Charges for Heavy Goods Vehicles: EU Policy and Key National Developments

1
Charges for Heavy Goods Vehicles EU Policy and
Key National Developments

• Chris Nash, Bryan Matthews, Batool Menaz and Esko
  Niskanen
• Institute for Transport Studies
• University of Leeds
• Paper presented at the IMPRINT-EUROPE one day
  workshop on charges for heavy good vehicles
• 1 October 2003

2

• Introduction
• Developments in European inter-urban road
  transport pricing policy
• The draft Eurovignette Directive
• Swiss experience
• German experience
• British proposals
• Comparison of the HGV charges
• Conclusions

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Heavy Goods Vehicles(HGVs) Costs and Charges

• The marginal social costs of freight transport
  depend on
• Congestion, which varies with traffic volume
• Road damage, which is sensitive to axle load and
  road quality
• Environmental costs, which vary widely with
  geographical location.

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• Normal charges are
• Fuel taxes
• Fixed annual charges
• Insurance
• In terms of supplementary charges, currently
  there are three Europes
• Eurovignette countries
• Countries with tolls on specific roads
• Countries with no direct road charging at all

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The Eurovignette Directive (EU, 1996)

• Aimed to limit competition problems within the
  road freight sector caused by the existence of
  very different methods and levels of charging for
  infrastructure use in different countries.

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• BUT
• The Eurovignette is limited to motorways
• It is only related to the infrastructure cost of
  providing those roads, thus excluding external
  cost
• It is based on time, rather than on the distance
  travelled.

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The Draft RevisedEurovignette Directive

• This will change the earlier Directive by
• Permitting charges to vary by distance, location,
  time of day, vehicle type
• Extending the Directive to all goods vehicles
  over 3.5 tonnes (instead of 12 tonnes) gvw
• Applying to the TEN network and to other roads to
  which traffic might divert, but permitting
  application of pricing to other roads as well

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/cont

• Annual vehicle taxes may be reduced below the
  currently permitted minimum to compensate
• Revenue must be used for expenditure on roads, or
  on other transport networks as substitutes
• Each state must create an independent transport
  infrastructure supervisory authority to guarantee
  that charges are being set and revenue is being
  used in the required way

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/cont

• The overall average charge must be equal to
  infrastructure and uncovered accident cost (i.e.
  external cost of accidents minus insurance
  premiums)
• In exceptional circumstances, a surcharge of up
  to 25 will be permitted to fund alternative rail
  infrastructure

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Swiss Experience (1)

• Heavy Vehicle Fee (HVF) was implemented to cover
  the high costs of heavy goods vehicles on the
  roads
• It took 20 years from the first approaches to
  introduce the HVF. The first step was to
  introduce a flat fee and finally a distance based
  fee was accepted and put into force in 2001.

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Swiss Experience (2)

• The fee was calculated in 3 steps
• Step 1 calculate the uncovered costs of heavy
  traffic which consist of uncovered road costs and
  external costs (Air pollution, Noise and
  Accidents) caused by HGVs. This amounts to 750
  million Euros.
• Step 2 calculate total transport performance
  (tonne kilometres). This amounts to 47 billion
  tonne kilometres.

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Swiss Experience (3)

• Step 3 fixing the rate as the ratio
• Step 1 750 million Euros
• Step 2 47 billion tonne-kilometres
• 1.6 cents per tkm
• The fee was introduced in 2 steps
• 2001 1.6 cents/tkm (0.01 Euros)
• 2005 2.5 cents/tkm (0.016 Euros)

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Swiss Experience (4)

• HGVs with total admissible weight over 3.5 tonnes
  were taxable
• HVF was calculated by
• Rate x Distance travelled in Switzerland x Weight
  of vehicle x Emissions

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Swiss Experience (5)

• Data for calculating the fee was obtained by
• Each domestic HGV is fitted with an On Board Unit
  (OBU) which registers kms travelled using a
  tachograph. OBU also stores admissible weight
  and emission category. Data is transmitted to
  Swiss Customs Authority (SCA) each month for
  billing.
• For unequipped vehicles, the fee is registered
  using an ID card at special terminals for HVF
  clearance. Data on distance is obtained by
  driver entering actual mileage when entering and
  leaving the country on a form. When leaving the
  country, the fee is paid by cash, fuel credit
  cards or through an account with the SCA.

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Swiss Impacts so far (1)

• An increase of 45 in sales of new HGVs in 2001
  as the new vehicles belonged to the lowest and
  cheapest emission classes
• Concentration in the haulier industry
• Less vehicles on the roads. There was a fall of
  5.6 in motorway traffic in 2001 after the
  introduction of the HVF.
• Stable modal split with no significant impact on
  rail transport performance

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Swiss Impacts so far (2)

• The gross revenue of the HVF in 2002 was 600
  million Euros and the costs were roughly 8 of
  gross revenue (45 million Euros)
• The net income of the HVF in 2002 was 525 million
  Euros, which was distributed as follows
• Reimbursement to cantons for their operational
  costs (5 million Euros)
• Reimbursement for additional enforcement (10
  million Euros)
• Share cantons (175 million Euros) and
• Share federation (335 million Euros)

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German Experience (1)

• The goal of the tolling system for HGVs is to
  improve mode split, doubling railway freight
  transport.
• The charge is to be implemented in late 2003
• The idea is to have a combination of tolling and
  public-private-partnership models. Private
  operator running the system may ensure
  cost-effectiveness and consumer friendly
  behaviour. The operator has to pre-finance the
  system.

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German Experience (2)

• Features of the charge
• Applies to all lorries weighing 12 or more tonnes
  using German motorways and may extend to highways
• Based on number of kilometres travelled
• Charge is differentiated by number of axles,
  pollutant emission categories, and possibility of
  place and time of use later
• Toll rate set by regulator
• Revenues will be spent on infrastructure projects
  for roads, railways and waterways
• The average toll rate is 12.4 cents per kilometre

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German Experience (3)

• Benefits of the German distance based HGV user
  charge (Federal Ministry of Transport, Building
  and Housing, 2002)
• More precise application of user pays principle
  for domestic and foreign road users
• Fairer competition between roads and railways
• Additional revenue for the funding of transport
  infrastructure
• More efficient use of transport capacities
• Emission related toll contributing to the
  protection of the environment
• Additional relief for public budgets by switching
  from tax funded to user funded infrastructure

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German Experience (4)

• The booking system allows the charge to be paid
  through sales points, online or through call
  centres which all link to a central computer
• Automated toll collection satellite based
  positioning system (GPS) and virtual collection
  points

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British Proposals (1)

• The charge is hoped to be introduced in 2006
• Objectives of the charge
• Fairness and efficiency All road users should
  pay at levels which reflect the costs they impose
• Positive effects on transport and the environment
  the charge should reflect the costs of climate
  change, local air quality, road maintenance,
  safety, traffic congestion and noise
• There will be off-setting tax cuts through fuel
  duty reductions for lorry operators when the
  charge is introduced

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British Proposals (2)

• Characteristics of the charge
• Apply to lorries over 3.5 tonnes
• Apply to all lorry operators using UK roads
  including foreign
• Apply on all UK roads with the potential of a
  different rate for motorways
• Vary by lorry type (emission, weight)
• Potential to vary according to time of day

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Comparison of the HGV charges (1)
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Comparison of the HGV charges (2)
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Comparison of the HGV charges (3)
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Comparison of the HGV charges (4)
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MC-ICAM Background

• Recognition that MSC pricing cannot be
  universally implemented simultaneously
• Interest in possible implementation paths
  (expressed e.g. in the infrastructure charging
  White Paper, 1998 and in White Paper, 2001)
• Lack of research on practical implementation
  paths and their costs and benefits
• e.g. which modes or parts of the network do we
  address first?
• How far do we move towards full marginal cost
  pricing on each?
• What accompanying measures should we undertake?

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• MC-ICAM
• Inter urban case studies
• Emphasis on freight
• On relationship between modes and degree of
  differentiation (Netherlands)
• On impacts throughout the economy including use
  of revenue (UK, Norway)
• On institutional arrangements between governments

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• Policy conclusions from MC-ICAM modelling
  results (D8)
• INTER-URBAN
• Most of the benefit can be obtained by tackling
  the dominant mode road (Netherlands, Norway)
• Second best pricing to allow for distortions in
  other modes/markets may again lead to fluctuating
  prices
• A big increase in price when freight alone
  charged followed by a reduction when passenger
  charged (UK)
• Use of revenue crucial
• Benefits may be several times greater if revenue
  used to reduce distorting taxes rather than
  returned to users as lump sum payments (UK,
  Norway)
• Where revenue used in best way, optimal charge
  higher.

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Conclusions

• All developments offer better differentiation by
  type of vehicle, distance, time of day, location.
• Still major issues about the level of charges
• Germany and Switzerland based on average cost
• Britain revenue neutral
• Eurovignette linked to infrastructure and
  accident cost only
• Earmarking of use of revenue for the transport
  sector may be inefficient