Indeed, Carsten Hess, Head of Deutsche Post DHL’s Corporate Representation in Brussels, says that while the European Union has long talked grandly about how to remake transport across the continent, its record has been decidedly spotty. “There has been an inability over the past 30 years to create efficient cross-border European freight networks,” he says. “You have two philosophies: one is about constant new regulation, and the other is about enforcing the single market which the EU has committed to. But we don’t have any complete single market at the moment, whether on road, rail or on air.”

While Hess says the European Commission sets an admirable aim in its White Paper in March when it calls for a Single European Transport Area, he is more skeptical about whether the measures outlined in the document are feasible or desirable. “We have a very complex system of regulation and policies in the 27 member states, and that impacts supply chains, and increases costs and the environmental impact,” he says. “This could be reduced by creating a true Single European Transport Area, which is what the White Paper is about. How do we get to a win-win situation where you reduce complexity and costs and therefore increase efficient transportation and logistics?”

Deutsche Post DHL has a certain weight of expertise as the world's largest logistics group. Headquartered in Bonn, it has some 450,000 employees across the world, and last year generated revenue of €51.48 billion. As its name suggests, it merges the former German mail authority Deutsche Post and express mail service DHL, yet it has expanded its operations to cover freight, global forwarding, supply chain management, warehousing, and even online sales platforms similar to eBay. All this underlines Deutsche Post DHL’s experience in a range of transport and logistic fields, which could prove invaluable for decision makers hoping to devise new policies.

Yet while Deutsche Post DHL is an enthusiastic supporter of EU integration, Hess sees the rhetoric regularly let down by the reality. Two and a half decades after the launch of the Single Market program, there is still no European market in cross border freight, national rules on cabotage that still require many truckers to return home with empty vehicles, and still no sign of the much-vaunted Single European Sky. “Why are the Commission and the European Parliament not more ambitious?” he asks. “I always hear that this is complicated, with diverging national interests. But if we can agree on binding climate targets, why can’t we have a true Single European Transport Area?”

Hess also refers to Deutsche Post DHL’s own environmental credentials as the first global logistics company to set itself a carbon efficiency target: its GoGreen program aims to improve carbon efficiency, including subcontractors’ business, by 30% by 2020, compared to 2007 levels.

“We’d love to increase our rail freight as we and our customers have our own efficiency targets,” Hess says. Yet the company’s efforts to move more to rail are often thwarted by the very politicians demanding modal shift. “MEPs say they want modal shift from road to rail, but when it comes down to discussing it, they say, ‘Not in my constituency, no more noisy trains here.’ But how do you deal with it if politicians do not want them in their back yards?” Here we need to have an EU wide discussion on acceptance of transport and its necessary infrastructure deployment.

Hess says there are all kinds of obstacles to cross-border rail freight, like a lack of common standards, a lack of choice of operators, poor infrastructure and no full competition. “Rail freight needs to increase its service quality to attract customers. If you want an integrated co-modal transport system, with rail playing its part, you need to make sure that the service is there,” he says.

And despite what the White Paper says about shifting freight of more than 300km onto trains by 2030, the reality is that there are many cases where that is not feasible, Hess says. “For example, when you need overnight or just-in-time delivery, rail will not be the preferred mode,” he says. Hess argues that customers rather than regulation should decide about the mode. “Instead of those scenarios we should place our bet on smart incentives to foster technology driven industry solutions. There the White Paper’s Technology Roadmap could help to increase research ending into quick market deployment which provides operators with affordable greener fleet solution. If  new trucks with e-engines cost three times as much as normal diesel engines, do you really think operators will pay for them?” he says.

Which is why he feels that the White Paper, for all its aims, can only be the start of a new discussion. “Do we want a Single European Transport Area that is efficient and cuts down emissions, complexity and costs?” he asks. The White Paper should look more at industry-based and technology-based solutions, rather than another round of regulations that increase costs while most of the adopted legislation on a Single European Transport Market has not been fully enforced yet. Let’s put more efforts into smart solutions that provide incentives.”

It’s a vote that might cost hauliers dear but, if its supporters are right, it could also mean cleaner air and quieter roads: the European Parliament’s backing, on June 7, of the revised ‘Eurovignette’ scheme means that new tolls for heavy goods vehicles will come into place, as lawmakers bid to cut pollution from the trucks.

The 505 to 141 vote, by MEPs in Strasbourg, marks the last major legislative hurdle for the measure aimed at charging hauliers for air and noise pollution costs in addition to motorway tolls. The directive means that revenue from these charges can improve the performance of transport systems and cut pollution across the EU. Trucks over 3.5 tonnes will be affected by the Eurovignette rules that cover not only trans-European transport (TEN-T) networks, but all motorways.

The current Eurovignette Directive, adopted in 1999 and revised in 2006, only covers roads in the TEN-T, which includes some 15,000 kilometres of tolled roads. It authorises, but does not oblige member states to charge hauliers between 15 and 25 euro cents per tonne/km. And the charges are only for infrastructure costs: until now, governments have been banned from charging for environmental damage, accident costs, and congestion costs, although there is a directive which would allow these costs to be internalised.

Now the new measure will raise changes by 3-4 cents to cover the external costs of road haulage, starting with air and noise pollution. Fares will be collected by an electronic system that should be up and running by 2012, with 15% of revenues funnelled towards improving TEN-T networks. Trucks with greener Euro V-class engines will be exempt from air pollution charges until January 1, 2014, and Euro VI-class until January 1, 2018. Countries can also choose to put funds towards transport projects such as alternative infrastructure and clean transport initiatives. As for congestion, it is now treated as part of existing infrastructure costs: the revised directive says member states can vary toll tariffs during peak and off-peak hours by up to 175% "to ease congestion".

EU transport commissioner Siim Kallas said in a statement that the EU rules “send the right price signals to operators” so they will invest more in efficient logistics, less polluting vehicles and more sustainable transport. "They also give member states new tools to fight congestion, with possibilities to vary charges at different times of the day to get heavy lorries off the roads at peak periods,” he said.

Said El Khadraoui, who steered the legislation through Parliament, said the move marked a cornerstone for the next decade of European transport policy, with the chance for countries to charge for air and noise pollution. “Finally ‘the polluter pays’ principle is introduced in road transport,” he said. “It is a small revolution.”

So, will this ensure that heavy trucks are less of a burden on Europe’s roads? Road transport is responsible for 75% of nitrous-oxide discharges and the cost of traffic jams amounts to about 1.1% of the EU economy, the Commission says. But despite the overwhelming backing by MEPs, the measure is controversial.

The freight sector has vociferously complained that trucks are being made into scapegoats because they are so visible on the roads – and grumbles that governments like such tolling measures less because of their greening capacity and more for their revenue generation.

The International Road Transport Union (IRU) says the draft Directive imposes an additional burden as countries are not obliged to reinvest the tax revenues in greening road transport. “This new tax imposed on road transport services through the Eurovignette Directive will actually impede operators from investing in and implementing the best technologies and techniques crucial to further green road transport,” said Alexander Sakkers, President of the IRU EU Goods Transport Liaison Committee. He was echoed by Francesco Del Boca, president of the European Road Haulers Association (UETR), who said the measures discriminated against road transport companies. “This means that EU legislation as of today esteems goods moved by inland waterways, trains or ships do not emit any harmful emissions nor make any noise at all,” he said.

Once the new Eurovignette rules are approved, the EU member states will have two years to transpose it in their national law before it comes into force. It may well prove an incentive for hauliers and truckmakers to work closer to produce more environmentally-friendly vehicles. And it may well channel funding to boost infrastructure and support cleaner transport processes. But there is also the risk that, as hauliers fear, this is simply a new tax that just offers governments a new revenue stream and does little to green transport. Only time will tell which works out.

The single market has been a key principle of the European Union since its founding more than five decades ago, yet it has taken exhaustive legislation over the years to turn this notion into reality. One particularly hard nut to crack has been the rail sector, where national monopolies have long held sway. However, European Union Transport Ministers meeting in Luxembourg on June 16 took a key step in changing this holdout to the single market as they voted new rules to boost competition and transparency in the rail market.

The rules set out to address three problem areas:
• fair access to railway infrastructure and rail related services: the proposed directive aims to open up markets for rail maintenance, terminal, and passenger information and ticketing – as well as establishing new rules on conflicts of interest and discriminatory practices. It aims to end discriminatory practices on access to tracks and rail-related services like disproportionate discounts to the largest operator and denied access to central stations for international passenger trains competing with those of the incumbent;

• regulatory supervision: national rail regulators will have an extension of their remit, and full independence from any other public authority. This is significant since regulators' offices in most other member states are understaffed, have limited investigating powers and cannot enforce their decisions with financial penalties. And in several member states, the regulator belongs to the transport ministry, which also owns or controls the incumbent railway undertaking – a clear case of conflict of interest;

• the framework for public and private investment: governments and infrastructure managers will be required to work to long-term strategies which link funding to performance. There are also measures to increase private investment in interoperability and green technologies.

According to the EU Transport Commissioner Siim Kallas, if approved by the European Parliament, the new rules will provide passengers and rail companies with greater choice and better services. "These new rules aim to shut loopholes in the current laws that allow discrimination against newcomers and block operators from providing new and innovative services,” he said. “They will ensure that opportunities to compete exist not just in theory but in practice." He added that the proposals were a response to complaints made by companies over the last 10 years.

Indeed, despite many reforms, there are still major gaps. The 2001 Railway Package aimed to liberalize the sector: the rail freight market has been completely open since 2007, and international passenger services since January 2010. To some extent, there has been an impact: the railways' share of inland transport has remained stable in the last 10 years, following a long period of decline (its share among inland modes has remained around 17.1% in tonne/km for rail freight and between 8.6 and 8.4% in passenger/km for rail passenger transport since 2002). And on some rail corridors, rail’s modal share can in fact reach up to 35% (such freight transport on the Rotterdam-Genoa rail line) or even 80% (such as for passenger transport on the Lyon-Paris rail line), suggesting the potential of rail transport if well organized and well managed.

However, the Commission has admitted that the liberalization has only had a moderate success. Despite the 10-year push for European rail liberalization, competition varies widely. Monopolies dominate in countries such as France, but other states such as Britain have given privately owned train companies the right to compete.

There are two important reasons for rail’s relative lack of progress, according to Christian Kirchner, a professor at the Humboldt University in Berlin who specializes in railway legislation. The first is that closed national markets are too small to enable long distance transport where rail would enjoy competitive advantages over road; and the second is inefficient, heavily subsidized national monopolies, he said.

Kallas himself notes that no other mode of transportation has state interests that are so strong: even airlines - still often known as “flag carriers” can be bought and sold across borders within the EU, he says. His vision ties in with the Commission's Transport White Paper published earlier this year, which set a target that most medium-distance journeys should be taken by train by 2050.

On a smaller scale, in May, Kallas announced details of a plan to make it easier for tourists to travel across Europe with the creation of a unified journey planner: he invited both businesses and the general public to submit ideas for standardized European ticket and timetabling systems to allow people book and travel on all modes of transport across all countries in the EU with a single ticket bought online.

And this is not the end of the process. Kallas said that the agreement sent a strong political signal and paved the way for a much more far-reaching rail regulatory package that the Commission intends to bring forward in the next 18 months. Which means that even a decade of reforms has yet to fully open up rail, Kallas is determined to finish the job over the next few years.

Roads, railways, canals, bridges, ports, airports: Europe is peppered and crisscrossed by infrastructure for all modes of transport. And yet despite the visible signs of buzzing transport all around, more and better transport links are still needed to deal with issues like deteriorating infrastructure and growing congestion. European leaders have long recognized that efficient transport for people and freight is essential for a thriving society and economy, and significant chunks of the infrastructure need to be repaired and renewed. Indeed, in the case of the Trans-European Networks (TENs), they still have to be built.

But these are huge jobs, often costing billions of euros. Who is ready to foot the bill for such projects, especially in these budget-crunching times?

It’s an issue that Europe is trying to grasp at the moment, not least because a 27-nation entity like the European Union can deliver huge economies of scale when it comes to major transport projects. It was at the top of the agenda at the informal Transport Council organized by the Polish EU Presidency in the Baltic resort of Sopot on September 5 and 6 when ministers discussed how best to apply public–private partnership (PPP) ventures to spread the financial, technical and operational risks in infrastructure projects. “The financial crisis we are faced with now has shown that public funding – both at EU level and member state level – is insufficient to finance infrastructure investments,” said Polish Infrastructure Minister Cezary Grabarczyk, who chaired the meeting. “We need to look at new sources of funding.”

OECD figures show that the GDP share of investment in inland infrastructure (road, rail, inland waterways) in Western Europe has declined steadily since the 1970s. It has fallen from an average 1.5% in 1975 to 1.2% in 1980 and further to 1.0% in 1982, after which it leveled off. The most recent data show that investment in inland transport infrastructure as a percentage of GDP declined again in the 1990s to around 0.8% in 2000, where it has remained. However, there are marked differences between countries, especially for recent years, varying from 0.5% in Denmark to 1.1% in Spain in 2009.

Grabarczyk said he wanted Sopot to kick off a debate on European rules for PPP - its definition, risk sharing and the consequences on debt and deficit - so that decision makers can have clear rules before they put out invitations to tender. One issue, for example, is whether Eurostat can revise its current rule that says the public share of PPP is included in debt and deficit statistics.

But although PPP has been pioneered in various member states for many years – notably France, Germany and the United Kingdom – there is resistance against setting up a harmonized system at European level. EU Transport Commissioner Siim Kallas has played down suggestions that the debate will lead to restrictive rules. “The challenge for now is to promote good practices and good governance, along the lines of investments made in partnership with the EIB. But there is no strong and centralized European legislation in the works,” he said.

PPPs already account for many major European infrastructure projects. In 2010, some 112 PPPs in the EU were completed, amounting to €18.3 billion in value. The United Kingdom was the leader with 44, followed by France (19), Germany (14), and Spain (13).

The Sopot meeting ended with a broad agreement that while PPP is a complementary model for financing infrastructure; public funding remains the basic source of finance. But since there is no uniform definition and methodology for PPP in the EU, nor is there a risk-sharing model, it assumes a range of forms, depending on the state in question. While there is no move to harmonize PPP practices, the Commission is set to issue proposals to reform the different financial regulations this autumn, to provide a framework for low-carbon investment.

It ties in with the agreement made last December at the International Road Transport Union (IRU) conference and ministerial in Brussels to develop efficient, safe, and sustainable road transport PPPs.

The Commission is nonetheless looking more closely at PPP options. Last June, when it proposed a new seven-year EU budget (Multi-annual Financial Framework) covering public expenditure between 2014 and 2020, it sought to concentrate public funding on the investment that would not occur without public intervention. As a result most of the €500 billion required for the TEN transport networks by 2020 is expected to be covered by the market and private investors. New financial instruments aiming at leveraging public investment, such as ‘project bonds’, are likely to be created in order to close the gap between the investments needed and the public resources available.

All this suggests that however grim the budgetary strains across Europe, there is still the will to find ways to ensure existing transport infrastructure is maintained and modernized, that new links are built, and that people and goods can still get to where they need to go. The methods for funding the upkeep and renewal may well be different, but for the moment, they are still very much part of Europe’s priorities.