Speeches: David C. Green, IRU Past President, United Kingdom

7th IRU East-West Road Transport Conference Budapest, 15-16 May 2003 Budapest Congress Centre (BCC), Alkotas u. 63-67 - 1123 Budapest, Hungary

David C. Green
IRU Past President, United Kingdom

The theme I want to emphasise concerns the relationship between transport and trade and more particularly which comes first. In a modern free market society efficient logistics is an essential requirement for a thriving and growing economy. Meeting the consumers unquenchable thirst is now the key driver as less reliance is placed on heavy industrial production to improve prosperity.

During the industrial revolution of the eighteenth century the location of basic materials and energy determined the location of production. New towns and cities were constructed to bring the workers to these sites. Transport networks, first canals then the railways and roads delivered the products to the final consumer.

Two hundred years on much of that has dramatically changed. Whilst our cities have not moved frequently the location of production has. Modern transport networks have made this possible so that I stand here today wearing a shirt made in the far-east and not the north-west of England - you can no longer tell which country you are in by looking at the make of the cars in the streets - and the menu in this hotel has products from all over the world.This would not have happened without the transport revolution of the last fifty years. I could comment on the failure of governments to fully recognise this fact and the essential role that all of you in this room are playing in meeting these demands. But that is not why we are here - my contribution concerns the impact of EU enlargement and the prospects for the years to come.Of course new and improved transport infrastructure will continue to be a key ingredient in these developments. This will have some influence in the location of business. For example whereas over one hundred years ago the growth of the railways affected such decisions today with road transport being the increasingly dominant partner in efficient logistics business is moving to sites easily accessed by new roads. In the UK the so-called golden triangle in the Midlands is formed by the M1, M6 and M42 motorways; and here in Hungary there is major motorway investment going on in all important transit corridors, one of which between Vienna and Budapest was completed back in the mid-90s.

For the IRU, and for this conference, an important question concerns the impact of an enlarged EU on the road transport sector and the extent to which growing markets will influence user choice. In particular will more open markets favour transport operators from a particular part of this wider Europe? I want therefore to focus on this issue.
My first fundamental point is that transport follows trade and it is not the other way round. Yes, as I have demonstrated earlier a good transport infrastructure can make a difference - but it is not the primary factor.Transport is in the service sector of the economy. This means first that it is the level of trade and associated activity which will set the trend for transport activity. More significantly it is the type of trade and the relationship between imports and exports which can have an over-riding impact on the nationality of the transporter.

Let me give two examples of these trends. I know that Russian hauliers are very concerned with their share of international road transport to and from the Russian Federation - I understand their share is less than 40%. But we need to understand more about the type of traffic involved before jumping to too many conclusions.Taking imports and exports together the dominant feature is the import of consumer goods into the RF. Such movements will always initially favour operators from or in the vicinity of the country of production. This is not a pattern exclusive to Eastern Europe - take my country for example.Strong links exist between the strength of currencies, the economy overall and imports. Appended is a graph comparing the strength of the pound and the level of movements to and from the UK undertaken by non-UK operators. During a long period when the pound and the British economy was performing less well than it's competitors foreign hauliers also did less well. More recently with a strong pound and the UK economy ahead of it's competitors imports have significantly increased and so has the share for non-UK hauliers.So we must always recognise that transport will follow trade.

The second key question for us is does market share matter? Of course it does to individual businesses because that is a major influence on success or failure. But in the broader perspective does it matter to broader European interests if, for example, EU enlargement and lower employment costs in the new member states resulted in a major shift away from west European operators in international road transport?

Before I answer this I must stress a further significant point. Lower employment costs must not mean poorer quality and as the research published by the IRU at the Prague 2001 East-West Conference revealed higher costs are often balanced by higher efficiency. To illustrate what that can mean my second appended graph shows level of road freight activity in the UK compared with the number of trucks - enormous improvements have been achieved.The transport user is of course interested in price but efficiency and quality are also high on his agenda. That is why the IRU policy for a step by step approach linked with the full adoption of the EU standards must be right. But assuming this is achieved along with greater efficiency there is no reason in my mind why operators in the new member states of the EU should not take a larger share of the international road transport market.

That is what has happened with my shirt - why not with international road transport?

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