New Measures Adopted to Support the Road Transport Sector
20/08/2008 International Law Office
It is clear that the dramatic increase in oil prices over the past few months has had a considerable impact on most sectors of the global economy. It is no less clear that this impact has been particularly significant in transport-related sectors, including the carriage of goods and passengers by road. This updates focuses on recent measures affecting the carriage of goods by road.
The characteristics of the Spanish market for the carriage of goods by road are easily identified; it is a highly cost-dependent, fragmented market with extremely narrow margins. These are some of the reasons why the government, in pursuit of the recovery and stabilization of the sector (and in order to avoid a repeat of the carrier strikes that took place in June), entered into negotiations and reached an agreement on June 11 2008 with the Department for the Carriage of Goods of the National Road Transport Committee, an entity that represents the majority of road transport associations in Spain.
Terms of the Agreement
Although the agreement contains a large number of future commitments and was entered into with a representative group of ministries (including the Ministries of Public Works, the Economy, Justice, Labour, Education and Trade and Industry), its commitments will become enforceable only after relevant resolutions have been adopted and necessary legislative actions have been taken. At the time of writing, only about 10% of the commitments have been implemented in applicable legislation.
Before discussing the new legislation, it is appropriate to mention the diverse commitments undertaken by the government. The Ministry of Public Works has lent its support to:
- actions to reinforce the ability of companies in the sector to negotiate (eg, establishing a term for payment for their services and setting a default interest rate, establishing an automatically updated price linked to the price of oil and updating the amount of indemnity for waiting times at unloading);
- actions to stimulate restructuring in the sector (eg, increasing the subsidies for retirement from the transport sector at a certain age, easing requirements to obtain the relevant transport authorizations and assimilating regulatory requirements for the provision of domestic services in accordance with EU requirements);
- actions relating to the European Union (eg, restricting the foreign provision of domestic services and fostering harmonization); and
- actions related to penalties, inspection and infrastructure investment.
Other ministries have also assumed important commitments, such as:
- deferring payment of social security contributions;
- reducing taxes on specific activity;
- offering privileged credit conditions;
- issuing value-added tax returns;
- reinforcing training requirements; and
- promoting legislative reforms (particularly in relation to the latest Road Transport Contracting Bill).
Most of the commitments above have yet to become part of current legislation. However, some have already been implemented, as described below.
New contracting conditions
Order FOM 2184/2008 amends the order of the Ministry of Public Works of April 25 1997, which established the general contracting conditions for the carriage of goods by road.
This order introduces a contracting condition which establishes a formula to be applied to calculate the applicable price of the relevant transport when oil prices have increased between the date of entry into the contract and the date of the actual provision of transport service. The right to alter the price by applying the new formula also operates in favour of the recipient of services when oil prices have fallen between the date of entry into the contract and the date of provision of the service. The order further provides that the formula is automatically applicable in the absence of other non-abusive agreements between the parties when the relevant variation in oil prices is at or above a particular percentage.
The order also provides a term for payment of amounts due for transport services equal to that for other services (Law 3/2004, which incorporated Directive 2000/35/EC). Although this term was arguably already equally applicable to transport services as to other commercial transactions, the order contains a specific provision in this respect.
Order FOM 2185/2008 amends Order FOM/734/2007 on authorizations for the carriage of goods by road.
The principal provisions of this order can be summarized as follows:
- It abolishes the requirement to have a minimum number of drivers in order to apply for an authorization;
- It regulates some specific conditions for the transfer of authorizations to heirs; and
- It establishes, for the first time, a number of possibilities for transferring authorizations to companies (capital contributions and mergers).
The transfer of authorizations (as in the case of the contribution of the necessary professional capability required to provide transport services) may bring new problems to a number of transport and logistic companies, particularly in relation to their shareholder structure.
New rules on road cabotage
Order FOM 2181/2008 establishes new rules for the provision of domestic services for the carriage of goods by road (road cabotage by foreign EU or EEA carriers).
The basic feature of the new order is the specification of the concept of temporality, which is now used in order to define 'road cabotage services' as follows:
- The relevant transport should occur immediately after an international transport service;
- A maximum of three carriages may take place; and
- The carriages must take place within seven days of the first unloading of the relevant cargo in Spain.
When the relevant carrier arrives in Spain without cargo, only one carriage is permitted in Spain, and this must take place within three days of entry and seven days of the previous unloading in another EU member state.
A number of subsequent documentary requirements on carriers are established in the order. They are intended to allow inspection authorities to verify compliance with the rules mentioned above.
Deferred social security contributions
A June 26 2008 resolution of the Treasury of the Social Security of the Labour Ministry authorizes road transport companies to defer payment of their quotas of social security contributions.
This resolution, which is intended to implement the agreements reached between the government and the National Transport Committee, provides that road transport companies are entitled to defer payment of their quotas for social security contribution for a specific term.
Other implemented commitments
Further to the above, Order FOM 2118/2008 is also notable. As part of its implementation of the commitments of the Ministry of Public Works, the age of application for subsidies for retirement from road transport activities has been reduced - whether in relation to the carriage of goods or to the transport of passengers. Furthermore, the order represents the execution by the Ministry of Public Works and the president of the Official Credit Institution of an agreement for granting credits to transport companies amounting to €300 million.
As for the rest of the commitments assumed by the government, it remains to be seen how these are implemented into specific rules or legislation and, more importantly, how long it will take them to come into force. It may well be that by the time the relevant ministries have completed their work, oil prices will have returned to their former levels.