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Road transport operation on the Continent

by Herbert Bress

General manager, Pickfords International (Deutschland) GmbH

AS IN YOUR COUNTRY, the Continental haulier lives with all kinds of regulations in his day-to-day work. Whether they differ in some cases from yours, you may judge by what I am able to tell you about our situation on the Continent.

The first point at which a potential haulier in Germany encounters the system is when the local Chamber of Commerce judges whether he is capable of running a transport firm. They will assess whether he meets the requirements of the law by examining him regarding his commercial knowledge, his understanding of the respective traffic laws and his financial position; there will also be a clearance from the financial authorities, who give the final OK. These investigations will be made before he opens up his office for business, as will the acceptance of his application for a licence.

Licensing is indeed a very big problem in West Germany. To operate locally, a haulier needs a short-distance licence, for distances up to 50km (about 30 miles). This will be granted by the respective road transport department in the community or city. The application has to be justified and the haulier must give written evidence of his reliability, his capability and his knowledge of what he is undertaking. After meeting these requirements the applicant is authorized by law to receive a short-distance licence. Taking the present situation, for example in Dusseldorf, the whole process from date of application to receipt of a licence takes about three months.

While this process is obviously not a big problem, we really meet difficulties if we picture ourselves in the position of the same man trying to get a long-distance licence. This demands the same basic qualifications as for the Short-distance licence but, having met them and thus satisfied the law as to his fitness to hold such a licence, he encounters the capacity control operated by the Ministry of Transport. Since the long-distance licences are already fully taken up, the applicant has to wait his turn for an existing licence to be surrendered — and in present German circumstances he would consider himself fortunate to get his operating licence within 10 years.

Since such a wait is out of the question from a practical point of view, he has to consider the only alternative — the possibility of buying a licence. Frankly, this really means buying an established company having long-distance licences. The present market value of a long-distance licence in connection with the vehicle to which it refers is about £6000. A licence is not transferable to a third person, so the intending haulier has only two choices — to wait or to buy.

Licences are not issued to, for example, forwarding companies but only genuine haulage firms, that is those who own the vehicles. German transport law has, up to now, identified the licence with a particular vehicle, but the number and character of licences granted is somewhat different. There are suggestions that from January 1 next year the licence will not be bound to the particular vehicle, but to the firm itself, which is quite sensible if the vehicle is at the repair station.

There are quotas effective within the various local governments of our republic; also, under long-distance licensing, there are: (1) A

blue concession extending up to 150 km range. (2) a rec concession — which all operators are very keen to get — since i is for the whole of the Federal Republic — and (3) a pink concession which is for all the countries within the EEC.

Rates and tariffs The next important point is, of course, the tariff situation. ThE tariffs for long-distance haulage are based on, to use a direct translation from the German, the "law for moving merchandis( over long distance" and the "Haulage companies law". The roac haulage tariff is a fixed rate with a margin of plus or minus 8.5 pei cent. We also have special tariffs to the German seaports and foi groupage, and a separate tariff for moving goods ex-railwa) station up to final destination within city limits, but this is at optional tariff, not an obligatory set of rates.

The road tariff for haulage is compulsory for forwardit.q corn panics but a forwarder has the possibility of getting a specia tonnage rate. We have 5, 10 and 15-ton classes for pricing, anc indeed so do the railways. Regarding the groupage traffic by road the tariffs are fixed, but there is a margin of plus or minus 11 pei cent up to three tons.

All these foregoing factors relate only to long-distance trucking In the short-distance work, up to 50km, we have separat( short-distance tariffs and these, too, are fixed but with an uppe: and lower margin.

Although this may seem to you a very strong tariff situation, it which a specific traffic or business may not be granted an concession or flexibility, the haulage business is considered to be rough and rude affair and as a German haulier you would neve. get the "plus" margin on a rate. The general tariff situation it practice is the fixed tariff, less the margin which gives the lowes possible rate. This is the average and general business, and beside: this the haulier is expected to do some specific work for which hi will not get extra money, but which is considered as part of ail service.

There is not the slightest possibility of under-cutting the roa( tariffs. There is a very strong control from the Government' Federal Control Authority for Road transport.

Trade Associations I have dealt so much with authorities, control and licences tha at this point I think it advisable to introduce some °the] organizations and associations involved in the road transpor world.

Among the associations which have been established, not b,) law, but as a voluntary membership, are the forwardinf associations, the association for the long-distance haulier, and th, long-distance transport association. These have severa sub-branches regionally as well as according to the different type: of haulage business (removals, long-distance trucking, groupagi traffic and so on).

Representatives of these trade associations work together wit! shippers (customers) in the German Tariff Commission, whicl rorks out new tariffs and presents them to the Ministry of 'ransport for acceptance. The joint commission also sets out the onditions under which forwarders and hauliers work. For xample, the recently published new edition covering German )rwarders' liabilities against a third party and the basic conditions nder which a haulier operates.

The trade associations lobby the Government strongly and, in ie reverse direction, pass on to members any information which omes direct from the Ministry of Transport. Although this may amid very important, the associations in fact have no real power, rhether against third parties or within their own membership. 'hey have no basic power with which to enforce rules against tembers and can only take indirect sanctions, for example :ading to fines for malpractices before the federal control uthorities or the office of the Ministry of Finance.

Further assistance is given on general information, but any efinite help which has in some cases legal power is not given.

he railways

The biggest competitors for haulage business are, of course the ailways. As in the UK, in Germany we have a state-owned ailway, plus some minor railways which are of very small and )cal importance.

The law does not protect this State railway against the ompetition of free enterprise, because German law prohibits state tonopoly situations regarding any kind of transport organization ivolved in moving freight. This may partly explain why our ailways have deep red financial figures. In the latest financial year re had a deficit of 17 billion Deutschmarks — and it is obviously till climbing. Of course the Government, as the only shareholder, -ies to protect the railways in their market position and to permit tem to offer special tariff conditions which sometimes do not ven cover the actual costs.

A very promising and, even for haulage companies, attractive evelopment has been the Kangaroo system by which the railways ffer wagons for the transport of containers and trailers over long istances. For example, a haulier in Krefeld, just 15km from )iisseldorf, who also has a very good business outside Winched, truck his trailer to the railway terminal at Dusseldorf, where le trailer will be put on the railways to Munchen, where a tractive nit will make the road delivery to the final destination, which pplies also to Kangaroo traffic within the EEC i.e. Dusseldorf — Clan, or Dsseldorf — Paris.

You will therefore understand that the long-distance transport is tamed in the hands of the railway, which also does its own .ucking. The German railways have a huge stock of their own antainers and they move roughly between 70 and 80 per cent of le whole container traffic within the Federal Republic.

I would like to go a little 'more deeply into this competitive, tuation. The domestic German freight traffic, as I have already aid, works on fixed tariffs, but these are not now quite so strong s they were a few years ago. At least we now have the possibility I offering some margin, whereas the former rigidity did not

accord with the so-called free enterprise market situation in other parts of our commercial life. Some haulage rates were, and still are, equal to railway tariffs and the traffic trend in the past 10 years has been more and more from the railway to the truck, mainly because the truck offers door to door facilities while the railway is too inflexible. One also encounters operational problems, such as the impossibility of working to fixed loading and unloading dates, but the railway is still moving its share of traffic, especially where big firms have their own rail connection.

And, astonishing as it might seem, the competition between road and rail has led to a degree of co-operation. On one side the increased and still rising container traffic has led the railways to install terminals in some big cities, where a big part of the container movement is by rail wagon direct to the terminal, with local delivery from there by truck. The Kangaroo traffic has attracted hauliers and is carried at special rates and is seen not only as having the merit of leaving the autobahn free for motorcars but also reduces the need for maintenance of the road vehicles and can provide shorter delivery times.

International competition

Some hauliers are interested not only in domestic transport but also look for international business. In carrying international traffic, German hauliers were for long governed by the fixed domestic tariff as far as the German border, but beyond this were free to quote as they wished. Among the countries within the EEC this led to some very strange situations. For example, for a 20-ton load from Diisseldorf to Rotterdam, the fixed German freight up to the German border was 18 DM per ton, but the shipper was charged only 20 DM per ton for the total journey to Rotterdam — although the foreign part of the trip was two-thirds of the whole distance!

This situation, of course, affected the competitive position of the German haulier because hauliers from Holland or Belgium did not se themselves as responsible to the German tariff and they quoted freights from within Germany that were even lower than the fixed tariff to the German border. This all changed on November 1 last year, when the EEC countries established among themselves the EEC or bilateral tariffs which provide a door-to-door rate with a maximum margin of 23 per cent.

This should, and I repeat shoua be the basis for all transport by road between EEC members. It was the intention that member governments should ensure that these tariffs were operated and that infringements should bring high fines. But, here again, the German haulier was affected unfavourably. While the Federal German Government has a well-organized transport control authority, accustomed to enforcing tariffs, no governmental control organization exists in the other member countries, or only control to a very small extent. In the other member countries these controls take effect only when an operator is being nominated, and not during the actual operating routine.

This means in practice that Dutch, Belgian, Italian and other hauliers have been able to negotiate rates direct with the shipper or any other person, while the German haulier has been forced to comply with the EEC tariff. But now, in order that this negative situation does not have a damaging effect on the German haulage industry, the German control authority has said that it will not apply specific tariff control measures of any kind, unless the other countries in the EEC play their part and install control systems to monitor the tariffs. Much water will run down the . Rhine before this system is working fully.

Another odd situation arises from the fact that for export freight we have special export tariffs to the German seaports, Hamburg and Bremen, and we have a free market price system beyond the German border. The result is that for industry in the Ruhr and the biggest part of North-Rhine-Westphalia it is still cheaper to send goods via Rotterdam at present-day prices. Of course, a very strongly applied EEC tariff could one day lead to the situation that Rotterdam, Amsterdam and even Antwerp would lose a big part of the North-Rhine-Westphalia business to the German ports. On the other hand, of course, within Germany we would have to withdraw these special tariffs to Hamburg and Bremen, which means that the odd .situation we have today will for a long time still be in force.

This more or less free-for-all situation can also be applied to the licence application of a foreign company. Basic qualifications must be given, but there is no quota system because this is based on bilateral agreements between each government.

Canvassing for business Let us now take a look at some of the problems which a haulier encounters in his daily work. How, for instance, does the Continental operator go about generating business? Basically I would say that he will not make any direct advertisement to shippers. He prefers to work for or with a forwarding company. Of course, he will take advertisement space in papers, he sends out mail shots, he will distribute brochures, he will have a salesman and of course — and this is still very popular in our country. — for the Christmas season the famous bottle of spirit will be his gift for the business he received in the year that is past.

A point which I should mention is the payment of invoices. According to existing laws, any transport work which is invoiced to the customer must be paid immediately without any deduction. There are no incentives from the haulier himself to speed up cash payment of his invoices, since in general the term of payment is acceptable — that means between three and six weeks, and after three weeks he may expect payment. Of course there are black sheep, but they really are sorted out very quickly.

As a haulier he may also work as a forwarder, when he has his own sealed shed with customs clearance. This is the usual way when he has haulage traffic outside Germany.

The general situation in the European haulage industry is that big forwarding companies with their own branches in major cities, such as Kiihne & Nagel, Dachser, Schenker, Union Transport, Frech, WTAG — you may have heard some of these names before — concentrate perhaps 50 per cent of the concessions. Thus one firm may have up to 100 long-distance concessions.

On the other hand we have small family owned haulage companies who only have up to 10 concessions on the longdistance runs. They work mostly for forwarding companies under contract or do free tramping. Only a few of them work directly for shippers (customers) on a contract basis. Of course, shippers sometimes have their own truck fleet to carry their products, as will be the case with very many of the delegates at this conference.

We call this works traffic, and it is separately specified by law. What we call works traffic (you call it own-account transport), is understood in the 50km range. Formerly this works tariff was handled without licensing and covered only transport of products from the factory itself, as well as the transport of raw material. For the protection of the hauliers and the forwarding company, the works traffic was taxed at DM 0.05 per ton-km, excluding foodstuffs (dairy produce etc.) which was taxed at DM 0.01 per ton-km. The present situation is this, that the factory must obtain a licence to handle its own-account traffic. The biggest item in this it their volume of traffic. With works traffic, enormous paperwork is involved with each trip, since, as previously mentioned, a strict control is maintained on this kind of transport, which has the highest rate of increase in road transport. Some big firms try to itvoid the works traffic by buying existing hauliers or building up their own forwarding firm.

Warehousing and the delivery of goods locally is mostly in the hands of forwarding companies; this is work in which a real road haulier is mostly not interested.

Trade unions and the driver As I understand it, trade unions are a big factor in transport in your country, but this is not so in Germany. In the German transportation world we have only one union and its influence is very poor; so far, luckily, we have never had a strike.

But of course the trade union is a partner in wage tariff deals, and salaries and wages are freely negotiable between the trade unions and the trade associations. The tariff wages are minimum wages, but if you pay only minimum wages, you will never get t man, so in most cases firms pay more than the tariff Since our jot is very heavily affected costwise by salaries and wages, these have to be looked at carefully when recruiting staff, but if you an not paying the appropriate rate, a man will go on looking until hi finds a firm prepared to pay what he wants.

EEC regulations affect us in other ways than the freight tariff mentioned earlier. We now have the EEC social law, restrictirq the hours worked by drivers — in fact restricting the daily drivirq time to eight hours. For both workers and employers this become: a basis for each EEC country's tariffs, for example in overtime payments and so on.

There are basic laws for employment contracts. There is thi Federal Republic's basic law, the law for running a transportatiot business and what one might describe as industrial relations law. I you employ more than 20 workers in your haulage company, the are legally entitled to a workers' council which deals direct witl the management regarding the conditions of employment withit the company — holidays, canteen facilities, coffee break and 5( on.

Speaking in general, I would say the market for qualified trucl drivers is very bad. In Germany we have apprentices for all kind of trades but so far we have no apprenticeship for drivers. Thi means that you may find on a German truck a man with a licenc, entitling him to drive the 'truck — but that's about as far as i goes. Of course, any profession has its white sheep as well as th; other sort, but one mustn't expect too much from a Germa] haulage driver, especially in the short-range business.

Vehicle conditions and control The trucks themselves are subject to a quality control when ir service, mainly by way of an annual inspection by the technica installation in the city or town where the vehicle is registered. Bu the German police also undertake regular traffic controls on the highways, enforcing the traffic laws. This involves not only the technical status of the vehicles — tyres, weight, dimensions horsepower per ton and so on, but also the documents the driver i; carrying.

The present traffic laws stipulate that a complete T-truck which means motor unit plus cargo unit, must have a maximun weight not exceeding 38 metric tons; a trailer normally has 36-ion limit. As you know, in Germany we have at present th, 10-ton axle, though there are talks concerned with raising thi limit to 11-tons, and the new applicants for EEC membership ar involved in these discussions.

I think I have made it clear that the German haulier has to liv with regulations of many kinds, covering personal and equipmen qualifications, domestic and international tariffs and industrie relations. I think it is very unlikely that all our existing Germa: laws affecting transport will be incorporated within EEC law! because there are some points at which other member countrie would not accept them. So at least this means that future tan] regulations within the Community can't be harder or stronger tha the present German ones.

I hope I have given some idea of a German haulier's lift Although this paper has perhaps given the impression of a dry an heavily regulated existence, the transport world is still an interest ing one and full of life. Although any German haulier you talk t is deeply concerned about the low rates and turnover of capital h achieves, he will not give up the business. I believe this is equall true in the UK. People working in the -road transport world al idealists.