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29.03.2022

Mobility Package – new rules for international hauliers

Mobility Package – new rules for international hauliers

Mobility Package – what is it?

Road transport plays a key role in the European transport of goods. It accounts for three-quarters of the European Union’s (EU) inland freight transport. The previous decade illustrated that transport companies from Central and Eastern European (CEE) countries are leading the international freight business. Current EU regulations are a significant barrier to the development of this market for many European countries.

One of the most significant challenges currently facing transport companies, is the European Union’s new law regulating issues connected to road transport. These new regulations are consolidated within the Mobility Package. The wide scope of the package includes, inter alia, the posting of workers, access to the road haulage market, road charges, driving and rest time rules, vehicle taxation, and CO2 standards.

New Law vs Environment

Some of the changes have already been in force since 20 August 2020. One of the most important and criticized changes is the mandatory regulation that a driver must return to the operational center (base) or driver's place of residence every 4 weeks. In addition to this coming into effect from February 2022 – transports must be organized in such a way – that the obligation to return the vehicle to one of the operating bases in the country of the carrier's residence, can be met at least once within 8 weeks from the date the vehicle leaves the country.

The majority of stakeholders are keen to stress that the proposed rules will increase empty runs, which will lead to the increase of CO2 emissions as a consequence. It’s also worth mentioning that even the European Commission has recently published a study which confirms the validity of these concerns. It states, “the obligation of the return of the truck will lead to inefficiencies in the transport system and an increase in unnecessary emissions, pollution and congestion”. The study found that the two provisions could result in up to 3.3 million additional tonnes of CO2 emissions per year. While up to 704 additional tonnes of nitrogen oxides (NOx) and 251 tonnes of particulate matter (PM2.5) will be released into the atmosphere, stemming from these two provisions of the Mobility Package alone.

Minimum Wage and Taxes

An additional issue of contention is related to the stricter rules around the remuneration for cabotage, combined transport or international cross-trade transports. Previously, a minimum wage was paid. However, under the directive an “equal pay” system will be introduced. For the correct settlement of employee remuneration, it will be necessary to use; the laws of the host country, general implementation of provisions - the Posted Workers Directive, local administrative regulations, industry regulations and trade union collective agreements and arbitral awards.

Typically, drivers receive a daily subsistence allowance and lump sums for accommodation. However, taking into account their local regulations and the Mobility Package rules, many countries will not be able to accommodate these allowances into the “standard remuneration”. Therefore, it is estimated that after the Mobility Package entry pertaining to posting comes into force, the employee costs for entrepreneurs from CEE countries may increase by as much as 30 percent. This is not good news for those countries which are effectively competing with entities from the West mainly due to cheaper labor costs. Poland, Romania and Bulgaria have already introduced this change to the national law.

Cabotage

New rules will affect the transport of goods between two places in the same country by an operator from another country, e.g., a Slovak company which transports goods from Prague to Brno. This type of service is called cabotage. Until now it could be permitted as a consequence of an international road transport, a maximum of 3 times within 7 days after unloading goods from the international transport. Since 21st February the “Cooling-off period” rule has been enforced. Therefore, even if the driver enters the same country again after 3 days, he cannot perform the cabotage service on the same day because there must be a four-day break (theoretically, it's permissible, but with a different vehicle).

Bureaucracy

Other changes, the effective date of which is the same as for the provisions on the posting of workers, include, for example changes to registration obligations. When posting an employee, the carrier will have to send a notification containing specific information, such as carrier details, details for the contact person, driver's details including driving license number, information on the employment contract, start and end date of the posting and registration numbers for the type of transport performed. These changes will certainly be a challenge for many transport companies as they will require knowledge of foreign law and industry regulations, which will make it difficult to calculate the driver's remuneration. This all entails greater bureaucracy, the need to hire new reporting persons, tax specialists and lawyers. Additionally, all transports must be registered in a pan-European IT system – the Internal Market Information System (IMI).

Most Suffered

Countries most affected by the new laws are those from Central and Eastern Europe. One must only look at the Eurostat statistics for the top 5 countries with registration of foreign lorries active in each EU territory. The table consists mainly of Eastern countries. In addition, in 2020 the top 3 countries responsible for cross-trade transport in the EU were Poland, Lithuania, and Romania. Followed by Bulgaria, Slovakia, Slovenia, and Hungary. Cabotage transport was dominated by Poland (45% of the cabotage market), followed by Lithuania (11%) and Romania 7%.

Summary

As the European Commission’s website states, “The new rules will improve drivers’ working conditions, introduce special posting rules for drivers in international transport and update provisions on access to the haulage market”. However, according to many experts the regulations included in the Mobility Package will be a development obstacle for companies, especially those from Central and Eastern Europe. The German authority on logistics Prof. Peter Klaus shows in the report Mobility Package I: Impact on the European Road Transport System’ that this will significantly increase the overall costs of the European international road transport system and reduce productivity. Many experts agree with this point of view and observe that additional costs related to vehicle journeys e.g., fuel, tires, drivers and the posting of driver’s rule will definitely put pressure on costs. This, in addition to high fuel prices and the shortage of drivers on the market, is one of the reasons for the rising prices of transport services in Europe.

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