goods may be carried by UK hauliers from another country to a third country. A Community Authorisation allows UK hauliers to make journeys between any other EU Member States. The rules on third country journeys involving at least one non-EU country are complicated (Annex B). No agreements outside EU exist for this.
Commissioner responsible for the technical study put forward the argument to the Assembly that 44-tonners might cause less damage to roads and bridges if the weight is spread over more axles, especially with twin tyres and air suspension.

#### 2.6. Summary and conclusions

To sum up, the UK in terms of flexible arrangements for contracting companies, is streets ahead of the rest of Europe. Although most restrictions in Europe have now gone, other countries have come to that position much later than the UK. Not many years ago, other European countries had tariff control on haulage rates-bracket tariffs which protected price rates and entry to the market. This built in market distortions. For example in France, to reduce the overall cost of transportation and storage, companies would throw in free warehousing - which was not controlled.

The move to a quality market in the UK has had two effects:

1. Some companies which have their own fleet have become more efficient, and have moved into third party distribution i.e. carrying freight for others. Before 1968, the industry was dominated by own account carriers. Many of these have taken the opportunity presented by the legislation to diversify their activities.

2. The more mature parts of the haulage sectors have moved into company transportation i.e. they operate a dedicated fleet.

Privatisation has made a significant but smaller contribution than deregulation to improving the service given by the industry to the users of freight transport services. Cooper (1995, 11) concludes that together, deregulation and privatisation in the freight sector have helped to give manufacturers and retailers an enhanced capacity in order fulfilment, a key competitive dimension in the 1990's.

Although the UK freight industry has gone through a successful period following privatisation and deregulation, recent developments have cast a blight over the industry. In November 1994 industry commentators suggested that UK transport policy was at a cross-roads (Freight 1994). Transport in general and road transport in particular now seem to have an uncertain future. There is a growing acceptance of something that the FTA pointed out in its 1990 Transport Dilemma report; unless it is managed, demand for road use in the UK will outstrip the road network's capacity.

This highlights a broader issue - that the ownership of the transport infrastructure has not been tackled by the legislation. Although government policy, is 'to ensure that the taxes paid by road users at least covers the full economic costs of road provision and road use' (Royal Commission on the Environment 1994, 98), the road network remains in state ownership. The use of this network is not priced. This means that its deregulation has been only partial, that the freight company operators are operating at low marginal costs. This is a difficult area in any deregulation as it presents a major second best problem. In this case where the use of roads is not priced,