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Unified transport policy still eludes Europe. (Global Links).

A key objective of the 1957 Treaty of Rome that established the European Community was to create "a European transport policy." Fulfilling that goal, however, has not proved easy. While the member states supported a European-wide transport policy in principle, in reality, they found it hard to give up part of their sovereignty in transport matters. Even today, 50 years after the start of the European Community, a unified transportation policy has yet to fully emerge in all of the transportation sectors. I'll give you a number of examples in each of the sectors.

Road

The European Commission did not propose liberalizing the road transport sector until the end of the 1980s. At that time, it was still not possible for a Dutch company to transport goods from Hamburg to Munich for a German client, because that was the domain of German trucking companies. The commission first liberalized transborder shipments by trucks. It then launched the "European vignet," a license that allowed transport companies to offer services anywhere in Europe. The results were clear: Road transport in Europe grew exponentially, prices dropped, and competition on the market increased. So although member states were reluctant at the start, once the agreement was in place, the market reacted in a positive way.

Air

The liberalization of air transport, however, has been less of a success. Every member state used to have its own flag carrier; most of which were government-owned companies. Compared to the United States, air transport in Europe was traditionally a nationalist, closely regulated (and thus uncompetitive) sector. When the United States deregulated their airlines, the competitive gap became even larger. At the end of the 1980s, the commission proposed liberalizing air transport and abolishing state aid to the national airlines. The rationale was that if we were to create a Pan-European market in air transport, it would no longer be acceptable for a private company that had to earn its money on the market to compete with a company that was receiving money from the government. It took the commission ten years to establish the principle and to bring this rule into practice. Today, in all of the member states, air transport companies are closely linked to their national governments but are no longer financially supported by them. From that point of view, the European Commission has achieved its goal.

On the other hand, consolidation of the air sector--another goal of the European Union--has not happened. One of the reasons why the commission wanted to liberalize the sector was that American companies, which were the large European airlines' main competitors, were on average bigger and more profitable. The commission wanted to make mergers possible and to reduce the number of companies as a way of making the industry, more competitive. Yet, so far, there has been no merger of any significance in Europe. The only example to date was the merger between Belgian carrier, Sabena, and Swiss Air--and that merger failed.

The main reason why consolidation has not taken place is that the airlines are still working in a national environment. Air traffic control is national, airport policy is national, and a number of company rules are national. Through its "Single Sky" program, the commission is trying to merge the different air traffic control authorities in Europe. But no member state is willing to give up its authority to regulate and control air traffic. The challenges facing the Single Sky program prove how immature and incomplete the European transport policy still is.

Rail

The inability to create an internal market for railways has been one of the big failures in European transport policy. Over the last few decades, both freight and passenger rail transport has been losing market share in Europe. Railways in the European Union have not been providing adequate capacity and service. For example, the average speed of freight transport in the Union is a little bit more than 10 miles an hour.

The reason for these problems is that railways are still run as national companies. It is almost unthinkable that, in a Europe where goods, services, and people have moved freely for decades, trains still stop at each national border, where they might have to change locomotive and/or driver. There are still no Pan-European rules on train driver's licenses or employment conditions, and standards on locomotives or tracks. As a result, a container moving over land from the port of Antwerp to the north of Italy has to pass through four or five different networks, each of which has different operational characteristics. This creates serious barriers to a smooth functioning of the European rails, making it difficult for customers to use this service. Furthermore, because of the monopoly on rail transport in most of the countries, shippers cannot "shop around" and choose another service provider.

Several liberalization initiatives are now underway, with varying degrees of success. Two years ago, the European Union decided that, starting in March 2003, competition for rail freight would be open on what we call the Trans-European freight network, over which any licensed railway could offer a service. Meanwhile, liberalization efforts have varied from country to country. Germany has liberalized its market, and the Netherlands has done so with some difficulty. But Belgium, France, Italy, and Spain have not so far.

Liberalization of the freight railway market cannot wait, particularly if we are to realize the full potential of intermodal transportation in a Pan-European market. If we fail to organize the European railway market now, there is no future for the railways. Everything will have to be transported either on inland waterways or roads.

Water

Water transport has a great deal of potential and needs a European-wide approach as well. There are big possibilities in Europe to make better use of water to bring goods from one member state to another, be it by using inland waterways or the deep-sea ports.

The European Union is the largest trader in the world. And the largest part of what we trade is transported by deep-sea shipping and comes into or leaves from one of the many ports in the European Union. Surprisingly, however, port policy is a very national policy. The organizational and ownership structures differ widely as do the policies on using taxpayer money to fund port operations. It is not fully clear what role the state should play in European ports. The commission has made a number of proposals to make ports more competitive and liberalize their services. I hope this work pays off because water transport has an immense future. That's especially true in the region I am from, Flanders, which has a dense network of inland waterways. Inland-waterway transport has become increasingly liberalized in both Flanders and the Netherlands. As a result, this sector has grown by almost 20 percent over the last ten years in these areas.

Clearly, creating the unified European transport policy envisioned in the 1957 Treaty of Rome has proved to be a difficult task. Yet continuing to work on such a policy is essential to maintaining the European Union's position as the largest trader in the world.

Dirk Sterckx is vice chairman of the European Liberal Democrats in the European Parliament.
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Author:Sterckx, Dirk
Publication:Supply Chain Management Review
Geographic Code:4E
Date:May 1, 2003
Words:1198
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