Regulating Trans-Boundary Trucking

Since the mid-eighties Austria has attempted to slow the growth in trans-boundary trucking. The number of trucking permits which is regulated in bilateral treaties (quotas) is increased only slowly, the permitted number of transit trips of trucks registered in Austria and in the EU was capped at the 1991 level in Austria's transit treaty with the EU. This change in road transport policy already can be seen in the statistics of trans-boundary trucking. While the volume of shipments increased by an average of 3 percent p.a., the number of road trips has remained constant for the last five years. As a result rail transport gained significant market shares. Austria's restrictive quota policy with respect to trucking permits has already caused occasional capacity bottlenecks. It is expected that the EU internal market and the opening up of reform countries will lead to a significant increase in international commodity transport in Austria. This will lead to an increasing shortage in road transport quotas (bilateral permits, eco points). They will be in high demand by trucking firms, since transport rates will increase as a result of scarce supply. In the past permits have been distributed free of charge according to the "established interest" rule: firms which already in the past had carried out regular transport activities to or through the respective partner countries have received priority treatment. When firms change hands, transport permits are transferred to the new owner. This practice leads to the result that these "quasi-automatic permits" play a major role in the valuation of trucking firms. In this way the road transport business has come to be dominated by a number of firms which have been in the business for a long time. It was nearly impossible for new dynamic firms to enter the market. In general, this lack of competition leads to low efficiency. One way to determine who is the most efficient user of a permit would be to auction off the permits. A firm which expects to obtain higher profit from a permit than its competitors would be willing to offer a higher price. The auction mechanism could be a uniform price procedure with the rent going to the public hand. These auction revenues could be used to finance measures to reduce environmental damages caused by trucks.