Imbalances and inefficiencies of the current pricing system

One of the immediate objectives of RECORDIT is to assess current imbalances and market distortions in the European transport market. Therefore a comparison of real versus current costs and of prices versus costs will be performed and used as the foundation on which an assessment of current imbalances and inefficiencies will be based. This is the main objective of Working Package 6 (WP6) which will be achieved through two tasks:

Task 6.1
Integrated assessment of real costs versus current costs

In this task analysis will be carried out in order to estimate if, for the various categories of transport chains, the costs of the relevant individual modes clustered in a number of combinations ensure full cost recovery. It will be therefore assessed whether the resource cost, as defined in Task 1.3 and 1.4, are matching the current costs - including taxes as described in Task 5.3. The findings of Task 2.2. will play an important role when determining the above mentioned costs. From the bottom-up perspective, the direct coverage of cost factors (charges), supplemented by taxes for each transport mode within each transport chain, will be measured against the calculated total costs, including environmental, congestion, accidents and infrastructure costs arising from that chain.

The result of the calculation (i.e. total costs) will be compared to market prices (see WP1) whenever possible. This part of the comparison is particularly important considering that prices are often distorted on specific routes or corridors, as a result of marketing strategies induced by specific competition circumstances. The impact of such distortions will be investigated further in Task 6.2. The Users Group will play a significant role in this respect, by providing own estimates of real market data.

Task 6.2
Intermodal versus road costs: Identification of inefficiencies in the current pricing system

The current pricing system for national and international transports of goods by the various modes of transport, is characterised by a number of market imperfections, including a lack of transparency when it comes to the actual mechanism of price formation. A widespread use of cross subsidies between individual routes further contributes to blurring the picture.

Based on the combined output of the methodological WPs and of the previous Task 6.1, a systematic comparison of intermodal and road costs will be carried out, in order to identify current inconsistencies. Those are expected to arise as a consequence of various factors, such as:

• the state of the lorry market, characterised by a high supply compared to demand,
• the lack of ability of many operators to calculate the correct price, and the consequent low levels of prices
• cross subsidisation between individual routes, and between passengers and freight transport
• a growing extra capacity of the ship transport market

An accurate description of costs and pricing on road transports versus intermodal transports within the selected corridors will be carried out, and the results presented so as to highlight the current distortions.

A comprehensive report of WP6 will be prepared by the end of July 2001 assessing the imbalances and inefficiencies of the current pricing system.

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