EUROPEAN COMMISSION Brussels,8.11.2017 SWD(2017) 362 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 92/106/EEC on the establishment of common rules for certain types of combined transport of goods between Member States {COM(2017) 648 final}



{SWD(2017) 363 final}



The reduction of the negative impact of transport activities remains one of the main goals of EU transport policy supported by a range of different EU actions aimed at optimising the transport system and improving its efficiency, at scaling up the use of low-emission alternative energy for transport and moving towards zero-emission vehicles. Incentivising a shift towards lower emission transport modes such as inland waterways, short-sea shipping and rail is one of those actions and the 2011 White Paper on transport already defined, as part of its general strategy for more sustainable transport, a target for shifting 30% of the projected volumes of road freight transport above 300 km to other modes of transport by 2030. For such a modal shift in the freight sector, the main alternative to road transport for non-bulk items is constituted by intermodal transport, where load units such as containers are transhipped between the modes as opposed to manual un- and reloading of goods. Despite the potential of intermodal transport especially over longer distance journeys, road only transport however remains the first choice of shippers even over longer distances above 300km : 56% of road freight transport still takes place on long distances. Under the right conditions (i.e. available infrastructure for intermodal transport, sufficient level of services and competitiveness of intermodal transport) this volume could be shifted away to other modes of transport leaving only the last mile for road transport. Unfortunately, this is not the case today While other complementary measures at EU or Member States level aim at improving specific aspects of negative externalities through regulation, obligations and taxation, the current initiative is about updating the Combined Transport Directive, the only legal instrument directly supporting intermodal transport: adopted in 1992 it focuses on a portion of intermodal transport with limited road legs, and specifically defines it with the term combined transport (CT). The Directive originally aimed at removing certain regulatory obstacles and making intermodal freight transport more attractive compared to road transport in a situation where the market is not providing price signals that correspond to socially desirable outcomes. While the Directive does not create any obligations on economic operators, it provides since 1992 a framework and the conditions for authorities to simulate the uptake of combined transport. However some of these conditions, e.g. the use of paper transport documents and stamps as a proof of eligibility for Combined Transport, and the freight market environment have evolved quite substantially in the last 25 years : some of the provisions of the Directive can no longer be applied and need to be updated. 1.1.Policy context The priorities of the current Commission reiterate the importance of sustainable growth. Transport activities continue to generate large negative side effects such as local air pollution, greenhouse gas emissions, accidents, noise and congestion. These are largely ‘external costs’ or ‘negative externalities’ since they cause considerable costs for society, estimated at 4% of EU GDP in 2008, but only in part are borne by the users. The large majority of these externalities are caused by the road sector which dominates the freight transport market (49% of overall freight volume in the EU and 75% of inland freight transport are carried on road). As already underlined in the 2011 White Paper, and reminded in the EU Low-Emission Mobility Strategy, reducing the negative impact of transport activities requires a mix of complementary measures and joint efforts and support by all stakeholders. Existing EU policies for sustainable transport were notably adopted in the context of the 2020 Energy and Climate Policy Framework (e.g. the revised Directive on the European Emissions Trading System) and the 2011 Transport White Paper. They cover mainly the following three areas: (1) "low emission vehicles": with European Regulations setting CO2 targets for new passenger cars and vans, with the Car Labelling Directive, the Clean Vehicles Directive or the Weights and Dimensions Directive, (2) "switching towards low emission alternative energy for transport" : with legal instruments such as the Renewable Energy Directive (RED); the Fuel Quality Directive (FQD), the Directive on the deployment of alternative fuels infrastructure or the Electricity Market Directive; and (3) "efficiency of the transport system": with legal instruments notably addressing the internalisation of external costs, such as the Eurovignette Directive, or aiming to optimise the traffic management and traffic flows such as the ITS Directive, or directly supporting the shift from road freight transport to other modes of transport such as the Combined Transport Directive or the Marco Polo Programme. Other existing policies and measures aiming at building a Single European Transport Area and completing a competitive and resource efficient European transport system have important co-benefits in terms of reduction of externalities, and most notably to promote the shift to more sustainable modes of transport. These include notably the Regulations providing for the market access to the international road freight and passenger market; the Regulation for the establishment and organization of international Rail Freight Corridors and the Directive on the Single European Rail Area; the River Information Service (RIS) Directive aiming to support to support inland waterway transport and to facilitate interfaces with other transport modes; the Regulation setting Union guidelines for the development of the trans-European transport network setting Trans-European Transport Network (TEN-T) policy implementation. Finally EU financing and related instruments such as the Connecting Europe Facilities (CEF), the European Structural and Investment Funds (ESIF), or the European Investment Bank (EIB) play an important role in for the development of the European transport infrastructure. In this context, while technology and all these EU policies and legislation on transport, energy and climate have achieved a reduction of emissions per tonne-kilometre, the road externalities remain higher than in other modes and congestion continues to increase and a greater use of alternatives to road transport is therefore also necessary. A specific target for such modal shift has been set in the 2011 White Paper on Transport: to shift by 2030 30% of long distance road freight (over 300 km) to rail or waterborne transport, and more than 50% by 2050. This would inter alia contribute to the achievement of the target aiming at reducing greenhouse gas emissions from transport by mid-century to a level 60% lower than that in 1990, reconfirmed recently in the EU Low-Emission Mobility Strategy. The latter also concluded that the reduction of air pollution from the transport sector is an important factor for achieving the commitments under the Paris Agreement on climate change and in line with the 2030 Agenda on Sustainable Development. More recently, the "Europe on the Move Communication" presented the road contribution for "a socially fair transition towards clean, competitive and connected mobility for all". It was accompanied by a series of measures and proposals (e.g. revision of Eurovignette Directive, recast of the Directive on interoperability of electronic toll system, revision of regulations on market access and on working conditions for the road haulage sector, as well as steps to lay the ground for cooperative, connected and automated mobility) and will be complemented by other proposals, including the amendment of the Combined Transport Directive. The Combined Transport Directive is not considered as a standalone instrument that supports modal shift in freight transport through the promotion and development of combined transport. As explained above, it is one of the key elements in a package of EU measures aimed at the development of multimodal transport and hence contributes to the reduction of externalities, in particular reduction of GHG emissions, air pollution, energy consumption and congestion. From a road transport regulation viewpoint, and as reminded above, it is worth noting the direct interaction of the Combined Transport Directive with the Weight & Dimension Directive and with the Regulation (EC) 1072/2009 on access to international road transport market: -the Weights and Dimension Directive complements the Combined Transport Directive by allowing heavier loads for combined transport to counterbalance the disadvantage of the weight of the transferrable load unit -the Combined Transport Directive includes an exemption from the cabotage restrictions provided for in Regulation (EC) 1072/2009. . In addition, when considering financing investment in transport infrastructure, it is important to remind that the EU Competition rules and most notably State Aid rules remain of application, especially when Member States decide to support unilaterally, through national programmes, combined transport, in the absence of dedicated regulatory framework for support.

1.2.Legal context: rationale for the Combined Transport Directive The Council Directive 92/106/EEC on the establishment of common rules for certain types of combined transport (known as the Combined Transport Directive) was adopted on 7 December with the original intention to improve the sustainability of the EU transport system through modal shift from road to rail and waterborne transport. It was meant to do so by lifting existing regulatory obstacles and increasing the competitiveness of international intermodal (and more specifically "combined") transport vis-à-vis road only freight transport. As the only EU legal instrument in place that directly supports intermodal freight transport, the Directive did not impose obligations on economic operators but rather introduced support measures for strictly defined ("combined") intermodal transport operations. Those measures were split between: -"regulatory" support measures : measures a) safeguarding the freedom to provide the cross-border service, i.e. preserving combined transport from possible national protectionist restrictions (authorisation schemes, regulated tariffs and quotas), b) exempting the road legs of international combined transport from the road cabotage limitations under Regulation (EU) and c) allowing, through cross-reference with the Weights and Dimensions Directive (53/96/EC), heavier loads for vehicles used in intermodal transport road legs to compensate for the tare weight of the load unit as well as use of 45 foot containers; -"economic" support measures: providing selected fiscal incentives and an extension of the definition of the own-account transport. These were meant to partially correct the unbalance between combined transport and road-only transport caused by the existence of negative externalities not fully reflected in the price of road freight. Historically the 1992 Combined Transport Directive built on, and extended to road/ waterborne the original 1975 road/rail combined transport legal instrument. In 1998, and building on report by the Commission, the Commission adopted a proposal to amend the Combined Transport Directive and the Weights & Dimension Directive. The proposal focused, already at that time, on the need to simplify the Directive, and most notably the definition of Combined Transport and related conditions for eligibility. Despite the relevance of the proposal, it was withdrawn in December 2001 due to a negative opinion of the European Parliament, mainly concerning the proposal to amend the Weights & Dimension one. Since then however, the European transport policy has evolved notably fuelled by the 2011 White paper, and notably a specific target for modal shift of road freight transport above 300 km. In parallel, and notably under the Paris Climate agenda, environmental considerations have pushed a drive towards even more low emission mobility. Finally with the advent of new technologies, notably the growing pervasiveness of modern ICT tools and the digitalisation of business processes, some of the provisions of the 1992 (e.g. the use of paper and stamps to certify transport documents) have become outdated and need to be reviewed. 1.3.Outcome of REFIT evaluation A REFIT evaluation of the Directive was carried out in 2014-2016 and concluded that the Directive continues to be a relevant instrument for supporting combined transport. It was established that without EU action, cross-border Combined Transport services would likely be faced with barriers resulting from different legal systems, making Combined Transport services less attractive and possibly unfeasible. The evaluation underlined that Combined Transport helps to reduce negative externalities through modal shift: as illustrated in table below it was estimated that the shift from road to intermodal transport induced by the Combined Transport Directive has brought along an annual saving of up to €2.1 billion in external costs. More specifically the evaluation reported that the shift from road to rail/road combined transport saved in 2011 (compared to road only) 7.3 Mt of CO2, while the shift to inland waterways saved 0.96 Mt of CO2 in the same year. Heavy goods vehicles External costs Inter-urban Accidents 410 Noise 73 Congestion 661 Air Pollution 607 Climate change 366 Total external costs 2118



Table 1. Total external cost savings for CT non-road legs otherwise being carried out by HGV (million EUR, in 2010 constant prices - Source: REFIT evaluation – based on PRIMES-TREMOVE Transport Model As pointed out in the evaluation, the freight transport market has evolved significantly since 1992 with the globalisation of the world economy and in particular the spread of global supply chains which has generated a considerable increase in freight transport volumes in the world and in the EU. The enlargement of the EU from 12 to 28 Member States has also further influenced the trade flows and therefore the transport market of the EU. These trends have supported the continuous growth of the transport volumes in the EU, including growth of Combined Transport. In addition some technical developments during the last 25 years can be assumed to have influenced multimodal transport more than single modal transport. In particular the widespread use of containerized transport can be seen as having supported intermodal transport, while the greater use of ICT have made it easier to plan and execute multimodal journeys. Considering the benefits of the Combined Transport Directive and the freight transport market development since 1992, the evaluation showed that there is significant margin for further improving the effectiveness of the Directive, owing to the fact that some of its provisions are outdated, its language is sometimes ambiguous, and its scope is limited. The shortcomings relate in particular to the definition of Combined Transport, the limitations of fiscal incentives and the outdated provisions relating to transport documents. In addition, the transposition and implementation of the Directive has been somewhat problematic. While the Directive has been transposed into national legislation by most Member States, the quality of transposition is not homogenous. Both the analysis by the Combined Transport Study as well as the public consultation highlighted that considerable differences exist in the implementation of the Combined Transport Directive. Some Member States' legislation seems to miss parts of the measures, while in others the chosen language is not in full conformity with the Combined Transport Directive or allows contradictory or misleading interpretation. The Commission has started several EU-Pilots and one infringement case, both where complaints have been launched by industry as well as to clarify the state of play of the transposition. 2.WHAT IS THE PROBLEM AND WHY IS IT A PROBLEM 2.1.The general problem: limited and slow ow uptake of intermodal transport The White Paper on Transport in 2011 set a clear target for modal shift of long distance road freight with an aim to reduce effectively the negative externalities of the transport sector. It also concluded, similar to the conclusions of the 1992 White Paper on Transport, that adequate interventions are needed to create conditions in which the industry could and would use intermodal transport instead of road only transport : investment into intermodal networks, regulatory intervention to ensure the internalisation of external costs as well as fair treatment of intermodal transport, and direct support to intermodal transport to counterbalance the inherent cost disadvantages of the complex intermodal transport chain. As explained in the REFIT Evaluation Report, intermodal freight transport has grown significantly between 1990 and 2011, with a doubling of volumes in TEU, and a significant increase (55%) between 1990 and 1994, notably due to the adoption and implementation of the Combined Transport Directive. In the recent "CT Update Study", the figures on the evolution of intermodal freight transport from 2011 and 2015, calculated based on an updated methodology, seem to demonstrate a higher share of intermodal transport as compared to the 2015 CT Study used for REFIT, but nonetheless confirm the estimated annual growth rate of intermodal freight transport of 3.5% provided in the REFIT Evaluation report. Table 2 below illustrates the relative importance of the various intermodal transport types, i.e. road/rail Vs road/IWW and road/SSS as provided in that same study. However, despite this evolution, the modal shift observed in European freight transport does not seem to evolve fast enough in the desired direction, i.e. towards most environmental friendly modes, as illustrated in the recent EUROSTAT figure for the years 2011 to 2015. This evolution seems to be confirmed by the projections of the transport reference scenario which show that the modal shift target set in the 2011 White Paper will not be met by 2030 (see more detail in Section 3.1. Baseline).

Table 2. Split, per modes) of Intermodal Transport and of CT as covered by the CT Directive in 2015 - Source: CT Update Study 2017 Figure 1 : Freight transport in the EU-28: modal split based on five transport modes (% of total tonne-kilometres A fundamental reason for the relatively limited uptake of intermodal transport, and hence slower than expected modal shift, is that the framework conditions for intermodal transport are and remain considerably less advantageous than those for road-alone transport (see problem tree in figure 2 and Section 2.1.1). This makes intermodal transport less competitive than road only transport, especially on shorter distances, as explained in the REFIT report. The main challenge, as regards cost competitiveness, is, for each types of intermodal transport, to bring down that "break-even" minimal distance. The low uptake of intermodal transport is also due to the insufficient density and capacity of the needed intermodal infrastructure . The effects of the Combined Transport Directive have been modest and could be improved. Figure 2: Problem tree As further explained below, and despite the TEN-T Guidelines and related CEF funding for the European transport infrastructure, the required level of interventions has been insufficient so far for achieving equal footing for intermodal transport with unimodal road transport and thus for ensuring sufficient modal shift. After 25 years, the infrastructure considered necessary to ensure intermodal transport is lacking in many parts of Europe, or does not have sufficient capacity; intermodal transport services remain non-competitive with road only transport due to inherent disadvantages of intermodal transport, limits in the full internalisation of external costs, and there are still barriers hindering operations between Member States for non-road transport legs that reduce efficiency of intermodal transport. In short, the conditions for intermodal transport in the EU do not support modal shift. 2.1.1.Non-competitive framework conditions for Intermodal transport services Intermodal transport services often remain non-competitive, in terms of price, efficient operation or reliability compared to road transport despite the measures taken through both the Combined Transport Directive and other EU legislations (e.g. Eurovignette Directive) to support the needed modal shift and address other causes discussed in detail below. These measures have not always been as effective as they could have been due to their technical complexity or because of political sensitivities. 2.1.1.1.Higher inherent cost of Intermodal Transport There are several factors inherent to intermodal transport that can be translated into additional costs for the operators and users, or other disadvantages for intermodal transport in terms of e.g. delivery times or reliability. These disadvantages are addressed partly through the Combined Transport Directive’s economic support (that is currently ineffective, see section 2.2.2.) and partly through other EU measures as described below. Thus the majority of root causes of uncompetitive intermodal transport, discussed in detail below, continue to aggravate the problem resulting in intermodal transport being considerably more expensive for the shippers. Figure 3 below illustrates, based on cost figures from the 2017 Survey study, the costs incurred by shippers when choosing for intermodal (rail-road) transport (without the benefits from Combined Transport Directive) (i.e. respective parts of cost from road part, non-road part, transhipment, reduced load capacity, cabotage restrictions and additional costs) compared to road transport only. Figure 3. Cost comparison of road only and intermodal transport, percentage of cost components (without CT Directive, based on medium to long rail-road transport) Transhipment

In an intermodal transport operation, the load unit needs to change the transport modes and thus necessitates transhipment. In 2015, there were estimated 66.8 million transhipments in the EU with an average 2.2 transhipments during rail-road intermodal transport operations, 1.7 transhipments during inland waterways-road intermodal transport operations and 2 transhipments during short-sea-shipping intermodal transport operations (excluding transhipments to and from ocean going vessels and Combined Transport operations). The transhipment costs vary considerably between Member States and modes of transport with the average cost being around 50€ per lift. However, an additional important element to remember is the fact that, for transhipment to be possible there is an underlying high fixed cost due to required initial transhipment equipment in the intermodal terminal. This high fixed cost of transhipment will have to be compensated by lower costs per ton-km. This in effect explains the limitations of the modal shift potential for long haulage transport: as illustrated on table 4 below, the average non-road leg of e.g. rail/road intermodal transport is 615 km. Additional costs and delays due to multiparty operation An intermodal operation includes by definition a considerably more complex transport chain than any single mode transport operation. The disadvantages deriving from a complex operation include contractual and transaction costs for organising and carrying out multiparty operations (estimated at 85€/shipment), costs of delays resulting from the need to transfer the load units between modes, difficulties in tracking and tracing the shipment between the various modes and responsible operators (estimated at 10€/shipment) and costs from other external factors. The main cost factor for shippers and Combined Transport organisers (logistics companies, freight forwarders, Combined Transport operators etc.) is the longer delivery times (caused by longer routes, transhipment related delays and other delays caused by multiparty operations, average 150€/shipment) followed by transhipment costs (average 100€/shipment). The industry stakeholders responding to the targeted consultation also identified journey time and price as two of the top-three impediments for the use of intermodal transport, with no suitable services (connection or terminal) as the most crucial of the three. Cost and weight of the load unit An additional disadvantage and cost factor for intermodal transport is the fact that a separate load unit is used. First, the load units itself require either an investment or involve leasing costs. Secondly, as the maximum weights and dimensions are regulated in the EU for the road leg and a load unit has its own empty weight on top of that of the lorry and goods, the load capacity of intermodal transport is ca 10% lower. This problem is partly addressed through the higher weights allowed for containerised intermodal transport in the Directive 96/53/EEC (Weights and Dimensions) allowing additional 2 or 4 tonnes depending on the vehicle. This extra weight does not create a real benefit as for most load units the additional allowance does not cover or barely covers the weight of the empty load unit and no extra weight is allowed for other intermodal load units. Thus this benefit rather compensates for the weight of the load unit allowing comparable loading capacity, while not creating the damage to infrastructure connected to mega-trucks as on short road leg distances the 10% additional weight creates little problems. The definition used in the Weights and Dimensions Directive refers directly to Combined Transport Directive and thus any change in the definition of combined transport in the Combined Transport Directive will also change the eligibility of operations as regards the increased weights and dimensions. Similarly, a new restrictive definition in the Combined Transport Directive would exclude large parts of intermodal transport from this compensatory additional weight. The industry stakeholders raised the latter as their major concern in regard to the currently planned amendment of the initiative. Broken transport operation with different regulation applying to different parts An intermodal transport operation is subject to different modal rules on different parts of the operation. In particular, for international "combined" transport, the Directive also ensures that no additional layer of authorisation or quantitative restrictions is applied as such. A particular problem relates to the existing cabotage restrictions for national road transport: some stakeholders perceive the road legs of intermodal transport, though parts of an international operation, as being national operation. However the Combined Transport Directive establishes that the road legs of an international Combined Transport operation can be carried out by non-resident hauliers even when the road legs do not cross a border, setting it at bar with international road transport that is the competitor for this type of operation. This has been confirmed several times by CJEU rulings. According to the open public consultation, in case of removal of this expressis verbis confirmation from the Directive, large parts of combined transport would reverse back to road only international transport as the inability to use the subcontractor freely would increase the cost by 3-15%. Figure 4 below further details, based on the cost figures of the referred 2017 study, the split of average additional cost incurred when operating intermodal transport because of organisational issues, longer delivery times, transhipment costs, traceability difficulties, or lack of harmonisation of procedures or documents. Figure 4: Estimated additional average cost proportion for an intermodal transport per shipment as compared to road only transport All these costs components vary based on the non-road mode of the intermodal operation, and on its total length as illustrated in Annex 5. 2.1.1.2.Lack of full internalisation of external costs in the road sector The competitive position of intermodal transport is further jeopardized by the fact that transport prices today do not reflect the full extent of external costs and thus road transport can offer low prices with high cost to society. A detailed inventory on internalisation of external costs in the transport sector established that the costs of the road sector are covered to 38% by different internalisation measures (not including congestion costs). The level is very different in different Member States (see Figure 5). Figure 5: Indicative cost coverage ratios for road transport The EU has supported the implementation of the "polluter pays" principle for a while. It is argued that if the prices of different modes would reflect the external cost to society, the competitive position of road against the other modes would change and it would become more economical to use rail, inland waterways or short sea shipping transport instead. The main instrument is the so-called "Eurovignette" Directive 1999/62/EC, as last amended by Directive 2011/76/EU. It provides a legal framework for road charging systems for heavy goods vehicles (HGV) and contains specific provisions on the calculation and allocation of infrastructure and environmental costs. However, the current Eurovignette Directive provides only a possibility for and not an obligation to introduce such charging schemes and furthermore does not foresee charging for congestion and accident costs. As part of the "Europe on the Move" communication adopted in May 2017, the Commission adopted a proposal for amending the Eurovignette Directive which includes ambitious measures. However, according to the impact assessment, it is expected to mostly influence the choice of vehicles and not so much the choice of transport mode and the actual modal shift from road to other modes is expected to be limited to 0.1-0.2 percentage points by 2030 relative to the baseline scenario.

The internalisation of external environmental costs of transport is also supported by fuel taxation. The Energy Taxation Directive 2003/96/EC lays down the rules on the taxation of electricity and energy products. The minimum tax rates set in the Directive are aimed at supporting the reduction of negative externalities of the transport sector. However, in its current form, the Directive does not create sufficient incentives for energy efficiency and reductions of CO2 emissions. The Commission adopted a proposal to review the Directive on 13 April 2011 aiming at aligning energy taxation policies to reflect the environmental impact of fuels and other energy products. Due to lack of agreement in the Council, the Commission withdrew the proposal in March 2015. Taking into account the widespread use of road transport, the internalisation of the external costs of road transport – partial or full - is politically and economically difficult as it would impact a large category of operators and citizens. In the short term it will not be possible to achieve full internalisation of external costs and partial internalisation is unlikely to achieve the desired modal shift results alone. The latter is supported by the data from Member States who have introduced road charging with an aim to support modal shift. In Germany, no significant evidence was found on effects on modal shift from road charging. At the same time, in Austria, where the distance based tolls on HGVs were complemented by a handful of other policy measures (notably fiscal, financial and regulatory measures in support of rail and combined transport), a clear modal shift has been noted since 2004 when the tolls were introduced. 2.1.1.3.Regulatory disadvantages and other issues hindering Intermodal Operations Road sector As already explained above, despite the specific extension to 45' long containers for combined transport, the Weight & Dimension Directive limits the size and weight of the load unit that can be used in road freight transport, de facto also limiting the capacity that can be transported in an intermodal operation. Unequal liberalisation and evolution of rail, IWW, SS compared to international road transport As underlined in the REFIT evaluation Report, the liberalisation of road and rail transport, the improvement of interoperability of modes and state aid rules have had an impact on the intermodal transport in the EU. Because it was liberalised in 1990s, road transport enjoyed greater competitiveness than other modes of transport, while e.g. railways continued to be protected from competition for many years. This can be seen as having negatively influenced the comparative advantage of intermodal transport. The complete liberalisation of the rail freight operations occurred only on 1 January 2007 with the Second Railway Package, for both national and international services. Despite the increased competition and new operators entering the market, there are still issues and the effects of full liberalisation will take time to fully manifest themselves. For waterborne transport, there have number of initiatives to open up the market and facilitate inland waterway transport and short sea shipping, but additional legal instruments are needed to complement the existing ones (e.g. revision of the Reporting Formalities Directive). Different standards and regulations in non-road modes There are also specific technical issues or regulatory obstacles affecting the non-road modes, and in particular the rail sector, the original non-road mode affected by the Combined Transport Directive. Infrastructure requirements for the rail freight lines to complete the TEN-T rail freight core network by 2030 have been defined in the TEN-T Guidelines : "at least 22,5 t axle load, 100 km/h line speed and the possibility of running trains with a length of 740 m". This has been complemented by the Regulation on rail freight corridors aimed to develop coordinated capacity for rail freight along the corridors. This has contributed to ensure that overall, less than 1% of the total rail network was congested in 2014, as explained in the 5th Rail Market Monitoring Report. However, despite those objectives and advances, the present lack of connections, infrastructure and problems relating to technical harmonisation, including gauge differences between different part of the Europe (Eastern Europe and Central and Western Europe) continue to negatively influence the functioning of the EU rail market and through that the development of Combined Transport and other multimodal services. Furthermore, the European Court of Auditors noted in its report ‘Rail freight transport in the EU: still not on the right track’ that the performance of rail freight transport in the EU remains unsatisfactory. Finally it should also be noted that in the European rail system, with few exceptions, passenger traffic has priority over freight and international over domestic; this can have an impact on delivery and reliability of freight transport. Similar consequences in terms of speed and reliability are even more important and even inherent of waterborne transport operations and infrastructure. 2.1.2.Low density and limited capacity of Intermodal Infrastructure (including terminals) The way transport infrastructure is shaped has a decisive impact on the achievement of the modal shift and decarbonisation objectives of transport. The White Papers on Transport both from 2001 as well as from 2011 acknowledged insufficient availability of multimodal infrastructure to be the main problem for achieving modal shift. This was also underlined in the European Parliament resolution of 9 September 2015 on the implementation of the 2011 White Paper on Transport which pointed that "the modal shift policy has not so far delivered satisfactory results" and which highlighted that appropriate transport infrastructure was a precondition for a sustainable multimodal transport system and also stressed the need to prioritise investment on notably the completion of missing links and the development of multimodal terminals. Looking at the EU transport infrastructure, the completion of the TEN-T Core and Comprehensive Networks, especially as regards the non-road modes, is critical. The revised TEN-T Guidelines set a range of binding standards for infrastructure development and multimodal infrastructure, and a second generation of TEN-T corridors work plans is being prepared, under the supervision of Coordinators, further refining the initial analysis of the infrastructure needs and relevant projects, in particular to remove bottlenecks and complete cross-border section. The efficient completion of this network may however be impacted by complex regulatory and administrative arrangements, which may contribute to increased costs, delay and uncertainty for infrastructure projects. From a network capacity viewpoint, rail, inland waterways and short seas shipping have today the theoretical necessary capacity to absorb freight traffic shifted from road: - for rail, capacity limits vary significantly between various parts of the rail network, but, as explained above, capacity is and will be coordinated in the context of the implementation of Regulation (EU) No 913/2010 and the Rail Freight Corridors; - for short-sea-shipping, the EU has large available capacity in terms of sea-ports in 22 EU maritime Member States and there are 329 key seaports which belong to the trans-European transport network and that are key nodal points for handling both international freight trade and intra-EU freight flows; - for inland waterways, the EU inland waterway network spans 20 Member States with about 37000 kilometres and has ample capacity availability to absorb heavy freight traffic across main industrial areas, in particular over the cross-border regions linked by the Rhine, the Danube and other important waterways connections (e.g. Seine-Scheldt, Rhone, Po, Elbe, etc.). The main infrastructure bottleneck hampering the shift from road freight to other modes transport is at the terminal level: on the one hand, a minimum density of transhipment terminals is required to facilitate the shift from road to other modes in different areas of the EU; on the other hand, the capacity of existing transhipment terminal needs to cope with overall freight traffic growth. These issues affect primarily the road/rail intermodal transport and the situation is different from one country to the other:

-from a density of terminal viewpoint, and as illustrated in Annex 6 , the distances between rail/road terminals on the EU TEN-T Core and Comprehensive networks are still well above 300km in many regions; limiting the possibility of short (> 150km) road legs in case intermodal transport would be selected by a shipper or freight forwarder. As can be observed on the map, the density of terminals is quite high and currently sufficient in Benelux, Germany, Austria and Northern Italy; it is also the case in Czech Republic and Slovakia; however, in certain specific regions (North of Sweden or Finland) cases, the low terminal density is such that it is not possible to use intermodal transport; as indicated by the International Union for Road-Rail Combined Transport (UIRR) some countries have an appropriate overall capacity but inadequate capacity e.g. Hungary, where there are 4 terminals in Budapest, but none in the countryside, or France where certain regions are better covered than others, or Romania, where only Western Transylvania is well supplied. :In addition, a recent study on last mile in rail infrastructure identified that, while last-mile infrastructure and rail freight production systems will undergo further concentration and the total number of rail access points in Europe will decrease, under three different scenarios regarding rail freight traffic evolution from 2015 to 2030 (minus, trend, plus), the current number of road/rail intermodal terminals (~730 in 2015) would need to increase between 2% and 10 %, with the 5% value for the trend scenario. NOTE: It should be noted that the network density of non-road modes is unlikely to ever be comparable to that of road. In some countries with low population density, the volumes of freight transport are not enough to make investments in intermodal terminals profitable for private sector. In some areas the problem is not lack of terminals but lack of non-road alternative in general. -from a terminal capacity viewpoint, there are also differences between regions: there are countries with appropriate density, but insufficient capacity already today (e.g. Germany, Austria, and Northern Italy). However, looking at the 2030 time horizon, the above mentioned "last-mile" study also indicated that "In order to cope with the forecasted volume growth of intermodal transport, the capacity of the existing terminals shall be increased ". Insufficient investment in Intermodal Infrastructure Investment into terminals and connections to provide efficient alternatives to road transport is cost intensive and it is not always considered a priority even when supporting instruments, e.g. TEN-T, exist. The expected investment needs for building new and increasing the capacity of old intermodal terminals for rail connections alone is assessed to be 4.5 billion EUR until 2030, according to the pre-cited last-mile Study. The investment needs are heavier in some Member States; in particular those who joined the EU after 2004 and have hence had shorter time to implement previous EU initiatives on multimodal transport. Public support from EU and Member States funding mechanisms, to drive investment into sustainable transport modes remains nonetheless essential, and the interaction within such funding mechanism between infrastructure policies objectives and EU climate goals needs to be clearly recognised. As further detailed in the REFIT report, the EU has supported the investment into rail and waterborne transport and multimodal terminals through several EU programs including some dedicated ones (such as the Pilot Action for Combined Transport/PACT, 1997-2001, the Marco Polo programmes, 2003-2013) and TEN-T. Such support is currently made possible through general multipurpose programmes such as the Multiannual Financial Framework, the European Fund for Strategic Investment and the Connecting Europe Facility, although not dedicated to the development of multimodal infrastructure. Some Member States have introduced or renewed national support programs for different modes of supply as well as for terminal building in accordance with EU competition law. However, investing in intermodal transport does not feature prominently among the priorities of (all) Member States and may not be sufficiently prioritised for MFF, EFSI or CEF funds, nor are all Member States willing to go through the state-aid notification procedure for national programs. AT Support for construction of terminals and rail sidings 2013-2017 CZ Aid scheme for the modernisation and construction of CT terminals 2015-2020 DE Support for construction of terminals 2017-2021 SK Investment support for equipment not limited UK Freight facilities grant, Waterborne freight facilities grant 2013-2017 Table 3. Dedicated national support schemes for intermodal terminals The previously referred "last mile" study compared the effectiveness of dedicated programmes and non-dedicated programmes and concluded that dedicated programmes are more suitable for the development of terminals both in terms of effectiveness and efficiency and ensure greater impact. The study notably pointed at the positive results of the German funding programme for intermodal transport : based on the finding that terminals, which have been financed completely privately, are not competitive to road transport, the programme provided a relatively high funding rate (up to 80%) for intermodal terminals, in order to cope with the high initial construction costs required for the terminals, obliging the private terminal operators to charge high transhipment fees, and in turn endangering the competitiveness of intermodal services, especially in transport distances below 400 km. Thanks to the investment support, a significant reduction of transhipment costs in inland facilities up to 22 € per loading unit could be observed. Having dedicated financial support for intermodal infrastructure, complemented by other support measures in the Directive and by the package of other measures required and undertaken (e.g. review of Eurovignette Directive, further implementation of rail freight corridors, etc...) to support modal shift would be very helpful to address the general problem. Obviously, any infrastructure investment to address terminal capacity shortage or to build new terminals needs to be based on a detailed analysis of the market needs and conditions and an ex-ante assessment of the impacts, both locally and at European level, taking into account the effects of complementary measures. This would imply and require coordination at European level to notably avoid that unused capacity would be built. Such coordination should be included to any new investment support measures for transhipment terminals. This would ensure such additional investment would not result in unused terminal capacity. While the Combined Transport Directive does not contain any specific measures for infrastructure development, a majority of stakeholders have notably called for making use of the opportunity offered by the amendment of the Combined Transport Directive to make this concrete. It should also be noted and reminded that the original proposal for the Combined Transport Directive was accompanied by a proposal for targeted investments into the intermodal network and terminals; but this proposal was never agreed 2.1.3.Modest impact of the Combined Transport Directive Combined transport, as defined in the Combined Transport Directive, is a specific type of intermodal transport benefitting from regulatory and economic incentives. Despite the absolute growth of "Combined Transport" and intermodal transport, its relative importance compared to road transport has been limited and, as explained further below, specific problems related to the Combined Transport Directive have been highlighted in the recent 2016 REFIT evaluation, that need to be tackled. 2.2.The Specific problems and problem drivers of the current Directive The REFIT evaluation established that the Directive does not harness its full potential. Combined transport has been supported for 25 years and its volume, in terms of tonnes km, has indeed grown at twice the speed of road transport, however, problems still exist with the implementation of the Directive and the effectiveness of its measures has diminished over time. The stakeholders consulted in the open public consultation agreed that while the Combined Transport Directive has been a useful tool to improve the competitiveness of intermodal transport, it does not provide sufficient support to allow equal footing with road transport and does not even allow using the benefits foreseen to the full degree. The specific drivers for this modest impact of the Combined Transport Directive are further explained below.

2.2.1.Ineffective implementation of the Combined Transport Directive As pointed out in the REFIT evaluation, the implementation of the Combined Transport Directive has proved difficult for all stakeholders due to a number of issues. As already explained in section 2.1.1.1 above, one of the controversial issues in the implementation of the Directive has been the perception by some Member States and their national road associations that the "cabotage" exemption as provided for in Article 4 of the Directive has been "abused" by road operators to circumvent the cabotage restrictions of Regulation (EC) 1079/2012. The lack of clarity of the definition of the Combined Transport, leading to different interpretations between operators and Member States, associated with the limited and rudimentary enforcement conditions provided by the Directive, may have indeed caused a number of situations of conflictual appreciation of the cabotage exemptions. As underlined in the REFIT evaluation, and confirmed in the rulings of the CEUJ, the cabotage exemption of the Combined Transport Directive have fulfilled their role of promoting international intermodal transport and should be maintained. This was also supported by the majority of stakeholders in the Open Public Consultation. Yet it is also equally important to address the concerns of those Member States and national road associations to ensure the most effective enforcement and hence avoid possible situation of circumvention of the cabotage rules. 2.2.1.1.Complex and narrow eligibility criteria The definition of Combined Transport in Article 1 establishes the eligibility criteria for the beneficial regime created by the Combined Transport Directive : -it covers the transport of goods between Member States where the lorry, trailer, semi-trailer, with or without tractor unit, swap body or container of 20 feet or more, uses the road on the initial and/or final leg of the journey and, on the other leg, rail or inland waterway or maritime services. -the length of the road leg is limited in distance to ensure that long-distance road transport is limited. Road leg(s) combined with a maritime/inland waterway leg have to be each shorter than 150 km as the crow flies (in direct line). In case of rail-road combined transport, the road leg is limited to transport to the nearest suitable rail loading and unloading station. -A minimum length of the non-road leg (rail/sea/inland waterway) is also provided. The non-road leg has to be longer than 100 km as the crow flies. -The definition does not cover CT operations within one Member State, or between one Member State and a third country Those criteria were adopted in 1992 as an extension to the ones in the definition of the 1975 original legal act and were meant to focus on and support multimodal transport operations with shortest possible road legs. The "nearest suitable" part of the definition was originally and literally meant to limit the use of road to the minimum inevitable. It however proved not be very operational and raised since 1992 the most discussions, litigations and uncertainty. As mentioned in the REFIT evaluation, transposition and implementation by the Member States is still inconsistent after 25 years. This leads to practical problems that reduce the effectiveness of the Combined Transport Directive. In particular, various modifications of the Combined Transport definition by the Member States in their national transpositions have led to different ways in which Combined Transport operations are treated in the Member States. While the transposition of a directive allows for a certain level of flexibility, this should not result in the reduction of the rights provided for in the directive nor in the discrimination of service providers. However, it seems that this has not been the case with the Combined Transport Directive in some Member States. The Commission has received in recent years several complaints from the industry facing problems with national authorities causing delays and fines due to non-compliant transposition, interpretation and/or enforcement of the Combined Transport definition in the Directive. The problem caused by slightly different definitions, even if compliant with EU law, was expressly raised in the public consultation by stakeholders. Too narrow definition The above referred study carried out in 2014 on the EU Combined Transport market (The Combined Transport study) estimated that two thirds (58.3%) of what Member States and/or industry consider as Combined Transport is actually not covered by the Combined Transport Directive. This relates to geographic scope as well as limitations on road and non-road legs and load units. It should notably be noted that the transport of intermodal load units by ocean going vessels or to third countries where there is only road transport in the EU is not normally considered intermodal transport by the industry. Figure 6 : Combined Transport Directive’s coverage of actual CT volumes The geographical coverage applied by Member States varies considerably. According to that same study, half of the Member States have extended the intended geographical scope. Some have extended it to national Combined Transport operations, some to any international Combined Transport operations (including those only between 1 Member State and a 3rd country). The Directive currently covers only operations between Member States and not within Member States or with third countries. Actors in the Combined Transport industry (between 65 and 80%) have emphasized that the scope of the Combined Transport Directive should not be constrained to operations between Member States as different definitions create additional legal costs for the industry. This concerns in particular national combined transport operations (19.3% of all combined transport in EU) that are currently not covered and thus do not benefit from the support measures foreseen by the Directive, while the negative externalities such as greenhouse gases impact the EU beyond national borders. Note : an extension of the Combined Transport Directive’s scope to transport within a Member State and with third countries was also included in a 1998 amendment proposal. Different distance limitations for different modal combinations About 60% of respondents to the targeted consultation considered it a practical problem that different limitations on distances per mode apply to rail-road combined transport and waterborne combined transport and favoured modifications to these limitations. It has also created problems in certain Member States for the enforcement as controlling officers apply the more restrictive limitation on all combinations. In certain cases where the combined transport operation involves both, rail and waterborne transport, it is unclear which limitations should apply.

As illustrated in table 4 below, the average and mean distances in different modes diverge quite significantly between different modal connections: -For inland waterways, both the non-road and the road legs tend to be rather short meaning that it is the limit on the non-road leg (i.e. min 100 km) in Combined Transport Directive that excludes the operations from receiving support. Considering also that 50% of IWW/road operations are intra-MS, only 36% of the total IWW/road freight transport on EU territory is eligible under the CTD definition. -It is noted that a limit of 150 km for rail-road Combined Transport, would cover both the average and mean road legs. -For short-sea shipping, the mean road leg distances fall within the Combined Transport directive, but the average distance is almost two times longer than the current limit. This relates mostly to long road legs in combination to feeder traffic for ocean going vessels, in particular in areas where there are little possibilities to carry the longer continental distances by rail to the port. Intermodal transport sector / Intermodal Transport market segment Non-road leg within the EU (km) Road leg, one-side (km) Average length Median length Longest identified Average length Median length Longest identified Rail/Road CT 615 580 2 500 51 40 375 Barge/Road CT 222 140 1 400 21 10 360 Shortsea/Road CT 760 1 280 7 000 257 98 900 Table 4. Average and median distances of intermodal transport It should be noted that, as reflected in the stakeholder meeting of 30 March 2017, an inflexible limit would most likely result in reverse shift, that is to say the transport organiser, being unable to use the beneficial regime of combined transport (in particular the additional weight allowed) due to some kilometres too many, would use road only transport to make the ends meet. Limitations on the number of road legs First, some Member States interpret the Directive differently from the common understanding when it comes to the number of road legs included. The language in the definition in English says "… initial or final leg”. Some Member States interpret this as allowing only one road leg per full journey (exclusive or), while others require that there have to be two road legs (excluding container hinterland transport). The 1998 amendment proposal suggested that the problem is one of translation as in the French version the question does not arise. The Combined Transport Directive itself uses also “and” and “and/or” in other parts of the Directive. Taking into account the objectives of the Combined Transport Directive, there is no justification for limiting the Combined Transport operation to one road leg or requiring always two legs. The definition further introduces limits on road legs, and for the rail-road combined transport it uses the term "nearest suitable rail loading station" that has caused considerable problems to the industry. While most stakeholders agree that “nearest suitable” would be the best available definition if it would be left to the businesses to decide what is suitable. However this is not the case and as much as 60% of the stakeholders indicated in the public consultation that it causes them and national authorities practical problems as it is hard to enforce and often leaves large discretion to the police officer carrying out the road side checks. Furthermore the transposition and implementation of this term varies between Member States and the difficulty to enforce creates problems resulting in confusion particularly in relation to the road cabotage rules and the weights and dimensions rules. At least 6 Member States have established criteria to define 'suitability' that do not derive from the Combined Transport Directive and some of which are clearly discriminatory (such as requirements that the station has to be on the territory of the Member State or approved by the Member State) or impractical (such as not taking into account whether services towards the desired transport destination exist in the nearest terminal). The question on "suitability" was addressed to the CJEU in case C-305/06, however the court did not deliberate on that question as it reached its decision based on the "cabotage" question. Minimum distance requirements for the non-road leg As regards the requirement of a minimum distance of 100km for the non-road leg, the majority of operations run on considerably longer distances, in particular due to fact that combined transport only makes economic sense due to the additional transhipment costs on longer distances. 99.5% of rail-road operations are on distances longer than 100km, 99.94% of container short-sea shipping and 95% of inland waterways operations between Member States. However, only 69.655 of roro short-sea shipping is on distances longer than 100 km, as are many (mostly national) Inland Waterways operations. Thus a range of waterborne Combined Transport services operate over significantly shorter distances. In principal two types of operations have shorter non-road legs: first, the barge services feeding containers between the ports such as of Antwerp or Rotterdam and terminals in the immediate hinterland. Those operations contribute greatly to decongesting the road networks in sea ports and in the immediate hinterland and to reducing environmental burdens in agglomerations. Secondly island connections and some ferry crossings by short-sea shipping such as Calais-Dover and Puttgarden-Rødby. While the latter option would normally be used with or without support and it doesn’t bring along modal shift, the short IWW services around ports and in and around agglomerations contribute considerably to the objectives of reducing negative externalities. Dimensions and identification of load units With regard to load units, the definition covers the vast majority of intermodal load units in use today. However, the restriction of the Combined Transport Directive to load units of 20-feet (6m) length hinders the opportunity to introduce smaller Combined Transport load units that are used in some parts of the world, mostly in urban environments and environments where bigger vehicles/barges cannot approach. With growing urbanisation, these load units can become increasingly important in the future in the EU. Making Combined Transport services more flexible and allowing smaller load units (which can be combined and redistributed at hubs) could potentially encourage more users to shift freight away from road. This view was supported by the respondents of the public consultation who claimed that the legislation should allow new innovations to benefit from the Combined Transport Directive in order not to shift these load units to the road. Another issue raised notably by operators of road/rail combined transport relates to the fact that not all load units are identified in standardised ways slowing down the handling of the load units in terminals as well as not allowing or reducing the possibilities to implement technological solutions to follow the identified load unit throughout the operation, to gather data on load units and thus intermodal transport in general. Furthermore, standardised identification of load units would also simplify the control of eligibility for the combined transport support measures as it would be easier to identify the load unit through different modes of supply, in particular when using information technology means. 2.2.1.2.Lack of effective enforcement conditions Conditions for proof of eligibility are particularly important for the regulatory benefits in Articles 2, 4, 7 and 9 of the directive as well for the additional weights and dimensions allowed on the road leg from the Weights and Dimensions Directive. As mentioned above, it is particularly important for justifying the exemption from cabotage restrictions as provided in Article 4, and which has given rise to many complaints and sometimes infringements cases related to the potential abuse of such Article by "pseudo" Combined Transport operators. The requirements on the transport documents used for proof of eligibility are established in Article 3 in turn refers to Council Regulation Nr 11 from 1960. Information to be provided for control

In order to check the eligibility for support from the Combined Transport Directive, the controlling authorities should be able to check that the operation involves at least 2 Member States, that the load unit is one of those listed in Article 1, that the non-road leg is more than 100 km, and the road leg in question is less than 150 km as the crow flies in case of a connection with waterborne transport or to the nearest suitable rail loading station in case of a combination with rail transport. However, the required information in the current Directive covers only half of this information since it is related only with the road leg. No information is required on non-road legs nor whether the operation is at least between two Member States. Furthermore, the controller has to establish the length of the legs as the crow flies. This results in confrontations and delays on the road due to different interpretations. A vast majority (80%) of public consultation respondents consider it very important that the operators are able to prove that they are engaged in Combined Transport operations. While agreeing with the need to be able to establish eligibility, many operators claim to have encountered problems linked to documentation requirements, mostly causing delays and additional costs and during the stakeholder meeting of 30 March 217, stakeholders unanimously concluded that paper documents and stamps as proof of eligibility were outdated. The road hauliers claim it to be difficult to acquire documentation from a Combined Transport manager showing also the other legs of the journey. The respondents to the targeted consultation agreed that being able to prove the eligibility is important for an effective enforcement and for avoiding problems. Member States in particular pointed out that it is important that the data required corresponds to the eligibility criteria established in the definition. Format of information provided With regard to the format of the information provided, the only condition in the Directive is that is has to be a paper document stamped on the final leg and available in the vehicle. The stamp requirement has been identified by all stakeholders in the stakeholder meeting of 30 March 2017 to be a particular problem as stamps are no longer used in many countries and hence prove impossible to acquire. The choice of transport document type is expressis verbis left to the operators and there are a multitude of formats available. It should be recalled that under international transport law, transport documents constitute a civil contract between the shipper and the transport operator, and as the conditions for operation in different modes are different, the standard documents are also. This means that the industry can use for example a CMR, a CIM, a national transport document, a company-related consignment note, a bill of lading or a multimodal document etc., and Member States are not allowed to request a specific format as long as the information referred to in Article 3 of the Combined Transport Directive and in Article 6(1) of Regulation No 11 of 1960 is given. However in reality several Member States have established requirements on types of documents accepted, which is not in compliance with the Directive. It should be noted that some operators as well as public authorities would prefer to have a harmonised Combined Transport or multimodal transport document made mandatory. However as the transport document is also a civil contract, harmonisation would require also harmonisation of civil liability regimes, and any new liability regimes would need to take into account the contractual nuances needed for different modes of transport. The issue of simplifying the contacts with/controls by the authorities can be solved easier through the introduction of harmonised electronic data exchange formats/electronic documents, while allowing the industry the contractual freedom in civil law matters. The ability to use electronic documents/data for control purposes is widely supported by the industry. A specific recommendation in this sense has been made in the context of the Digital Transport and Logistics Forum, an expert group set up by the Commission with a view to assist it in supporting digitalisation processes in the transport and logistics sector. The Commission is currently in the process of formally launching a new initiative aimed at ensuring the acceptance of the electronic transport documents (for all transport modes) by the Member States authorities. 2.2.2.Ineffective and insufficient economic support While the industry perceives economic support and notably fiscal stimulation as an effective way of reducing heavy costs borne by intermodal operators and consequently as a way for allowing intermodal services to compete with long distance road transport on price, the Directive did not allow to generate the full expected benefit from such measures due to several reasons. 2.2.2.1.Narrow scope of the support measures The main problem with the current support measures, as defined in the Directive, is the very limited scope they have. Article 6.1 obliges Member States to reduce or reimburse taxes charged to road vehicles either by a standard amount or in proportion to the journeys that such vehicles undertake by rail, i.e. where the vehicles (and not containers) are loaded on a train (also called "rolling road" operations). This means that Article 6.1 support is in principle only applicable to ca 2% of intermodal operations in the EU. Furthermore, these rebates are granted by the Member State in which the vehicles are registered on the basis of rail journeys carried out only within this Member State. Other kinds of Combined Transport involving inland waterways or short sea transport or rail-road transport of containers do not benefit from Article 6.1. In the open consultation, stakeholders confirmed the problem and suggested a wider range of economic support measures to make the Combined Transport industry more attractive, ranging from dedicated grants for combined transport terminals to a tax reduction on scheme extension to all sectors and types of operations, or incentives for the introduction of innovative ICT solutions and technologies to reduce CO2 emissions such as cleaner trucks. 2.2.2.2.Insufficient economic support The transposition and implementation of the support for combined transport is far from homogeneous. Merely 17 Member States have adopted schemes for the reimbursement of vehicle taxes (and only 14 actually implement them), however often with conditions different from Article 6.1. This means that half the Member States do not actually provide economic support foreseen in the Directive. As the Combined Transport Directive is not very clear on the methodology to be used, Member States have adopted various approaches some quite far from the Directive’s text. For example, though the calculation basis is given in the Combined Transport Directive to be the length of the rail journey, various Member States are using different criteria, e.g. number of performed journeys, time of rail services' usage, driven distances, number of transhipments or operating periods. Some Member States have schemes in place that go beyond the measures foreseen in the Directive mostly by covering all rail operations as well as inland waterways operations and several Member States have measures in place not foreseen in the Directive. 8 Member States have implemented no support measures for Combined Transport at all. Figure 7 below illustrates how many Member States are applying the listed types of support measures. Figure 7 . Number of Member States applying different types of support measures An additional issue are the very wide differences of the levels of support between the Member States as Article 6 does not harmonise the reimbursement levels. The tax reductions range from 10% to 100%, are applied on already varying vehicle tax levels, amounting to fixed amount support from €1 to €50 per operation. To put this into perspective, the main additional cost element when comparing to road transport, the transhipment cost is on average €50 per handling and there are on average 2 transhipments per operation. In countries with lower reimbursement levels or a lower vehicle tax, the actual benefit per shipment is therefore minimal (less than 1% of costs). This was supported by several respondents (mainly operators) to the public consultation, who pointed out that the levels of incentives of Article 6.1 are insufficient today. In the targeted consultation, stakeholders (Combined Transport operators) suggested on average that an increase of the economic benefit of 27 % was required to achieve to achieve a cost-neutral alternative to road based service. As regards the possibility offered by Article 6.2 to fully exempt road vehicles engaged in Combined Transport operations from vehicle taxes, it applies only to road vehicles used exclusively in Combined Transport operations. Respondents to the public consultation had signalled that it is economically not viable to use some vehicles exclusively for Combined Transport (or to prove it). In any case, according to the so-called Combined Transport Study, only three Member States make use of this provision. 2.2.2.3.Limited monitoring and lack of review mechanism The current Directive does not foresee an automatic review mechanism for economic support creating a situation where support measures will get outdated and end up being either too low, as now, or potentially also too high if the framework conditions change. This is in addition to the difficulties in the currently foreseen monitoring and reporting mechanism: while the Commission is due to report based on data provided by the Member States, this has not been possible because of the lack of systematic data collection on Combined Transport, resulting in difficulties to adequately assess the effectiveness and efficiency of measures on a regular basis (for further details see chapter 9). Almost all respondents to the open public consultation considered that it was important to collect and publish regularly all Combined Transport data. 3.TACKLING THE PROBLEM

3.1.Evolution of the problem all things being equal (baseline scenario) According to the baseline scenario (see Annex 4 for details), under current trends and adopted policies, road freight activity (measured in tonne-km) is projected to increase by about 35% between 2010 and 2030 (56% for 2010-2050). CO2 emissions from road freight transport would increase by 6% by 2030 compared to 2010 (11% for 2010-2050). Without intervention, this would not allow to achieve the 2030 emission reduction targets, would cause high levels of air pollution and congestion and negative effects to the wider economy through several direct and indirect effects. These effects are assessed to be in 2030 roughly €27 billion for air pollution and over €100 billion for accidents, while costs from noise would increase by 17% and congestion costs by 24%. More details on the projections under current trends and adopted policies (i.e. the baseline scenario) of the different modes in terms of e.g. energy consumption, GHG emissions or congestion can be found in Annex 4 of the Impact Assessment accompanying the review of the Eurovignette Directive. In particular, under the baseline scenario, and without additional intervention, i.e. notably the review of the Eurovignette Directive, the application of the "polluter pays principle" would not be completed and there would not be a fair and efficient level playing field across modes of transport : financial support measures will be needed in the support of sustainable and socially equitable transport to address the "unfair pricing" between modes. 3.1.1.Competitiveness of intermodal transport As regards the competitiveness of intermodal transport (>300km) compared to road transport, it should first be noted that the proposal for an amendment of the Eurovignette Directive would have a slight influence depending on the final option adopted. In the accompanying Impact Assessment the road transport costs are projected to increase between 0.2% and 2% (1.1%-1.5% for the two preferred options). This however does not sufficiently address the price difference between intermodal transport and road transport as will be outlined below. As explained above, the current regulatory support provided by the Combined Transport Directive applies to less than half (41.7%) and economic support to less than 2% of intermodal transport operations and is too low to have an effect. Under current conditions, and based on average market prices the intermodal transport as a whole remains on average 23% more expensive for shippers to use than unimodal road transport. According to same market prices, the operations that are covered by the Directive and benefit from regulatory and limited economic support (i.e. "Combined Transport") remain 13% more expensive on average than road only transport. As explained in section 2.1.1.1 above, it is also important to remember that, besides these market prices differences, the shippers are facing "additional" costs from delays, transaction and legal costs, which are not all fully reflected in the market prices. Figure 8 below illustrates the estimated additional cost of intra-EU intermodal transport (all and Combined Transport only), compared to road transport (based on referred 2017 Study). This means that, economically, shippers, freight forwarders and logistics service providers would, in the absence of supporting measures, have little motivation to shift from road only transport to intermodal transport. Figure 8 . The competitiveness of intermodal transport (all and Combined transport only) in baseline scenario based on comparing costs and cost components, in percentages To increase the competitiveness of combined transport can be translated in bringing down for each of the sub-modes, the break-even distance under which the combined transport operation becomes "competitive" compared to road only transport. Measures having an effect on all the above mentioned cost components should be explored, including the public support measures. As an example, the CT Cost Study estimates that for rail/road intermodal, "the effect of the public sector support is to reduce the average breakeven distance by 70 - 90 km or about 13-14% of the breakeven distance without any support". 3.1.2.Achieving modal shift target The projection for achieving the modal shift target set in the 2011 White Paper is somewhat difficult as Eurostat is only starting to gather detailed data on freight transport distances in different modes. Eurostat does however gather data on road transport distances and recent data shows that during the last 5 years there has been no progress in reducing the long-distance road transport's share which is for all years around 56% of total road freight transport. Taking into account that the modal shift in freight transport essentially means shift to intermodal transport, the growth projections of intermodal transport in the EU are used as proxy for modal shift calculations. Based on the projections established in the Combined Transport Study and its update, two scenarios were developed to reflect the possible developments of the intermodal market and combined transport uptake until 2030. The analysis takes into account the developments that took place during the economic crisis and the following recovery as well as developments regarding the road transport market, in particular as regards fuel price and possible regulatory developments (e.g. the proposal for amendment of Eurovignette Directive). The latter’s impact assessment projects a limited modal shift, i.e. decrease of 0.1-0.2 percentages points in road transport modal share in 2030, equal to 3.5-7 bn tkm. This does not eliminate the gap between the White Paper target and the current projections for 2030. The optimistic scenario is based on the assumption that sectoral legislation in rail, inland waterways and short sea shipping will follow the path of further liberalisation and facilitation of cross-border operations, including harmonisation or mutual recognition of standards and qualifications as well as removal of main technical barriers still existing. The trend scenario assumes small-to-moderate progress in tackling the technical barriers. Figure 9 . Projected growth of road freight, intermodal and combined transport on average, 2030, bn. tkm Based on the trend scenario, current conditions and adopted policies, intermodal transport would increase between 2015 and 2030 with an average growth rate between 2.2% and 2.8% (cumulative rate 28.5%) reaching a level whereby intermodal transport would account for 32% of road freight transport volume. The operations covered by the Directive would increase in this baseline scenario to a volume constituting 14% of road freight transport. Based on the optimistic scenario, the growth rates of different modal combinations would be between 2.2% and 4% and the cumulative growth rate of all intermodal transport in the EU would be 36.4% for 15 years. In this optimistic scenario, intermodal transport would reach a share 34.5% while combined transport covered by the Directive would reach a share of 16%. An average annual modal shift is envisaged to be 8.8-11.2 bn tkm (including shift to non-road transport shorter than 300 km). According to these projections, the EU will not achieve its modal shift target of shifting 30% of long distance road freight transport (301 bn tkm) away from road. The modal shift from 2005 to 2015 amounted to 145 bn tkm. Intermodal transport is projected to grow slightly slower on average between 2015 and 2030 with an additional modal shift of 104 bn tkm. The currently estimated total modal shift between 2005 and 2030 is thus projected to reach on average 249 bn tkm. A gap of 52 bn tkm to be shifted remains.

Figure 10. Freight volume projections for long distance road transport in relation to intermodal transport, CT Study (+ update) in bn. tkm 3.1.3.Savings of external costs Using the PRIMES-TREMOVE Transport Model and the methodology of the Handbook on External Cost of Transport the external costs (air pollutants, noise, congestion, accidents and infrastructure costs) saved by baseline growth of intermodal transport between 2005 and 2030 amounts to €5.8 bn. As illustrated in table 5 below the gap of not reaching the modal shift target set in the White Paper corresponds to a loss of €1.2 bn in external cost savings and in particular to 4.4 Mtons of CO2 emissions that were aimed to be saved. Baseline: External cost savings (MEuro'13) 2030 Modal shift gap Trend optimistic average Modal shift, 2005-2030, bn. tkm 247 252 249 52 Accidents 603 615 608 127 Noise 163 166 164 34 Congestion 3974 4054 4006 837 Air Pollution: NOx 310,4 317 313 65 Air Pollution: PM 16,5 17 17 3 Climate change 699,6 714 705 147 Total External costs 5766 5883 5813 1214 Table 5. External costs savings of the baseline development, PRIMES-TREMOVE Transport Model 3.2.Why should the problem be tackled now The current Commission has set sustainable development as one of its main objectives. The agreement of the ambitious goals in the Paris Agreement on climate change and the subsequent policy aims set in the Low-Emission Mobility Strategy have set clear targets for the coming years. The latter concludes that comparing developments under the current trends and adopted policies (i.e. EU Reference Scenario 2016) with the central scenarios that were developed to achieve all the 2030 targets agreed by the October 2014 European Council, additional policy actions are necessary, especially post-2020, in order to close the gap of 6-7 percentage points between the desired emission reduction and expected trend scenario results. One of the identified areas of action; i.e. increasing the efficiency of the transport system, comprises also the efficiency increases resulting from modal shift. The amendment of the Combined Transport Directive is thus listed as one of the actions in the Low-Emission Mobility Strategy. The stakeholder consultations both in 2014 and in 2017 confirm that there is unused potential for further modal shift. Furthermore, according to Eurostat, 85.1 million tonnes of freight was transported by road already in containers (2014). Shifting these load units to intermodal transport would result in a 13% increase of the intermodal transport volume, but the current framework has not motivated the shippers to do that. 3.3.Why should the EU act? Negative externalities, in particular those relating to climate change are trans-boundary problems which cannot be solved by national or local action alone. The EU has worked on reducing negative externalities of the transport sector for more than a quarter of a century as one of the objectives of the Common Transport Policy is to ensure the sustainable development of the transport sector. Coordinated EU action is necessary to achieve the goals set in the Transport White paper 2011, the Low-Emission Mobility Strategy and other EU policies in the area. In addition to sustainable development issues, it is clear that transport has an international character (47% of intermodal freight transport is between Member States) and thus the added value of EU action is obvious as the existence of different regulatory environments of Member States would create barriers and/or additional costs for economic operators. The impact assessment accompanying the 2011 White Paper (p24) elaborates at length on reasons why the Member States per se are not able individually to meet the challenges of creating an EU-wide sustainable and integrated transport system. The Combined Transport Directive's aim is the promotion of modal shift across the EU through support measures based on common ground. A common definition and common criteria are needed to ensure that the benefits foreseen in the Directive are applicable the same way throughout the EU, notably considering that from all intermodal transport operations in the EU, 81% are cross-border operations. If Member States use different definitions, it means that the operator might not be able to benefit from the incentives throughout the transport chain. Some differences do not create serious problems though they make it more costly for operators, who would have to be familiar with all legal systems along the itinerary. Others, such as differences in the load units or transport documents allowed, would make it impossible to carry out operations or require an additional reloading at the border (which is economically not viable). The importance of EU action is illustrated by the high number of EU-Pilots and the infringement procedures launched by the Commission based on complaints by stakeholders who in cases of incorrect transposition or implementation have experienced first-hand the problems, as described in several sections above. As regards economic support, there seems to be a general consensus among the Combined Transport operators and users that without any support measures and common EU rules in place, the majority of current cross-border EU Combined Transport would have been carried by single-mode road transport due to inherent disadvantages of Combined Transport such as lower loading capacity due to weight of load units, additional cost of transhipment, delay etc. It should be noted in this context that stakeholders participating in the public consultation perceived (55%) that without the support of the Combined Transport Directive, Combined Transport services in the EU would not have grown at such a fast pace within the last two decades as many operations, in particular in the medium length, would not be economically viable. Last but not least, considering the lack of investment in terminal capacity, which is the main bottleneck for effective modal shift, the limited number of national investment programmes have proved useful, but in order to create a necessary EU network of transhipment facilities with sufficient density, coordinated investments at EU level are likely to be much more effective than isolated national interventions. In addition, such new EU investment measures, if defined at EU level, could simplify the burden related to the abiding to competition rules, notably as regards state aid rules, which would be much simpler. The Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union (2016/C 262/01) indeed states that "A measure is not imputable to a Member State if the Member State is under an obligation to implement it under Union law without any discretion. In that case, the measure stems from an act of the Union legislature and is not imputable to the State". 4.WHAT SHOULD BE ACHIEVED? The general objective of the current initiative is to support modal shift by further encouraging the use of non-road transport modes on long distance freight transport operations, while maintaining and reinforcing the necessary regulatory and market measures for international transport (e.g. exemption from cabotage restrictions and weight and dimension rules). By aiming at the specific target for modal shift set in the 2011 White Paper, i.e. to shift by 2030 30% of long distance road freight (over 300 km) to rail or waterborne transport, and more than 50% by 2050, the initiative will in turn reduce the negative externalities of the transport system, such as emissions, noise, accidents and fatalities, road congestion as well as to improve the efficiency of use of transport resources. A move towards a more sustainable economic activity is a general objective of the current Commission. Furthermore, reduction of emissions and in particular of greenhouse gases is a key objective of the EU in the light of the recent Paris climate deal and supporting modal shift through increased use of combined transport is included in the Low-Emission Strategy of the European Union. The desired modal shift induced by this initiative should take place due to deliberate decisions made by the market operators. This means that the amendment should improve the competitiveness of combined transport as an alternative to road only transport through simpler use of the beneficial regulatory regime and higher effectiveness of the economic support measures.

The specific objectives relate to the identified problems and their drivers, aiming at alleviating the underlying root causes as follows : 1.Clarify the definition of CT eligibility conditions (SO1). The aim of this simplification is to reduce the practical problems faced by both the industry as well as the authorities. A simpler regime should also motivate the take up of combined transport by further market operators. This specific objective should be reached by addressing the following specific drivers: -Complex and narrow eligibility criteria : the definition of CT should be reviewed to specify and clarify : othe geographical coverage; othe road legs; othe non-road legs; othe load units -Lack of effective enforcement conditions : the elements required for proof of eligibility should be specified and clarified : oRequired data oThe data presentation format oThe place of control 2.Further stimulate the competitiveness of combined transport (SO2). This objective addresses the market failures and inherent disadvantages of intermodal transport as well as infrastructure problems with an aim to increase the competitiveness of combined transport by reducing end-user prices. To ensure that the measures remain effective and efficient, regular analysis and review is necessary. This specific objective should be reached by addressing the following specific drivers: -Narrow scope of support measures : extending the current operational support (road tax deduction for rail/road CT to all modes) should be assessed -Limited monitoring and no review mechanism : measures to reinforce the monitoring of CTD uptake and how to review support measures should be specified and/or clarified : oData collection of CTD uptake oTransparency of measures adopted at MS level oCooperation between MS oReview mechanism of support measures

3.Increase the investment in and the capacity of intermodal terminals (SO3) This objective addresses directly the problem of lack of intermodal infrastructure and in particular the lack of and limited capacity of terminals. These specific objectives are complementary and need to be addressed at the same time. Improving access and availability of intermodal infrastructure is a precondition for the development of intermodal transport. While the simplification of the eligibility criteria may, depending on the selected option, result in a change of eligibility as compared to the current Directive and thus exclude some of the current beneficiaries, a reduction of practical problems is highly desired by both industry and Member States. Simplification of eligibility criteria and controls thereof is particularly important for the use of the regulatory beneficial regime foreseen in the Directive as it is difficult to ensure correct application of complex definitions during road side checks. Furthermore, achieving this will also help to better enforce the EU road transport regulations; in particular as regards weights and dimensions and cabotage rules as both these EU instruments have a direct relation to the Combined Transport Directive creating a further beneficial regulatory regime. Thus the objectives of the current initiative are consistent with the objectives of the other transport initiatives currently pursued. The specific objectives were explicitly supported by stakeholders in the consultations taking place in the run up to this amendment (open public consultations in 2014 and 2017, targeted consultation in 2017 and three dedicated stakeholder meetings between 2014 and 2017). 5.WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVE As preparatory work for this impact assessment, the Commission carried out several studies and evaluations focusing on different aspects of the intermodal transport market as well as two open public consultations, one targeted consultation and 3 consultation meetings followed by literature review and in-house analysis. Based on this analysis, the Commission has identified policy measures addressing the specific objectives, and more specifically the main drivers as listed above, and combined these in policy packages (options). 5.1.Overview of retained policy measures After a preliminary assessment of different policy measures, the following policy measures where retained for reasons explained below: Current measures Measures proposed for analysis Definition Geographical scope CT between MS Extend to national only CT as supporting CT also in national context supports modal shift and results in the reduction of negative externalities. Road legs For rail-road CT, until nearest suitable train loading station, suitable not defined. For waterborne connection max 150 km. For all modal connections allow max 150 km for each road leg. Change (negative impact) only on rail-road CT. Ensures that road legs are clearly limited while allowing reasonable catchment area. For all modal connections limit each road leg to 150 km or 20% of total door-to-door distance, whichever is longer. Allows longer road legs for long CT operations (more than 750km) to alleviate the problem of low-density of terminals in several regions, while at the same time allowing in areas where due to congestion shorter CT trips make economic sense to retain a reasonable catchment area. For all modal connections limit road leg to nearest suitable terminal, if Member States so decide. Combines the use of "nearest suitable" term from the current Directive (applies to rail) and from Weights and Dimension Directive (applies to waterborne intermodal transport). The need for longer road legs depends on terminal density and circumstances of the country. No limitation. Assumes that profit maximisation by private economic operators ensures that the non-road leg is always used to its longest possible length to pay for the unit costs and transhipment costs. Non-road legs Min 100 km No limit for non-road leg but for short sea shipping, exclude island connections as no modal shift takes place. No limitation. Assumes that profit maximisation by private economic operators ensures that the non-road leg is always used to its longest possible length to pay for the unit costs and transhipment costs. Load units Fixed list, incl. containers 20 feet+ Remove the minimum size limit to allow future innovation (urban transport, e-commerce) Limit the application to ISO/CEN standard based identified load units. Speeds the handling in terminals and supports the use of digitalised data. Eligibility control Required data Operators choose type of transport documents. Minimum data requirements in Regulation 1 from 1960 No data requirement, operators can choose their transport documents and data on them. International conventions on transport documents continue to apply. Establish new data requirements that correspond to eligibility criteria to facilitate eligibility checks. Operators can still choose the type of transport document but have to fill additional fields. Data presentation Stamped paper documents only. Paper + electronic documents. MSs accept both for CT road legs, incl. pdf/jpg (operators to decide on type and format). Does not allow digital reuse of data, but is easiest and fastest to implement. Paper + electronic structured data: MSs accept both, EU agreed requirements, data standards and architecture (data not centralised, but retrieved on request, applications either private or public). Place of control Document has to be in the vehicle for road side controls Paper in vehicle or electronic in vehicles at roadside inspection retrieved upon request (carrier can contact HQ/shipper/client or app or database and retrieve it for presentation). Allows reuse of digital data. Data can be stored at shippers own location. Creates a market for new applications. Economic support measures Investment support None in the Directive Grants for building CT terminals. Terminal density needs to be increased in several parts of the EU, while in other areas terminals are reaching their maximum capacity. Without terminals there is no intermodal transport. Possibility to provide grants for shipper side handling equipment investments. Needed for new take-up of combined transport for those shippers who would continue using road only transport to avoid high initial investment costs. Operational support Reimbursement of road vehicle tax based on rail distance for roro rail transport. Paid by MS where vehicles are registered on transport in that MS (mandatory). Exemption from vehicle tax for vehicles used exclusively for CT (optional) Reimbursement of road vehicle tax for all load units in all CT, based on non-road leg distances, level of support up to the MS. Paid by MS where vehicles are registered on transport operations in that MS. Extension of the current scheme to connections with all non-road modes. Aim is to motivate road operators to switch to short distance road transport. Grant per load unit shipped on CT, based on km of non-road transport, level of support up to the MS. Paid by MS where the transport organiser is established. Aimed directly at those choosing between road and CT transport. Basis on non-road-km motivates to use most of non-road transport. Reimbursement of transhipment costs, harmonised percentage level. Paid by MS where the transport chain organiser is established. Aimed directly at those operators choosing between road and CT transport. Addresses the additional cost of transhipment that is the main cost difference between road only and CT transport. Reimbursement of road rail and port (access) charges with harmonised percentage level.. Paid by MS where the transport chain organiser is established. Addresses the issue of higher infrastructure costs compared to road transport. Administrative measures Review None Review of economic support measures every 5 years at national level. Aims at ensuring that support measures are up to date and correspond to the needs of the sector. Data collection MS to assist the Commission Establish stronger obligations for MS to gather the data and share it with the Commission for reporting purposes. Cooperation between MS None Establish a contact network between Member States authorities. Transparency None Establish an obligation to publish rules and support measures in a single place. Table 6: Retained new measures The list of discarded policy measures and the underlying justifications are given in Annex 8. 5.2.Selection of policy options (and discarded options) The retained policy measures were combined into four pol