Three years in the making, the adoption of the first wave of the EU Mobility Package in July immediately gave rise to controversy, with nine member states, including Malta, saying they consider some of the new provisions to be detrimental to their interests.
The European commercial road transport sector employs nearly 11 million people directly, or about five per cent of total EU employment.
Road transport accounts for nearly half of all freight transport operations and forecasts show that passenger transport is likely to grow by 42 per cent by 2050. and freight transport by more than 60 per cent in the same period.
In line with a Work Programme unveiled in 2017, the European Commission proposed a set of initiatives to make traffic safer, encourage smart road charging, reduce CO2 emissions, air pollution and congestion, cut red-tape for businesses, fight illicit employment and ensure proper employment and social conditions for workers.
But while the European Parliament immediately approved the new rules that will drastically change the transport of goods by road, European Transport Commissioner Adina V ălean noted that the regulations include elements that are possibly not in line with the European Green Deal’s ambitions and the European Council’s endorsement of the objective of achieving a climate-neutral EU by 2050.
She highlighted two main aspects: the compulsory return of vehicles to the member state of establishment every eight weeks in the case of cabotage operations, or international freight transport, and the restrictions imposed on combined transport operations.
Neither of the two requirements had been included in the Commission’s proposals of May 2017 and were not even subjected to an impact assessment, she pointed out. Meanwhile, Malta, Bulgaria, Cyprus, Estonia, Hungary, Latvia, Lithuania, Poland and Romania are urging the European Parliament to modify the Mobility Package so it would take into account fair competition, EU climate policy objectives, the Single Market and post COVID-19 socio-economic realities.
They fear that, as things stand, the new law will continue to weaken an already troubled EU economy.
“We are concerned about the smooth function of the transport market in the EU. Restrictions in market access lead to monopolisation of the market by hauliers from some countries, which will lead inevitably to higher prices for many goods and services, impacting consumers’ budgets and economic growth,” the transport ministers of the nine member states said in a statement.
Daniel Debono, the Malta Business Bureau’s Manager EU Affairs and Head of its Brussels Office, explains that the Mobility Package is a comprehensive package of legislation with a wide range of objectives looking to achieve social fairness, fair competition and improve the environmental performance of road transport operations.
“The European Commission’s initial intentions had many positive aspects, including to modernise rules reflecting the digital age and reduce red tape for transport operators across the EU.
“However, unfortunately, the overall reform was undermined by dramatic alterations throughout the legislative process, which, from our perspective, ironically go against the EU’s objectives themselves, including the free movement of services and the European Green Deal,” Mr Debono observes.
He mentions two examples, including the compulsory return of vehicles every eight weeks to their member state of establishment, which will have a significant impact on the increase in transport emissions in the EU, thus impeding Brussels in its long-term goals of achieving a 90 per cent reduction in transport emissions, and climate-neutrality by 2050.
Operators claim that, in most cases, the vehicles required to return to their member state of establishment could travel empty and this could have a tremendous impact on traffic at border crossing points.
The experience of recent weeks, Mr Debono notes, shows this is something we cannot afford. Moreover, he adds, the measure is excessively restrictive and discriminatory against peripheral countries and, particularly, island regions such as Malta and Cyprus due to the permanent disconnection from mainland Europe.
It will put an unproportionate burden on haulage companies simply due to the geographical location of their member state of establishment and this goes against the principles of the Single Market.
Another issue of significant burden, he remarks, has to do with the location of drivers’ rest period as drivers will no longer be allowed to take their rest in the truck cab and operators would have to pay for accommodation costs instead.
Though the aim is to protect drivers, Mr Debono raises two issues. The new rules, he says, infringe on the right of drivers to choose where to spend their weekly rest.
A European Commission study last year concluded that there is no sufficient infrastructure that meets the needs of modern logistics in terms of capacity providing a safe and secure environment with adequate rest facilities for drivers and their cargo.
This also increases the risk of cargo crime, Mr Debono points out. “While disappointed with the outcome of some provisions in the Mobility Package, the MBB welcomes the Commission’s decision to investigate the expected impact of the return of the truck provision on the climate, the environment and the functioning of the Single Market, and reserving the right for future targeted legislative action.
“It will continue following any developments in this regard and liaise directly with The Malta Chamber and local operators to communicate their views at a European level. We will also continue working together with our European business network,” he asserts.
Karl Sullivan, Business Development Executive at Sullivan Maritime Ltd, notes that, in some way or another, all provisions will have a direct or indirect impact on Maltese companies.
“The new clauses in the Mobility Package are directly inclined towards our clients and will impose a huge financial expense and increase in costs. As a result, Maltese companies, or the end customer, will also incur an increase in the cost of the services rendered or a decrease in their freight forwarding services and/or ultimately in profits,” he asserts.
The extra expenses, Mr Sullivan explains, will be reflected along the whole supply chain, resulting in an increase in end-consumer pricing.
Long term, it can mean less consumer spending power, which will have negative implications on the country’s economic position. In order to alleviate the impact of the new policies brought about by the EU Mobility Package, Mr Sullivan thinks companies may have no choice but to increase their vehicle fleet and manpower to overcome the possibility of loss of business.
However, he is quick to add, this is not the ideal situation, especially in the prevailing climate, as it brings about a substantial increase in operational, labour and resource expenses.
In the wake of the negative impact the COVID-19 outbreak had on several businesses and organisations all over the world, businesses are now placed in a situation where their next strategies and decisions could prove critical in ensuring both their short-term and, if successful, long-term future, he says.
“Imposing these new measures will only compound the situation as the clauses in the EU Mobility Package conflict with the cost-cutting measures that organisations are opting for in order to survive the decrease in business brought on by the pandemic,” Mr Sullivan predicts.
Noting that the EU Mobility Package does not have any clauses directly related to ship agents, he adds that his company’s primary aim is to support clients as they face challenges.
“We will communicate and coordinate with all stakeholders in the industry in order to dampen implications on our business relationships, while reassuring our clients that they have our full support,” he explains.
All the provisions contained in the first phase of the Mobility Package will affect Maltese hauliers, Express Trailers Group Chairman and CEO Franco Azzopardi says, adding that he is aware that European peripheral countries are planning some sort of formal protest against the move.
“In view of the overwhelming vote by which the new rules were adopted, I am not very hopeful things will get better,” he asserts, adding that a lot of work has already been done with regard to the implementation of the provisions.
Yet, he says some EU governments and MEPs are still trying to see what can be done. “However, to us it is a fait accompli because the four main new rules, bar one, will come into force imminently,” Mr Azzopardi admits.
He is referring to the provision that deals with trucks, two provisions that apply to drivers and a fourth that relates to cabotage.
Trucks carrying out cabotage operations now have to return to the company’s operational centre every eight weeks. Moreover, drivers have the right to return home at regular intervals and are guaranteed that their rest periods are outside their vehicle, with employers covering the cost of accommodation.
Finally, the existing limits for cabotage, that is three operations in seven days, will be maintained, but a four-day cooling-off period must be observed before more cabotage operations can be carried out within the same country with the same vehicle.
Cabotage is the term used to describe the national carriage of goods for hire or reward carried out by non-resident hauliers on a temporary basis in a host member state Mr Azzopardi says that he fails to understand the EU’s stand with regard to cabotage.
“Where is the competition and the freedom of movement Brussels speaks of,” he asks.
In his company’s case, the main problem with regards to cabotage is Italy, and Mr Azzopardi feels the matter can only be solved politically through talks between the Maltese and Italian governments.
It is Italy, after all, that keeps insisting on roll on-roll off operations, he is quick to point out. At least on this point, he remains hopeful that some sort of arrangement can be found through dialogue between Rome and Valletta.
Mr Azzopardi explains that drivers must now be sent home to rest every four weeks. Most of his company’s drivers are Eastern Europeans who work nine weeks on and three off and, at times, longer too.
During the COVID-19 containment period, some of them worked for three months at a stretch. Things now have to be planned in a different manner and this, he is sure, will also cause inconvenience to drivers themselves, even if the EU claims the changes were made to improve their lot.
In addition, rather than take their rest in the truck cabin, as drivers usually prefer to do, they will have to be given hotel accommodation for two days a week, Mr Azzopardi says. All this costs money, he adds.
Express Trailers will need to buy a minimum of another five trucks, each costing about €100,000, to meet the demands of the new Mobility Package, he says, noting that his company is the only one on the island to have its trucks registered in Malta.
Mr Azzopardi forecasts that the cost of freight will have to rise by six to 10 per cent to cover such expenses. Staple goods and essentials will bear the brunt of such an increase and that will likely push inflation up, he says.
“At the end of the day, it will be the consumer who will have to pay and, of course, it is consumption that makes the economy go round. In fact, we suffered the moment we closed the airport, which immediately affected consumption across the board,” he argues.
He notes that retailers have already suffered as eCommerce becomes ever more popular and, if they are not careful, some may risk drowning if further consumption is negatively affected as a result of this latest move by the EU.
There may be casualties among retailers, Mr Azzopardi warns. The Malta Chamber, which has a Logistics Business Section, has raised the issue with Government. Individual companies also made representations.
This feature was first carried in the September edition of the Commercial Courier