Briefinginfographic - March 2015

EPRS|European Parliamentary Research Service Authors: Monika Nogaj, Eulalia Claros Members’ Research Service and European Added Value UnitPE 551.331

The Cost of Non-Europe in Transport

Potential annual savings and efficiency gains in transport: at least €8.6 billionPotential annual savings and efficiency gains in transport by sector: 8.6 € bn

Clarifying access charges

Addressing technical barriers

Harmonising vehicle authorisation and safety certification

€1.9 bn

€3.5 bn

Harmonising social legislation

and enforcing rules

Clarifying vehicle standards and rules on

road charging

Improving road safety

€1.3 bn

Air traffic management

Airport planning

Opening sky to 3rd countries

Completing market opening

Network integration for improved

modal inter-operability

Reducing environmental

externalities

€1.9 bn

Liberalisation of port services and transparency of port charges

Reducing administration andreporting formalities

Ensuring shipping competition

Transport is a vital component of the EU economy with huge untapped potential. The sector suffers however from remaining barriers, gaps and market inef-ficiencies that create substan-tial costs and that could be ad-dressed through further action at EU level.

The gains that could be achieved from addressing the identi-fied issues in the four modes of transport - rail, road, air and maritime - are estimated to amount to at least 8.6 bil-lion euro annually. While the four sectors show similarities in terms of market fragmentation and lack of competitiveness, each sector requires its own ap-proach to reform.

This document summarises the main elements that constitute the Cost of Non-Europe in the transport sector.

EPRS The Cost of Non-Europe in Transport

€2.7 bn

Optimal scenarioCautious scenario

Further gains from making the EU rail fully inter-operable

The historical development of rail systems within national borders results in

many differences in Europe’s railway networks, including different track and

loading gauges, electri�ication and signalling systems, and train designs.

These remain the main obstacle to a single market in the rail sector, since the

availability of trains that can cross borders is limited.

There are huge constraints to upgrading rail infrastructure to remove borders

for trains, and so the process must therefore be implemented in steps. How-

ever, the long-term bene�its of a truly European rail market could be up to 10

times those quanti�ied here, i.e. between 10 and 27 billion euros annually,

taking into account the cost of upgrading rail infrastructure.

Rail: a fragmented market

€1 bn

Vehicle & safety

certi�ication

Passenger rights

Unrestricted access to

commercial services

Standardisation

of rolling stock

Access to infrastructure

Open tendering to

Public service contracts

1

4.5

6

7.3

9.7

25 10

2.7

4.2

3

2

1

Direct quanti�ied gains

Different electri�ication systems across Europe

per yearper year

Freight transport within the EU272005-2011

AirRailSeaRoad47% 12% <1%40%

50

150

250

350

450

1995 1999 2003 2007 2011

Passenger and freight rail transport in the EU27

Passenger-km

Tonne-km

Billion

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Rail: a fragmented market and infrastructure

The Cost of Non-Europe in TransportEPRS

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Further challenges for road transport

The Single Market in the road transport sector is relatively advanced.

Nevertheless concerns remain due to the lack of suf�icient market

opening, incomplete harmonisation of social and employment stand-

ards and enforcement rules. Addressing these gaps would bring quanti-

�iable bene�its of between 2.5 and 4.5 billion euros a year.

The promotion of cleaner and safer vehicles and the achievement of

road safety targets are further challenges which remain. Additional

gains have been estimated at between 10 and 12 billion euros per year.

Adressing the environmental impact

Improving road safety

Promong modal shi�

€4.5 bnEnforcement of rules

Further potential gains

Direct quanti�ied gains

€2.5 bn

Road: an integrated market with a lot of further potential

Harmonisaon of social legislaon

Freight transport marketopening

SeaAirRailRoad

Passenger transport within the EU-27Modal distribuon 2005-2011

83% 8% 8% 1%

Road deaths per million inhabitants

Differences in transport labour costs in 2013Wages and salaries index

60 90 120 150BGROLUATHULVITSEEEBEUKMTCZPLFRDKDENLSKESHRLTFISIIECYPTGR

2008 = 100

Road: an integrated market with a lot of potential

EPRS The Cost of Non-Europe in Transport

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Different types of intervention: road and train

The gaps identi�ied for the road and rail sectors would require different types of intervention: while some issues

can be better dealt with by ‘soft’ coordination of Member States policies and actions, the EU should not shy away

from the necessary speci�ic regulation.

Approval of new legislation under

discussion at EU level

Approval of new legislation at

EU level

Industry coordination or

action

Other measures at

EU level(guidelines,

soft measures, etc.)

ROAD RAILLack of complete marketopening in the freight transportHarmonisation of sociallegislationEnforcement of rules

Inefficient vehicle design andstandardCleaner vehicles

Road charging: setting the price

Road charging: EETStechnologiesRoad safety

Envionmental sustainability

User rights - transport informationNot harmonised roadinfrastructure design

Lack of complete marketopening in the freight transport

Lack of competition for public service contracts

National specific vehicleauthorisation and safety

Ensuring non-discriminatory access to infrastructure

Single signalling system

Passenger rights

Varied access charges

Different technical standards accross Europe

Legacy of rail system

Single operating language

Standard technical parts and rolling stock and on bord signalling

Missing links at borders

Intelligent vehicles

Different types of intervention: road and rail

The Cost of Non-Europe in TransportEPRS

Air transport: preparing the market for the challenges of globalisation

Air transport: preparing the market for the challenges of globalisation

Direct quanti�ied gains

Top airports in the EU28 (passengers carried in 2013)

Bene�its of completing the single market in air A liberalised and integrated European market in air

transport would improve the organisation of transport

services and lead to a more balanced distribution of entry

and exit of intercontinental �lows. This would mean

lower fares and better service for passengers and more

competitive carriers. The ef�iciency gains have been esti-

mated between 0.9 and 1.8 billion euros.

Expected

annual savings between

€0.9 and 1.8 bn

Market opening and harmonisa�on

Internalisa�on of environmental externali�es

Improved infrastructure and cross-border links

Enhanced compe��on

Lower opera�onal costs, travel �me

and fuel consump�on

Reduced environmental impact

Shorter travel length throughNorth-South rebalancing

Complete Single Market

Geographical balance

Improved ef�iciency

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The Cost of Non-Europe in TransportEPRS

4% in Middle East

Distribution of

partner ports

2012

15% in North America

15% in Africa

38% in Asia

28% in Central and South

America

Bene�it of completing the single market in maritime transport

Emerging Asian economies have rede�ined world mari-

time trade, and today Europe's trade with Asia is four

times bigger than the traf�ic to and from North America.

However, northern European ports still hold the largest

market share in Europe, despite the shorter routes to

southern European ports.

The completion of the single market in maritime trans-

port, including the internalisation of environmental

costs, would lead to a gradual rebalancing of trade among

northern and southern ports, based on minimising costs.

This in turn would make European maritime transport

more ef�icient in terms of operational costs and energy

consumption. Gains would be in the range of 1.3 and 2.6

billion euros.

Maritime transport: geographical rebalancing of flows

Expected

annual savings between

€1.3 and 2.6 bn

Market opening and harmonisa�on

Internalisa�on of environmental externali�es

Improved infrastructure and cross-border links

Enhanced inter con�nental compe��on

Lower opera�onal costs, travel �me

and fuel consump�on

Reduced environmental impact

Complete Single Market

Geographical balance

Improved ef�iciency

Direct quanti�ied gains

Shorter travel length throughNorth-South rebalancing

Maritime transport: geographical rebalancing of flows

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Results from other assesments

European operating costs €2 to 3 bn higher than those of the USA

Missing integration and harmonisation of air transport system:

Full port competition with elimination of customs and other administrative

procedures

Savings to be generated by the simplification of administrative procedures€ 70 million per year

Savings in port costs to be generated by full port competition€ 1 billion per year

CO2 7.8 million

Single European Sky would have saved in 2012 alone €4.5 bn

and 7.8 million tonnes CO2

1

2

1 EUROCONTROL (2012) US/Europe comparison of ATM_Related Operationnal Performance 20102 Commission Staff Working Document SWD(2013)206final

3

3 Commission Staff Working Document SWD(2013)181

Results from other assesments

The Cost of Non-Europe in TransportEPRS

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The transport sector is a vital component of the EU economy and an impor-tant generator of employment, but it also faces difficulties, namely in terms of competitiveness and environmental sustainability, exacerbated by the re-cent economic crisis.

Since its inception, transport policy has pursued the aim of integration and removal of barriers, be they technical, administrative or regulatory, in view of creating a Single Market for transport. It is indisputable that substantial progress has been achieved. However, issues associated with the implemen-tation of new legislation in the Member States, stakeholders’ opposition and vested interests have meant that 20 years of regulatory actions have not created a sufficiently open market. The transport sector still has significant potential that can be tapped through further action at EU level.

In the rail sector, the main barriers identified include non-transparent public procurement, problems with non-discriminatory access to infrastructure for new entrants, a multiplicity of authorisation and certification regimes across the EU, insufficient separation between infrastructure and service manage-ment, differences in access charges and enormous diversity in technical standards both for trains and rail infrastructure.

The road transport sector is significantly more advanced. Nevertheless, con-cerns remain due to the lack of sufficient market opening, incomplete har-monisation of social and employment standards and enforcement rules, as well as differences in the promotion of cleaner and safer vehicles and in the achievement of road safety targets.

In the air and maritime transport sectors, new policies and legislative initia-tives are needed to prevent discriminatory access to infrastructure, to clarify public service obligations, to prevent stateaid and cross-subsidies creating unjustified market distortion, and to make progress on integrated traffic management. At a more strategic level, there is a need to advance in the overall regulation of ports and airports, the internalisation of environmental externalities for maritime and air transport, and to ensure the consistency of decentralised and privatised infrastructure investments.

The gains that can be achieved from enhanced actions to fill the gaps and create a fully integrated and more efficient transport sector have been esti-mated at 8.6 billion euros annually.

The calculations of the costs and benefits rely on conservative assumptions. While the exact extent of final benefits is not possible to assess as it will depend on a multitude of various factors, it will be somewhere between the minimum and maximum impact estimated for each sector. For the purpose of this study, the mid-point values are retained for further computations.

NotesCountry codes: Austria (AT), Belgium (BE), Bulgaria (BG), Croatia (HR), Cyprus (CY), Czech Republic (CZ), Denmark (DK), Estonia (EE), Finland (FI), France (FR), Germany (DE), Greece (GR), Hungary (HU), Ireland (IE), Italy (IT), Latvia (LV), Lithuania (LT), Luxembourg (LU), Malta (MT), Netherlands (NL), Po-land (PL), Portugal (PT), Romania (RO), Slovakia (SK), Slovenia (SI), Spain (ES), Sweden (SE), United Kingdom (UK), European Union (EU28).Sources: Map on page 2 from Railway Technology. Chart on page 3 from ETSC. All other statistics from Eurostat. This document updates an earlier one published in January 2015 (PE 545.723).