The German transport sector and the entire economy will soon have to face additional financial burdens associated with the toll extension for trucks. From July 1, 2018, all federal highways for trucks with a gross vehicle weight of 7.5 tonnes or more will be tolled in Germany. Currently, a total of 15,000 km of motorway and federal trunk road is subject to toll charges. With the extension, the federal toll system will grow to 40,000 km of federal trunk road. In addition, based on the new infrastructure cost assessment for the years 2018 to 2022, the German federal government is planning to adjust the toll rates as of 1 January 2019, which means that another significant cost surge is imminent.
Hence, transport companies will have to pay considerably more for the use of federal roads and highways in Germany, and in some cases, road transport costs will double compared to the level they are today.
More precisely, according to the latest estimates of the German Federal Transport and Logistics Association (BGL), the toll fee per kilometre for a 40-tonne Euro 6 class truck will rise from the current 13.5 cents to 17.4 cents. Moreover, the EU Eurovignette Directive requires truck operators to pay for the air and noise pollution caused by their vehicles, in addition to the tolls they are already paying for road infrastructure and maintenance. Until now, trucks meeting the Euro 6 standard were exempt from the costs of air pollution in Germany. However, this will also change, and the country will levy an additional charge on trucks to cover the costs of air and noise pollution. Thus, in total, these cost components would increase tolls for Euro 6 trucks from the current 13.5 cent cent to 18.7 cents per kilometre. The following example illustrates the impact – for an annual mileage of 120,000 km and 80% to 20% ratio of travel on motorways versus federal roads, toll costs are estimated to increase from the current €12,960 to €22,440, according to BGL.
Overall, the German Transport Ministry estimates that due to the extension of the toll, transport and logistics costs will increase by approximately €2bn. With the toll increases planned for 2019 the additional costs are estimated to reach €2.5bn a year.
So, what will be the impact of the toll extension on the profit margins in the road freight sector? Currently, toll fees account for around 10% of total transport costs. It is likely that most companies will pass on the additional costs to their clients and increase freight rates to compensate for the higher costs.
However, smaller transport companies, which have a weaker market position to negotiate for suitable deals, will be worse off. In Germany, profit margins are as low as 1% for small hauliers. In contrast, profit margins reach 6% and more for the big players. Hence, the additional toll costs will be more threatening for the smaller road hauliers than for large hauliers.
Another potential implication of the extension of the tolls could be a modal shift to rail and inland waterways. In some cases, traffic might move to toll-free local roads, though significant delays will have to be taken into consideration.
Despite the imminence of increased road transport costs, road hauliers might still have an opportunity to save on toll costs. In a move to motivate the electrification of truck transport, in April 2018, the German transport minister announced it is considering dropping the tolls for electric trucks. Logistics companies could save up to €5,000 per year if they take advantage of the tax benefit. As electric trucks and transporters are mainly used near urban areas, due to their range, the new regulation may encourage manufacturers to expand in the area of electrified mid-range road transport.
Source: Transport Intelligence, June 21, 2018
Author: Violeta Keckarovska