But by introducing a time-based (rather than a distance-based) system this year, the Government has missed an opportunity to create a level playing field for UK hauliers and to make road freight more efficient and sustainable.
A proper distance-based system would have provided an incentive to logistics operators to get better efficiency out of their HGVs - resulting in safer, cleaner and less congested roads - and would have provided an opportunity to charge foreign lorries on the same basis as UK hauliers.
DfT figures show that almost half (46%) of HGVs are partially loaded (in other words, neither constrained by weight nor volume) and almost a third are entirely empty. A distance-based system would reduce road freight inefficiencies such as partial loads, empty running, depot location, port of landing and general logistics practices that would arise from the generation of a freight system working at optimal efficiency.
There is considerable interest at European level in charging road freight vehicles in full for these external costs. In order to include some or all of these costs, there are now different approaches in place across the EU that charge HGVs for road use: motorway tolls in France, Spain and Italy; and ‘in vehicle’ distance charging in Germany, Austria, the Czech Republic, Slovakia and Switzerland. France is currently preparing to introduce an ‘ecotax’ on HGVs on the country’s non-motorway strategic network.
What these charging systems show is that road freight transport demand is relatively ‘elastic’, with demand reacting directly to changes in price.
Road charging is therefore an effective measure to reduce congestion, pollution and accidents from lorries. And the major effect is a reduction in distances travelled by lorries, but not a reduction of tonnage.
Therefore, road charging does not hamper trade. Efficiency within the road freight sector will increase, and the current wasteful planning - manifested especially in poor load factors and empty running - will be tackled as a priority. And since the negative impacts of road freight transport - congestion, accident risk, air and noise pollution -are directly proportionate to total distances driven (vehicle-km), these will also be reduced.
The German Maut lorry charging system, which covers lorry track costs, resulted in an 11% reduction in empty running in a four-year period, to below 20%. It also led to a 2% increase in loaded runs, and a rail freight increase by 7% in the same period.
In the Czech Republic, a km-charge was introduced for vehicles over 12 tonnes on motorways and expressways from January 1 2007. The volume of heavy goods traffic on these roads has since decreased by 10%, even with impressive economic growth rates during that period.
A proper distance-based lorry road user charging system would encourage more efficiency in the road freight sector, by providing a direct stimulus to improving utilisation (load factors) and allowing rail and water to compete with road and aviation.
In the debate on increasing size and weight limits of lorries (for example, mega trucks), proper charging is seen as critical, as these vehicles would impose even heavier costs on the economy.
Otherwise road freight subsidies will increase, and sustainable modes will find it even more difficult to compete even in the traditional bulk cargoes. The current HGV charging regime distorts the market, and leads to poor economic efficiency even though road freight is highly competitive.
Worryingly, as a result of this economic distortion caused by a lack of internalisation of HGV costs, not only is there poor economic efficiency, but also scarce Government resources could be misallocated as funding decisions are made on flawed premises.
This CBT research contributes to a reasoned debate about the value of different freight subsidy choices for the economy and society, allowing the Government to take into account all the costs associated with the different modes.
There are big changes being implemented by the Government, changes that provide the opportunity to progress this debate within the UK.
The Office of Rail Regulation’s role is being expanded to include cross-modal duties, enabling it to consider a broader range of the cross-modal effects resulting from the decisions taken on rail freight charges and structure.
Road charging
For example, ORR will become more aware that any decision that results in modal shift from rail to road will have serious external cost implications for the economy, environment and society. This new road function will increasingly give the Government a vehicle to look at comparative costs across both modes, and in fact ORR could become a de facto freight regulator across road and rail.
The rail freight industry is tabling its amendments on cross-modal duties to the Infrastructure Bill that will facilitate the setting-up of the new body to replace the Highways Agency.
As well as reforming the Highways Agency, the Government is carrying out its review of marginal externalities of road as part of its review of revenue support to rail freight, with the new values currently being appraised by the European Commission for state aid purposes.
Additionally, a European Commission proposal on road charging for both freight and passenger vehicles is anticipated in early 2015. It is expected that the EC will recommend a distance-based charging system throughout the EU, as the best mechanism to ensure that there is better internalisation of costs and to try to get the polluter to pay. Questions should be asked about where the HGV subsidy fits with Government policy, so it can evaluate how to charge the different modes.
