DEREGULATION AND PRIVATIZATION IN THE UK ...(iv) there is no evidence of restrictive practices and predatory pricing in the freight industry as in the coach and bus sector, which in

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DEREGULATION AND PRIVATIZATION IN THE UK FREIGHT, AND BUS AND COACH INDUSTRIES

Helen LAWTON-SMITH

Regulatory Policy Research Centre

Hertford College, Oxford

－101－

INTRODUCTION

This paper is in two sections. The first deals with privatisation and deregulation in freight

markets (trucking), and the second with coach and bus markets. The argument which the

paper develops is that privatisation and deregulation in the freight industry in the UK has

generally achieved its objectives of promoting competition, but that bus deregulation and

privatisation has had a number of adverse effects. In particular these include a fall in

passenger trips, low profitability in large parts of the industry, and wide-spread anti-

competitive behaviour. On the other hand, the opening up of the market in the long-distance

coach sector has been of benefit to consumers. An increasingly important area of regulation

at national and international levels, and which has important implications for the operation

of both industries, is that designed to combat environmental pollution.

The key differences between the two industries can be summarised as follows

(i) freight transport is much more subject to European Union (EU) regulation than the

coach and bus industry. This is because the latter is primarily a domestic market and

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therefore has a different regulatory environment. In the freight industry, the effects of

UK regulatory changes and that of the EU are inter-linked;

(ii) freight, unlike passenger vehicles, has not had a system of route licensing. Route

licensing was a critical component in shaping the structure of the road passenger

market, hence regulatory change operates within a different pre-existing market

configuration;

(iii) unlike in the bus and coach industry where there were few opportunities to compete

before deregulation, it had always been possible for firms to enter the freight market;

and

(iv) there is no evidence of restrictive practices and predatory pricing in the freight

industry as in the coach and bus sector, which in the case of the latter has arisen as a

direct consequence of changing regulation.

FREIGHT

Introduction

Deregulation of the freight industry, which began in the late 1960's has been a British

success story in that it has pushed forward an open market system into Europe. The freight

industry was one of the first UK public sector industries to be privatised, and was brought

about by an employee buy-out of the National Freight Corporation (NFC) in 1982.

However, deregulation and privatisation of freight transport markets has been only one of

four factors which have been particularly important in influencing the structure of the

European freight transport markets in general and the UK in particular (Cooper 1994, 2).

The other three are (i) the changing needs of users of freight transport, especially retailers

and manufacturers; (ii) information technology; and (iii) environmental considerations. This

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paper will focus on deregulation and privatisation in the UK and reference to other factors

will be made where appropriate.

The first part briefly describes the steps towards privatisation and deregulation in the UK.

This is followed by an outline of the structure of the UK market, then by a discussion of

the EU context, and finally some conclusions are drawn.

Privatisation and deregulation in the UK

Road freight transport activities were first nationalised under the Transport Act 1947.

During World War II, the state had controlled road transport through the Road Haulage

Organisation. The period from 1948 to 1970 was dominated by a policy of integration,

with the need for public sector road freight transport subordinated to those of the railways

(Bradley and Nejad 1989, 36).

The 1947 Transport Act

The Act set up the British Road Transport Commission (BTC) which was to co-ordinate

the development of a nationally integrated transport network. This intention was pursued

until 1979, but at the expense of productive efficiency in road transport (Bradley and Nejad

1989, 36).

All land transport was controlled by the BTC through four executives. The Road Haulage

Executive (RHE) was responsible for road haulage activities and traded as British Road

Services (BRS). Nationalisation of such a fragmented industry proved difficult, and it

proved possible to nationalise only long distance hauliers. Private hauliers were limited to a

radius of 25 miles. At the end of 1951, when the final take-overs were completed, BRS

had acquired over 3,700 firms, owned some 41,000 vehicles, based on 1,000 depots, and

employed over 75,000 people. BRS's monopoly was consolidated by the BTC's control

over the issuing of new licences to competitors.

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The Transport Act 1952, introduced under the Conservative government elected in 1951,

recommended de-nationalisation of most of BTC's licence haulage activities. In the event,

less extensive changes were made. Major changes were limited to the lifting of BTC's

licence-issuing role and of the 25-mile limit imposed on private hauliers.


This Act signalled the end of de-nationalisation. However, BRS remained larger than

intended and was larger than any private firm. It controlled 1 per cent of all goods vehicles

in its weight classes, and 5 per cent of all hire and reward vehicles. Even so, it was in

competition with private hauliers and its performance improved.


This Act dismantled the BTC, separated its various transport functions and passed all of its

road transport functions to the newly formed Transport Holding Company (THC). This

was instructed to operate as a commercial enterprise. The THC was allowed to grow by

acquisition in line with the general growth in road freight activity.


It was a Labour government, under the Minister of Transport, Barbara Castle, who brought

in the first moves towards deregulation through this Act, which enacted the 1967 White

Paper The Transport of Freight. The White Paper recommended the formation of the

National Freight Corporation (NFC) to incorporate all road freight activities, including

those previously undertaken by the British Railways Board. The NFC "represented a

notable departure from previous attempts at integration. Within the NFC traffic was to be

allocated purely on the basis of competition" (Bradley and Nejad 1989, 40). However,

Bradley and Nejad argue that political commitments to maximising the volume of transport

carried by rail impaired NFC's early commercial efficiency.

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The Act created a system of licensing (quality licensing), and removed the restrictions on

numbers of vehicles which could carry freight unless vehicles were carrying the company's

own goods (own account), in which case the company had to have a permit. Under the

new system, anyone operating Heavy Goods Vehicles (HGV) is required to hold an

operator's licence (O licence). This licence is granted by the Traffic Commissioner to those

of good repute. In order to operate, firms have to show that they have sufficient financial

standing and resources to maintain vehicles. The system therefore changed from quantity to

qualitative regulation, and lowered barriers to entry to the industry.

Since 1984, local authorities have had the right to object to O-licenses if a depot is, or

would be, damaging to the local environment. Between 1986 and 1992 Surrey County

Council, for example, objected to 202 applications (7 per cent of the total) and 97 per cent

of the objections were upheld (Royal Commission on the Environment 1994). The

government has recently restructured the system of licensing by introducing continuous

licenses instead of fixed term ones as at present. This was enacted through the 1994

"Deregulation Bill". Other legislation which has affected operation of the market include

that to introduce speed limiters which came into force in late 1992.

Privatisation

Large scale privatisation came about in 1982 with the sale of the NFC. It was Britain's

largest freight company. Under state control it was an ailing enterprise, and did not make a

profit until 1978 (Bradley and Nejad 1989, 43). The 1978 Transport Act reorganised the

NFC's capital structure, and its capital debt was reduced by half to ￡100 million.

Reconstruction under the Act meant that NFC was in a stronger financial condition, able to

continue modernisation.

The Conservative Party's 1979 election manifesto included a pledge to privatise NFC. In

1980 an enabling law was passed in preparation for the sale. The Transport Act 1980

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converted the NFC's capital structure from that of a loan-based public corporation to an

equity-based limited company. All equity was invested in the Department of Transport. The

NFC's debts were extinguished and constraints on director's salaries and areas of business

activity were removed. The Act also committed the government to fund most of NFC's

pension fund liability (some￡40 million).

Privatisation took the form of an employee buy-out, for a sale price of ￡53.5 million. Since

privatisation, the fortunes of NFC have been transformed, it has remained the largest UK

freight company and is now in the process of expanding internationally as a major

competitor to companies with a much longer presence in the private sector.

Table 1: Goods vehicles operator licences in issue and total number of heavy goods vehicles specified over 3.5 tonnes as at March 1994

Traffic Area Type of Licence Total number of licences in issue

Total number of vehicles specified

Restricted Standard Standard International

North Eastern 9126 8328 2266 19720 64165 (9543) (8662) (2327) (20532) (63840)

North Western 10165 8671 2326 21162 67376 (10399) (9000) (2362) (21761) (67698)

West Midland 6936 5585 1317 13838 43158 (7281) (5913) (1364) (14558) (43244)

Eastern 9314 8162 3078 20554 67802 (9792) (8567) (3210) (21569) (67873)

South Wales 3330 2550 503 6383 17380 (3476) (2666) (526) (6668) (17172)

Western 8199 6932 2222 17353 53942 (8493) (7286) (2253) (18032) (54701)

South Eastern 7620 5617 2359 15596 52926 and (8247) (6165) (2559) (16971) (54255)

Metropolitan

Scottish 5119 4626 942 10687 37462 (5271) (4724) (925) (10920) (37660)

TOTAL 59809 50471 15013 125293 404211 (62502) (52983) (15526) (131011) (406443)

Source: UK Department of Transport 1994c

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The UK industry

Numbers of firms and licenses

The number of firms in the UK was estimated by a survey in 1993 by MAI as 72,400. The

total number of licenses in issue and the number of first time applications have decreased

markedly in the recent period. As at March 31 1994 the total number of licenses was

125,293 (131,011 1992/3), with a total number of vehicles specified 404,211 (406,443

1992/3) (Table 1). At the end of 1994, there were 423,000 vehicles over 3.5 tonnes gross

vehicle weight in Great Britain., and account for 95 per cent of all freight moved by

road.Table 2 shows the population of HGVs 1979 to 1994. First time applications

received up to the year end March 31 1994 were 12,101 (12,946 1992/3), and 10,577

granted (11,819 1992/3).

Table 2: Population of heavy goods vehicles 1979 - 1994 (000 at year end)

Rigids Artics All Vehicles

Artics Over 33 Tonnes1

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

382 375 357 347 348 347 341 341 346 357 368 353 330 316 311 314

10210095888991909398

10511010610099

102109

----

112128354352626463656976

485 475 451 436 436 437 432 435 444 462 478 460 430 415 412 423

1Maximum gross weight increased from 32.5 to 38 tonnes in 1983. Most vehicles over 32.5 have a maximum gross weight of 38 tonnes. Source: Transport of Goods by Road Great Britain 1994

－108－

The licensing system has been criticised for its laxity. It has been estimated that in 1994

there were some 6-12,000 illegal operators. Illegal working by HGV operators and drivers

increases the dangers associated with such large vehicles and leads to unfair competition

against legal operators and against other modes (Royal Commission of the Environment

1994, 174).

Concentration of ownership in transport

Figures published in May 1995 (Lloyds Bowater/Coopers & Lybrand 1995) showed that

the total turnover of the UK's top 100 operators is in excess of ￡12.7 billion, of which the

top 5 account for 48 per cent and the top 20 for 78 per cent. Appendix 1 shows the Top

100 companies ranked by turnover, and shows pre-tax profit and employees. This shows

that NFC is by far the largest company by turnover.

The average pre-tax profit was 4.3 per cent which compares with 3.5 per cent in the 1994

survey, and 3.4 per cent in the 1992 survey. A study of financial and operational trends in

the UK road haulage industry 1983 to 1992 undertaken by the University of Westminster

Transport Studies Group (1993) found that the competitive nature of the road haulage

industry resulted in profit margins between 3 per cent and 6 per cent being achieved during

the period studied. Return on total assets (ROTA) fell from a peak of 8 per cent in 1988 to a

low of 2.5 per cent in 1991. During the period studied the larger companies by turnover

(i.e. those with an annual turnover of greater than ￡10 million) have generally performed

better than smaller companies across the range of financial performance indicators used.

However, in 1994 one fifth of companies declared pre-tax losses. The strength of the larger

companies has been reflected in the continued expansion into the European mainland and

other parts of the world.

The trend is towards increasing concentration of ownership through acquisition. At the

same time, the average number of trucks per company has increased sharply. Even so, the

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average size of company remains small, typically owning less than five vehicles. One of the

important reasons for fragmentation is that certain sectors of the freight industry exhibit low

entry costs.

However, while the small operator is prevalent they control a minority of the vehicles;

many of the larger haulage companies have fleets in excess of 100 vehicles. A recent study

by MAI (MAI 1992 Road Transport Market Study) showed that in 1992, although 69 per

cent of hauliers operated between one and four vehicles, these firms ran only 16 per cent of

all commercial vehicles operated by hauliers. Only one percent of hauliers operated more

than 50 vehicles but these hauliers ran 37 per cent of all commercial vehicles operated by

UK hauliers. Two sectors where concentration is increasing are the chemical industry and

retailing. Although the largest transport companies in each country account for only a

relatively small part of the total market in Europe as a whole, there are signs that their share

is growing (University of Westminster 1994, 5, 19, 22).

Pricing and price

Recent years have seen increasing complexity in the pricing structure of the road freight

transport sector. With economic deregulation, tariff structures have been abandoned and

buyer-supplier negotiations have been standard practice throughout Europe (Cooper 1994,

25). At the same time, a simple transaction basis for buying transport services has

gradually been replaced by the kind of longer-term, contractual arrangements in the more

complex service relationships which have developed (e.g. in contract distribution). Fewer

pricing structures are therefore subject to re-negotiation over a fairly short-term of months,

weeks or even days. In contract distribution, two years is typical and some contracts extend

to five years or even longer. There are signs and expectations of volatility in the prices

charged for transport services (Cooper 1994,25). Overall, the pressure on price is

downwards, but the picture is complex because there are different driving factors behind

price changes in different transport markets. For example, while short distance, national

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transport is not expected to fall in price, short distance international transport may well see

price falls of up to 15 per cent. The predictions were however, based only on Single

Market factors and did not take account of prospective environmental legislation and

increasing road congestion.

Freight movement

The buoyancy of the UK freight market, reflecting the recent up-turn in the economy, is

illustrated by an increase in freight moved by HGVs of 7 per cent, from 129 billion tonne

kilometres in 1993 to 138 billion in 1994. This was the highest annual figure ever recorded

and is comfortably above the previous peak of 132 billion tonne kilometres recorded in

1989. This rise in road freight between 1993 and 1994 was larger than the increase in GDP

(up 3.8 per cent) and the increase in manufacturing output (up by 4.1 per cent) (Department

of Transport 1994d).

Length of haul

The average length of haul has risen each year between 1979 and 1994, from 70 km in

1979 to 86 km in 1994. This is due to a shift in fleet composition, specifically the steady

rise since 1983 in the number of vehicles over 33 tonnes, when the maximum gross weight

increased from 32.5 to 38 tonnes. Since 1983 the number of 38 tonne goods vehicles has

grown to about 76 thousand, representing 18 per cent of the total HGVs in 1994. These

vehicles lifted some 38 per cent of total tonnes and accounted for 60 per cent of the total

tonne kilometres. They have the longest average length of haul of all vehicles. About 55 per

cent of goods are carried less than 50 kilometres. The commodity group with the highest

proportion of long distance travel is food and drink; 20 per cent of this type of freight is

carried more than 200 km compared with an overall figure for all commodities of 13 per

cent.

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Growth in the international transport of freight by road has been rapid. Roll-on-roll-off

traffic to and from the continent has doubled since 1982. Production and distribution of the

most everyday goods may now involve a series of long-distance movements across

national boundaries (Royal Commission on the Environment 1994, 165).

Changing patterns of work

Deregulation has had a number of effects on patterns of work. Statistics show that between

1979 and 1994, own account tonne kilometres fell by 2 per cent from 38 billion to 37

billion, while public haulage tonne kilometres grew from 61 billion to 101 billion, a rise of

64 per cent over the same period (Department of Transport 1994d).

Easier market entry created by the liberalisation of the road freight market has had a

profound effect on the suppliers of haulage services; fierce competition in general haulage

forced many operators, especially the larger ones, to specialise more than they did before

deregulation. A highly competitive and open market has also stimulated the demand for

third-party services. In a liberal market, manufacturers and retailers are more likely to

replace in-house operations with distribution companies offering storage, stock control and

transport. One example of a user of such services is Marks and Spencer (M&S), the food

and clothing retail firm. This company does not own or operate vehicles but its goods are

transported in vehicles which have the M&S livery owned by a dedicated contractor.

Other new patterns of freight transport have emerged, such as long hauls from a small

number of distribution depots serving the whole of Britain, and just-in-time (JIT) logistics.

JIT involves precise planning of deliveries to match production or sales needs. A further

change, and one which has been stimulated by the creation of the Single European Market,

is the move by many companies to concentrate their production and inventory holdings at a

smaller number of locations. Inevitably, concentration of production and distribution

centres will lead to an increased need for transport - and the transport will need to be, in

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many cases, faster and more reliable in order to maintain customer service levels. The move

towards concentrated storage started some time ago in the UK and explains in part why the

growth in freight transport measured in tonne-kilometres has been outstripping growth in

tonnes lifted.

Table 3: Road Freight Traffic - All national and international haulage by vehicles registered in the country, 1989

(1000 million tonne-kilometres)

Country Hire and reward Own account Total

Belgium 19.2 (63) 11.1 (37) 30.3 (100)

Finland 19.6 (78) 5.4 (22) 25.0 (100)

France 79.0 (68) 37.7 (32) 116.7 (100)

Germany 74.9 (60) 49.3 (40) 124.2 (100)

Greece 9.6 (70) 4.2 (30) 13.8 (100)

Ireland 2.0 (50) 2.0 (50) 4.0 (100)

Italy 110.6 (82) 23.8 (18) 134.4 (100)

Netherlands 14.3 (65) 7.7 (35) 22.0 (100)

Portugal 7.2 (50) 7.1 (50) 14.3 (100)

Sweden 21.6 (86) 3.6 (14) 25.2 (100)

UK 98.8 (72) 37.2 (28) 132.0 (100)

(percentages in brackets)

Source: ECMT: Statistical Trends in Transport, in Cooper 1994

NB: Hire or reward: goods vehicle operators who only carry goods in the course of their own trade or

business

Own account: Goods vehicle operators who only carry goods in the course of their own trade or business

The European market

The UK is a dominant player in European markets. It had the second largest volume of road freight traffic in Europe behind Italy (Table 3) in 1989. In 1991, NFC was the sixth largest road based transport company in Europe (Table 4). The UK has two other companies in the top ten and a total of six in the top 20.

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Table 4: Top 20 road-based transport companies in Europe

Rank Company Country Revenue(￡millions)

MarketShare (%)

CumulativeMarket Share (%)

1 Danzas CH 3424 3.8 3.8 2 Schenker D 2555 2.8 6.6 3 Nedlloyd NL 2033 2.3 8.9

4 Kuhne and Nagel D 1881 2.1 11.0 5 SECTA F 1774 2.8 13.0 6 NFC UK 1672 1.8 14.8 7 Panalpina CH 1567 1.7 16.5 8 Bilspedition S 1068 1.6 18.1 9. LEP UK 1101 1.5 1.97

10 Ocean Group UK 1101 1.2 20.9 11 Interforward S 1068 1.2 22.1 12 TNT Europe Australia 969 1.1 23.1 13 Internatio Muller NL 894 1.0 24.1 14 Wincanton UK 698 0.8 24.9 15 ASG S 685 0.8 25.7

16 Gefco F 667 0.7 26.4 17 SCAC F 613 0.7 27.1 18 TDG UK 581 0.6 27.7 19 Thyssen Trading Group D 575 0.6 28.4 20 POETS UK 557 0.6 29.0 Source: Cooper 1994

The market is perhaps best seen as Europe as a whole, rather than just as a domestic

market. It is predicted (Cooper 1994, 24) that continued growth, rather than market

dominance, is the prospect for the largest companies in road transport. Official forecasts of

the growth in HGV traffic predicted that growth would be slow but would increase by 140

per cent between 1989 and 2025 and that there would be a further increase in the proportion

of freight carried by road (Royal Commission on the Environment 1994, 163). This

growth is likely to be underpinned by a number of continuing features of the European

market place. For example manufacturers and other uses are rapidly rationalising their

carrier base in the wake of rationalising their European logistics systems. Increasingly,

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users are finding it more beneficial to work in a more involved way with fewer, but larger

companies. Moreover, continuing deregulation in the road transport sector has enabled

companies to grow more easily, either organically or by merger and acquisition. The

recession rather than regulation has restricted market growth for no longer are permits such

an expensive impediment to growth, whether on a national or an international basis. It is

predicted that by 2001, the top 6 European road-based companies will have captured

around 23 per cent of the market. This, however, represents only a relatively small increase

in concentration, compared to the current situation.

Table 5: Estimates of environmental costs of the transport system (1994/95)

￡ billion a Year

Costs attributable to road transport are shown in parentheses

Lower End of Range

Upper End of Range

Air Pollution 2.4 6.0 Climate Change 1.8 (4.6) 3.6 (12.9)Noise & 1.2 5.4 Vibration Accidents 5.5 (5.4) 5.5 (5.4)

Total quantified environmental costs 10.9 (10.0) 20.5 (18.3)

Among environmental costs for which it has not been possible to estimate a money value and which

are not therefore included above are: losses of land severance of loss of access to land communities visual intrusion loss or disruption of

Source: Royal Commission on Environmental Pollution 1994

External dis-economies: Environmental costs

Recent controversy over road building, size of freight vehicles and mix of transport has

been added to by the Report of the Royal Commission on Environment Pollution;

Transport and the Environment published at the end of 1994. Its recommendations include

steep tax increases on fuels, over and above the 5% a year to which the government is

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already committed, and a big growth in the amount of freight carried by rail from 6.5 per

cent in 1993 to 10 per cent by 2000 and by 20 per cent by 2010.

Table 6: Tax revenue from road users in relaton to quantified environmental and public costs, by vehicle class (1994/95)

￡ billion

Cars and light goods vehicles

Heavy goods vehicles

All vehicles

Infrastructure costs 3.7 2.8 6.9 External costs of accidents a 3.7 0.9 5.4 Other quantified environmental costs b 3.5 - 9.6 0.9 - 2.7 4.6 - 12.9

Total quantified costs 10.9 - 17.0 4.6 - 6.4 16.9 - 25.2 Infrastructure costsa 16.6 3.1 20.4 Revenue as percentage of 152% - 98% 68% - 49% 121% - 81% quantified costs

a The external costs of accidents have been allocated between vehicle classes in proportion to the involvement of each type of vehicle

b HGVs have been alocated 30% of noise and vibration costs; in other respects environmental costs have been allocated between vehicle classes in proportion to fuel used.

Source: Royal Commission on Environmental Pollution 1994

The Commission's Report discussed the economic costs of transport. Table 5 taken from

the Report gives money values for costs imposed by the use of the transport system. The

figures in brackets are estimates of the environmental costs of road transport as a whole. It

was assumed that road transport gives rise to almost all the accidental costs included in

these calculations and that its share of the costs of environmental damage is proportional to

its share of transport-related carbon-monoxide emissions. On that basis, the quantified

environmental costs of road transport are estimated to be between ￡10 and ￡18 billion or

between nearly 2 per cent and over 3 per cent of GDP (Royal Commission 1994, 102).

Table 6 shows the relationship between tax revenue from road users and the combined total

of infrastructure costs to which a money value has been attached. This shows that for

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HGVs, tax revenues fall short of combined total of costs even if environmental costs are at

the lower end of the estimated range. However, the figures do not include some important

environmental costs for which it was not possible to ascribe a money value, particularly

infrastructure costs. The underpricing of the HGVs for the use of infrastructure and

environmental pollution effectively distorts competition in favour of road freight and

encourages the progressive growth in the distances over which goods are moved. The

Royal Commission Report recommended an increase in fuel duty, but recognised that this

would be insufficient to bridge the gap between revenue from road taxation and quantified

infrastructure and environmental costs. On average fuel represents about a seventh of

transport costs. The importance of freight costs as a proportion of sales income varies

considerably, from up to 80 per cent for bulk materials such as aggregates, to very small

percentages for high value goods. Therefore, for bulk materials, a large increase in fuel

prices may induce a transfer from road to a more energy-efficient mode.

Moreover, new patterns of freight transport, for example JIT, have adverse consequences

for the environment because more deliveries have to be made, than in a system with high

stockholding; vehicles may not be filled to capacity, and more fuel is used. The Royal

Commission Report quoted a study which found that energy consumption for transport

was twice as high in JIT as in conventional logistics.

International arrangements

This part of the report outlines the European regulatory framework. Authority to change the

rules of domestic freight operation resides with national governments rather than the EU.

However, Cooper (1994,9) argues that it is clear that the Commission has had an indirect

impact on domestic regulation as a result of successfully promoting change in the

regulations governing international haulage and cabotage, and thereby creating dynamism

in the EU freight sector. For many decades, markets for road freight services in Europe

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have been characterised by strong economic regulation affecting haulage capacity and/or

prices charged (tariffs) for services. From about 1985 onwards, there was a change from

strict regulation to a more liberal approach. Prior to 1885, most national markets were

tightly controlled by governments often with respect to both haulage capacity and prices

charged (Cooper 1984, 8). The UK and Luxembourg were the only ones in which free

market conditions could be said to apply, with hauliers deciding how many vehicles they

should operate (subject to safety standards), and hauliers and their customers together

deciding prices for services.

The driving force behind the deregulation of international haulage in the EU relates to the

Treaty of Rome, and the right of an individual from any member state to provide goods and

services anywhere in the Community. The EU observed that the system of bilateral permits

which controlled international haulage in the Community during the mid-1980s amounted

to cargo reservation. If a cargo needed to be moved from, say France to Italy, the bilateral

permit system made cargo more available to a French or Italian international haulier than to

one from say, Belgium. This was contrary to the Treaty of Rome and deregulation was

seen as an effective way of ensuring that EU international hauliers were not restricted in

their access to markets.

Since the mid 1980s' the position in the EU began to change and there has been a gradual

harmonisation of transport policies with the completion of the internal market, although it

has only really developed in the early to mid-1990's. Deregulation for international haulage

was agreed by the Council of Ministers in 1987 (and became fully implemented at the end

of 1992). A further measure to increase access to domestic markets of member states

initiated by the Council of Ministers was with respect to cabotage i.e. journeys entirely

within another country. By 1995, there is about 80% harmonisation within the EU -

systems of regulation are similar but implementation varies. There have been fears within

the EU that moving to the implementation of regulations to open markets would cause a

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significant increase in competition within domestic markets. The evidence above suggests

that although the market is large enough to accommodate a large number of firms there has

been, as was pointed out above, some moves towards an increased concentration within the

UK industry.

EU regulations

The regulations which govern the movement of vehicles and goods between countries,

focusing particularly on the EU, are now described. Further changes being planned include

those on drivers hours (to be extended) and speed limits (to be reduced). International

requirements on special loads include regulations on the transportation of dangerous goods,

perishable foodstuffs and customs.

Customs

With the completion of the single market on 1 January 1993, goods in free circulation in the

EU may travel freely between member states without customs intervention. However,

goods not in free circulation remain under customs control and normally move under the

community transit system. The goods are accompanied by Community transit documents

and both goods and documents must be extended to customs at destination. The

Community system has been extended to European Free Trade Association (EFTA)

countries.

Many countries including the UK are parties to the Customs Convention on the

International Transport of Goods under cover of TIR Carnets (TIR Convention) 1959 and

1975 and The Customs Convention on Containers 1956 and 1972.

A TIR Carnet gives no right to operate, it merely provides a special customs facility which

allows goods carried in officially approved vehicles or sealed containers to cross

intermediate countries with the minimum of customers formalities. The TIR Carnets

cannot be used for journeys wholly within the territory of the EU. TIR Carnets can,

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however, be used for journeys which start or finish outside the EU. In the UK, the

Road Haulage Association (RHA) and the Freight Transport Association (FTA), as

guaranteeing associations, are authorised to issue TIR carnets and give guarantees.

Certifying organisations authorised by HM Customs and Excise are responsible for the

approval of all new containers and any application is made directly to them. The

Department of Transport is responsible for the approval and re-approval of all vehicles

including trailers and semi-trailers.

Vehicles moving between EU Member States do not need any import customs

documentation. Vehicles temporarily imported into the EU from third countries may be

relieved of duty and VAT without the need to present any customs documentation, subject

to certain operating conditions, such as restrictions on cabotage. Most European countries

readily allow temporary importation of a container free of customs duty under the Container

Convention 1956.

ATA carnets

ATA carnets are international customs documents issued by Chambers of Commerce in

most major countries throughout the world. The Carnets allow customs clearance of certain

classes of temporary imports and exports by replacing:

● normal customs documentation in the country of temporary exportation; and,

● normal customs documentation and security (e.g. by bond or deposit) in the

country of temporary importation.

Carnets do not however, give immunity from other conditions of temporary exportation

and importation. For journeys to non-EU or EFTA countries, when a TIR carnet is not

used, the customs requirements of each country through which the goods are passed must

be obeyed. A deposit or guarantee instead of import duty is normal needed before the

goods are allowed entry (carnet de passage en Douane).

－120－

EU community authorisations

Hauliers wishing to make international journeys for hire or reward within the EU must hold

a Community Authorisation. It is issued under Regulation (EEC) 881/92 and is valid for all

journeys to or through Member States. These include transit through a Member State on a

journey to any other country, whether or not it is a Member State, and journeys between

two Member States. However, Community Authorisations do not allow cabotage, i.e.

journeys made entirely within one Member State (see section below). Community

Authorisations are issued by Traffic Area Offices to all operators who hold a Standard

International Operators Licence. They are valid for up to five years and there is no limit on

the number of journeys which may be made during that period.

Road haulage permits

Under 7 of the Agreements and Arrangements (mentioned above) goods vehicles from the

UK must be previously authorised by a permit. On production of a permit at the border the

haulier is allowed to pass through that country, although, depending on the terms of the

Agreement, he may still have to pay local taxes. All permits are issued by the International

Road Freight Office (IRFO). A fee is charged for each permit issued. Whether a permit is

necessary depends not only on the country of destination but also on the size of the vehicle

and the goods being carried. There are some exceptions for small vehicles and certain loads

as well as for other types of operations.

Each single journey permit is valid for one return journey, with outward and return transit

trips through a country counting as one complete journey. Multiple journey permits are

available for Turkey, authorising four return trips during the validity of the permit. Most

permits incorporate space to record details for the vehicles and journey.

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ECMT (European Conference of Ministers of Transport) permits

A small number of ECMT permits is allocated to the UK each year. They are valid for

haulage between ECMT Member States (EU Member States and Austria, Bulgaria, Croatia,

Czech Republic, Estonia. Finland, Hungary, Latvia, Lithuania, Norway, Poland,

Romania, Slovakia, Slovenia, Sweden, Switzerland and Turkey). ECMT permits allow

journeys between member states, including laden or empty transit journeys and third

country journeys to other ECMT states, which are prohibited by certain bi-lateral

Agreements. However, they cannot be used for transit of ECMT countries on journeys to

non-ECMT states or for cabotage. They are for hire or reward journeys only and may not

be used by unaccompanied trailers or semi-trailers. ECMT permits are valid for one

calendar year and allow an unlimited number of journeys within that period. They can be

used with only one vehicle at a time. There is an administration fee of ￡40 per year. The

quota is limited, so these permits are allocated before the beginning of the year in which

they are issued. Usually no further permits are available during the course of the year.

ECMT removals permits

These permits are quota free and can be used for international removals between ECMT

member states or crossing ECMT member states. They are available only to firms

employing the specialised equipment and staff needed to undertake such operations. They

are valid for one year from date of issues and the fee is ￡5 per permit.

Own account traffic

Operators carrying goods in connection for their own business are exempt from

Community Authorisation requirements in the EU and permit requirements in certain other

countries, but may need to carry an own account document.

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Cabotage permits

Cabotage - i.e. journeys entirely within another country, is generally prohibited under

bilateral Agreements and Arrangements. However, cabotage is allowed within the EU

under cover of a cabotage permit. These are issued by the IRFO and allow the holder to

make an unlimited number of cabotage journeys during the period of one month. There is a

￡5 fee for issuing cabotage permits.

There is a quota of cabotage permits and usage is monitored. Under-use of the permit or

non-compliance with the conditions of issue could lead to its withdrawal. Operators may

pay VAT on cabotage in the Member State in which the journey is made. Cabotage by own

account operators was permitted from January 1 1994. Cabotage within the EU will be

liberalised from 1 July 1998, when all permits and quotas will be abolished.

A cabotage agreement is not needed where there is a certain combined transport operation.

Goods must be carried between Member States, by rail, sea or inland waterway services, in

a lorry, trailer, semi-trailer (with or without a tractor unit), swap body or containers of 20

feet or more. If the non-road leg exceeds 100 km, as the crow flies, and the initial and final

road legs are within a radius of 150 km of the port of loading or unloading, as the crow

flies, then a cabotage permit is not required for the road legs of the journey. In theory there

is a numerical control on the number of permits, but in practice demand lags behind the

opportunity. The allocated number of permits has not been taken up. However, there had

always been the opportunity for UK firms to bring back a return load from a destination to

which a load had been taken. Cabotage allows carriers freedom of access within countries.

For example a UK carrier could take a load to France, pick up and deliver within France,

then move to another country within the EU.

It is illegal not to be in possession of the documentation for the journey undertaken. Fines

of up to ￡2000 may be imposed where documentation is not carried, or if documents are

－123－

forged or misused. A conviction is grounds for an operator's licence to be revoked,

suspended or curtailed under section 69 of the Transport Act 1968 as amended.

Third country traffic

In some cases goods may be carried by UK hauliers from another country to a third

country. A Community Authorisation allows UK hauliers to make journeys between any

other EU Member States. The rules on third country journeys involving at least one non-

EU country are complicated (Annex B). No agreements outside EU exist for this.

EU weight limits

The current EU rules on weights and dimensions is a patchwork dating back to 1985. It is

an important regulatory issue as it has direct implications for operating costs and so

profitability.

The UK is in conflict with the EU which wants to raise the general limit to 44 tonnes,

which the UK only permits in the specific circumstances described below. The

Government's proposals were outlined in a consultation document Heavier lorries for

combined road/rail transport which was published in February 1993. The subsequent

legislation permitting the use of 44 tonnes for combined road transport came into force on

24 March 1994. The combined freight network means that freight can be taken to special

rail terminals without break of bulk problem of having to reload. Special transhipment

points have been set up e.g. Manchester, Birmingham, West and South Yorks. These are

connected by designated motorway networks.

There is no specific legislation labelled The Combined Transport Act or the 44 Tonne

Regulations or whatever. The laws which permit the use of 44 tonnes are contained in two

statutory instruments which amend regulations already in existence, namely the Plating and

Testing Regulations 1988 and the Road Vehicle (Construction and Use) Regulations 1986.

The amendments to the former are covered by SI 328 1994 which, for example, provides

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for additional information to be shown on the Ministry plate, in particular, separate

maximum permitted weights for 'normal' and 'combined transport' operations. Similarly,

SI 329 amends the construction and use regulations by including the requirements which

govern the operation of vehicles over 38 tonnes and up to 44 tonnes. The statutory

instrument merely amends the regulations, it does not replace them, so the vehicles will still

have to comply with all the other requirements of the 1986 regulations in such areas as

braking, lighting and so on. The 44 tonne trucks would need extra axles, (6 in all) to

spread the load on the road; the 38 tonne lorries use five axles.

The FTA questions whether there would have been any greater opposition if the

government had had the courage to go for 44 tonnes across the board. FTA estimates that a

move to 44 tonnes without the road/rail restrictions would result in 9,000 fewer lorries,

480 million fewer lorry miles a year, a saving of over 300 million litres of fuel a year and

annual savings to industry of around ￡300 million. In late 1994, it was announced that the

House of Lords' Select Committee had recommended the introduction of legislation

permitting the general use of 44 tonnes on six axles on the grounds that "the twin

arguments of reduced road wear and reduced fleet size are sufficient justification for the

Committee's recommendation". The European Commission in Brussels has launched

technical studies to see whether a new generation of tachographs could be designed to

record lorry weights (Surveyor 24 November 1994, 13). If this was feasible, it would

resolve major problems that arise when trucks circulate through the EU. Current cabotage

rights currently make it very difficult to monitor trucks and verify their loads.

The argument was not accepted by the Assembly, however, which voted a first reading

amendment to maintain the present 40-tonne limit for intra-EU haulage (November 1994).

However, if the Council of Ministers backs the Commission's idea, the Parliament might

be forced into retreat when the legislation returns to Strasbourg for the second reading. The

European Commissioner responsible for the technical study put forward the argument to

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the Assembly that 44-tonners might cause less damage to roads and bridges if the weight is

spread over more axles, especially with twin tyres and air suspension.

Summary and conclusions

To sum up, the UK in terms of flexible arrangements for contracting companies, is streets

ahead of the rest of Europe. Although most restrictions in Europe have now gone, other

countries have come to that position much later than the UK. Not many years ago, other

European countries had tariff control on haulage rates-bracket tariffs which protected price

rates and entry to the market. This built in market distortions. For example in France, to

reduce the overall cost of transportation and storage, companies would throw in free

warehousing - which was not controlled.

The move to a quality market in the UK has had two effects:

1. Some companies which have their own fleet have become more efficient, and have

moved into third party distribution i.e. carrying freight for others. Before 1968, the

industry was dominated by own account carriers. Many of these have taken the

opportunity presented by the legislation to diversify their activities.

2. The more mature parts of the haulage sectors have moved into company transportation

i.e. they operate a dedicated fleet.

Privatisation has made a significant but smaller contribution than deregulation to improving

the service given by the industry to the users of freight transport services. Cooper (1994,

11) concludes that together, deregulation and privatisation in the freight sector have helped

to give manufacturers and retailers an enhanced capacity in order fulfilment, a key

competitive dimension in the 1990's.

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Although the UK freight industry has gone through a successful period following

privatisation and deregulation, recent developments have cast a blight over the industry. In

November 1994 industry commentators suggested that UK transport policy was at a cross-

roads (Freight 1994). Transport in general and road transport in particular now seem to

have an uncertain future. There is a growing acceptance of something that the FTA pointed

out in its 1990 Transport Dilemma report; unless it is managed, demand for road use in the

UK will outstrip the road network's capacity.

This highlights a broader issue - that the ownership of the transport infrastructure has not

been tackled by the legislation. Although government policy, is 'to ensure that the taxes

paid by road users at least covers the full economic costs of road provision and road use'

(Royal Commission on the Environment 1994, 98), the road network remains in state

ownership. The use of this network is not priced. This means that its deregulation has been

only partial, that the freight company operators are operating at low marginal costs. This is

a difficult area in any deregulation as it presents a major second best problem. In this case

where the use of roads is not priced, compared to tolls charged on some motorway routes

in France and Germany for example, this can lead to a lot of distortions in the operation of

the market.

BUS AND COACH DEREGULATION

Introduction

This section has three parts. The first describes the current operating conditions in UK

market, the second summarises changes in regulation covering buses, the third considers

the express coach market, and the last makes a brief assessment of the impact of regulatory

change.

－127－

Current operating conditions

Great Britain is divided into eight Traffic Areas each with its own Traffic Area Office which

provides administrative support to a Traffic Commissioner. In order to operate a bus or

coach service - or Public Service Vehicle (PSV) - as they are known officially - individuals

or companies have to meet certain standards before they are granted an operator's licence.

Decisions on applications for operators licenses are taken by Traffic Commissioners who

also monitor operators' performance and can revoke, curtail or suspend licences if

operators fail to meet standards. The Traffic Commissioners and Traffic Area Offices also

handle the registration of local bus services.

In passenger transport there is a distinction between:

1. Local bus stage services: Deregulation was designed to create an open market, except in

London and Northern Ireland which were not de-regulated.

2. Coach sector: This has been an open market since the 1980 Traffic Act under which

scheduled express coach services in Britain were de-regulated. In this sector there is a

normal competitive market.

Local bus services

"A local service" is a service using PSVs to carry passengers at separate fares over short

distances. The route can be of any overall length, as long as throughout its length

passengers can get off within 15 miles (measured in a straight line) of the place at which

they were picked up (PSV353A Rev 2/93).

All local services need to be registered except for:

● the parts of a local service with stopping points within the London area; or

－128－

● local services run under an agreement with British Rail to replace any rail services

which have been temporally disrupted or withdrawn; or

● excursions and tours which do not run at least once a week for at least six weeks in a

row.

Since 1930 every local bus route had to be licensed. Until 1980, it was almost impossible

to start a new service in competition with an existing operator. The Department of

Transport described this system as having "acted like a straightjacket preventing the bus

industry from adapting to meet changing travel needs" (Buses: A Guide to the White Paper

1985).

London

Between 1933 and the mid-1980's London Transport was granted monopoly power in the

running of buses in London. Following the London Regional Transport Act of 1984,

London Regional Transport (LRT) was created as a state owned, nationalised industry but

it has statutory obligations to involve the private sector. Under this system LRT procures

services from both public and private sector suppliers by means of a cost contract. In 1994

around 50 per cent of bus mileage in London was procured through this system. The

remainder is provided by London Buses Ltd (LBL), a subsidiary of LRT. In summary,

LRT decides which route or set of routes to put out to tender, the service provided

specified, tenderers submit sealed bids. There is no reservation price. No information that

may exist regarding operation cost is published. The price paid by the winning bidder is the

bid price. The introduction of competitive tendering reflected a more general UK policy.

Competitive tendering was a major part of the Government's privatisation policy (Kennedy

1994, 1). Evidence of a recent study finds that there is no statistically significant difference

in costs of operation between public and private sectors on the tendered network. The

estimated cost saving from tendering is 20% (Kennedy 1994).

－129－

In November 1994 the Government announced that it was not to press ahead with

deregulation in London, but to privatise London Transport subsidiaries. This was

completed by December 1994.

Changes in regulation

The regulation of passenger-carrying motor vehicles was introduced by the 1930 Road

Traffic Act. This Act marked the beginning of comprehensive state intervention by its

introduction of both quality regulation (demanding particular standards for vehicles, drivers

and conductors) and quantity regulation (requiring each route in operation to have a

separate licence and maintaining control of the overall number and type of services offered

by operators). The 1930 Act remained unchanged, despite two government reviews in

1953 and 1961, until 1980 when the Transport Act released inter-city bus services from the

constraints of quantity licensing for all local services and by the competitive tendering for

subsidised services (Mulley and Wright 1986, 2).

The 1985 Act, which took effect from October 1986, forms the legislative framework for

these changes. A number of arguments were put forward in favour of deregulation at the

time of the Act. The fundamental idea underpinning such a change of ownership was that

with improved efficiency and a more flexible bus network, which have knock-on effects

from improvements in the general economy, subsidies would be reduced by improved

efficiency, and that the changes would reverse the decline in the industry. A strong

argument for ownership change at the time was that privatisation was required to ensure

that a competitive environment could be maintained, and through this consumer wants

would be satisfied (Mulley and Wright 1986).

The changes were introduced to bring competition into the industry. For that reason the Act

also ended the various exemptions from competition legislation which the bus industry had

had until that point (Department of Transport 1986, 1). The changes meant that competition

－130－

law applies to the bus industry in the same way as it applies to other industries in Great

Britain (the changes did not apply to the industry in Northern Ireland). Three main areas of

competition law were involved. One is the law on restrictive agreements. From the passing

of the Act, many agreements between bus operators under which two or more parties

accept restrictions on their commercial freedom will have to be registered with the OFT.

The second change concerns the law on monopolies. Monopolies in the bus industry from

then could be referred by the Director General of Fair Trading to the Monopolies and

Mergers Commission. A third area of competition legislation concerns anti-competitive

practices. The legislation concerned already applied to the bus industry; bus stations (which

were not previously covered) were brought into the scope of the Transport Act. An

example of anti-competitive practice in the bus industry is 'predatory pricing' - that is

charging fares well below cost - or offering free travel - with the intention of eliminating

competition (see subsection on such practices below). Thus, the industry was for the first

time made subject to the competition laws dealing with market dominance, mergers, anti-

competitive practices and restrictive agreements.

The combined effect of these changes has had a greater impact on the framework for local

bus services and the bus industry as a whole than the changes introduced for the coach

sector in the Transport Act 1980. The real debate on deregulation for buses concentrated on

the issue of quantity licensing. The proposals contained in the 1985 Traffic Act meant that,

as in freight, quantity licensing aspects of the previous regulations were removed, although

it was proposed to retain and strengthen the quality control of the industry. The programme

of privatisation was not nearly so clear-cut since the Act did not incorporate the full

proposals of the White Paper Buses which preceded the Act. The White Paper contained

additional proposals to alter the structure of the industry by the eventual privatisation of the

publicly owned companies and, where necessary, the creation of smaller private bus

companies. It envisaged that the varied types of public ownership, particularly local bus

provision, would be gradually dismantled and eventually replaced by private companies. It

－131－

suggested that the route to this should be first, the removal to 'arm's length' of those bus

companies under the ownership of local authorities whether these be metropolitan or district

councils; second, the breaking up of large units (and especially the Passenger Transport

Executives (PTE's) of the metropolitan counties) into smaller units; and finally, the

eventual transfer of the whole publicly owned fleet, including the National Bus Company

(NBC) into the private sector. In the event, the regional companies under the former NBC

and the Scottish Bus Group (SBG) holding companies were privatised between 1986 and

1992 (White 1994).

By 1994, over half the fleets formerly under local authority ownership, including all those

in the Passenger Transport Authority areas (the former Metropolitan Counties) had been

sold to the private sector, and all but one of the former London Transport bus subsidiaries.

About 20 urban fleets remain under the ownership of district and regional councils while

the Ulsterbus/Citybus operations in Northern Ireland continue in state ownership. In

1994/5 some 84% of bus services are run on a commercial basis, the remainder (16%) are

run by local authorities under subsidy. Route deregulation has now been abolished outside

London.

The 1994 Deregulation and Contracting Out Act was passed at the end of 1994, and will

come into effect in December 1995. A small section of this Act covers passenger carrying

vehicles and introduces a new system of operating licences. Entry to the UK market is open

in that anyone holding a valid PSV operator's licence can register a local bus service. The

new system will mean that instead of licenses being renewed every five years, licences are

granted in perpetuity. Deregulation is designed to reduce the burden of bureaucracy.

The impact of deregulation on the UK Market

The outcomes of the 1985 Act over the period 1985-6 to 1993-4 are now summarised. The

basis of the discussion is taken from White (1994).

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First, total passenger trips in the deregulated areas fell by 27% in the eight year period.

This is shown in Table 7 and Chart 1. In London the fall was only 3% and in Northern

Ireland about 6%. The worst fall was in the former metropolitan counties (which were

abolished on April 1 1986), at 35%; the greater-than-average drop is explained largely

through the steep fare increases at the time of the metropolitan counties' abolition, notably

in South Yorkshire. Largely because of previous subsidies, some Metropolitan Authorities

had to raise fares by as much as 25% in real terms, but in the shire counties fare increases

averaged about 3% (Table 8).

Table 7: Local bus services: passenger journeys by area

Millions

London English metropolitan

areas

Englishshire

counties

England Scotland Wales Great Britain

AlloutsideLondon

1983 1

1984 1

1985/86

1986/87

1987/88

1988/89

1989/90

1990/91

1991/92

1992/93

1993/94

1,087

1,162

1,152

1,164

1,207

1,211

1,188

1,178

1,149

1,129

1,117

2,011

2,047

2,068

1,810

1,732

1,695

1,648

1,547

1,478

1,384

1,334

1,629

1,604

1,588

1,571

1,550

1,501

1,474

1,396

1,333

1,308

1,268

4,727

4,813

4,807

4,545

4,489

4,407

4,310

4,120

3,961

3,820

3,719

680

669

671

644

647

647

613

585

571

531

526

180

168

163

152

156

161

151

145

133

129

130

5,587

5,650

5,641

5,341

5,292

5,215

5,074

4,850

4,665

4,480

4,375

4,500

4,488

4,489

4,177

4,085

4,004

3,886

3,672

3,516

3,352

3,258

1 The allocation of total passenger journeys by area is less reliable prior to 1985/6

Source: Department of Transport 1994b

－133－

Second, total bus kilometres run rose by about 25%, both in the deregulated areas, and in

London and Northern Ireland. This reverses the previous trend of steady decline from the

1950's, as operators cut services in response to falling traffic, following the impact of

rising car ownership and other factors. These increases are also associated with extensive

minibus operation, and also some cases of strong competition between operators using full-

sized vehicles. It is likely that most of the increase in bus-kilometres represents frequency

over roads already served, although some minibus routes do penetrate further into housing

areas than previous services. By 1988 minibuses accounted for about 15% of urban fleets

(Utton 1991).

Chart 1 : Local bus passenger journeys


Because of the increases, local authorities were therefore able to contract enough subsidized

services to ensure similar post-deregulation provision in most cases. However, fewer off-

peak, low density routes were registered for commercial operation. Some were restored

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Table 8: Local bus services: fare indices by area 1985=100

London

English metropolitan

areas

Englishshire

countiesEngland Scotland Wales

Great

Britain

All

outside London

Current prices 1983 100.0 99.4 88.8 94.1 94.4 89.5 93.7 92.8 1984 91.6 98.6 94.8 95.3 98.3 96.3 95.8 96.5 1985/86 101.7 100.4 101.2 101.1 100.2 101.1 100.9 100.8 1986/87 107.8 127.0 106.3 112.6 103.7 105.5 111.0 111.7 1987/88 113.1 137.9 111.9 119.3 107.8 - 117.2 118.1 1988/89 125.3 146.6 117.6 127.0 112.2 - 124.3 124.2 1989/90 138.2 158.7 127.3 137.8 117.9 - 134.3 133.6 1990/91 152.4 176.4 140.5 152.1 126.9 - 147.8 147.0 1991/92 167.0 197.0 151.4 165.8 136.6 - 160.8 159.8 1992/93 179.8 210.7 157.9 175.2 146.0 - 170.1 168.4 1993/94 194.2 220.9 162.7 183.6 151.6 - 177.9 174.9 Constant prices2 1983 111.3 110.7 98.9 104.8 105.0 99.7 104.3 103.3 1984 97.2 104.5 100.5 101.1 104.3 102.1 101.6 102.4 1985/86 100.5 99.2 100.0 99.9 99.0 99.9 99.7 99.6 1986/87 103.2 121.6 101.8 107.8 99.3 101.0 106.3 106.9 1987/88 104.1 127.0 103.0 109.9 99.2 - 107.9 108.7 1988/89 108.8 127.4 102.1 110.4 97.4 - 108.0 107.9 1989/90 111.4 127.9 102.6 111.0 95.0 - 108.2 107.6 1990/91 112.0 129.6 103.2 111.7 93.2 - 108.6 108.0 1991/92 117.1 138.2 106.2 116.3 95.8 - 112.8 112.1 1992/93 122.3 143.2 107.3 119.1 99.3 - 115.6 114.5 1993/94 129.8 147.7 108.8 122.7 101.3 - 118.9 116.9

1 Figures for Wales since 1986/87 are omitted because insufficient data are available 2 Adjusted for general inflation, using the Retail Prices Index


Third, real operating costs per bus-kilometre fell very sharply, by 42% outside London and

35% in London. This also reversed a previous trend of gradual increase. The main factor

explaining this is increased staff productivity, associated in turn with major cuts in

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under the contract system, but in virtually every county some places and times of day had

fewer services.

Limited financial support for the provision of rural services is available from the Rural

Development Commission, which was set up in the mid- 1980's. It has a special fund to

help keep rural communities alive. It acts on behalf of the Department of Transport by

administering the Rural Transport Development Fund, which amounts to about ￡1 million

per year for England. Similar schemes operate in Wales and Scotland. The funds are for

innovative public transport schemes - such as community buses. The fund would pay for

start-up costs of such a scheme for example. Services which cannot be run commercially

can also be subsidised by local authorities.

－136－

administrative and engineering staff. In spite of the increase in total vehicles on the road,

numbers of staff employed has shown a dramatic decline over the ten year period 1983-

1993/4 (Table 9). In 1983 some 187,000 people were employed in the industry, by 1993/4

this had fallen by 40,000 to 148,000. Real earnings per member of staff have also fallen,

and other aspects of working conditions worsened. Existing operators used the approach of

deregulation to push through cost reducing reforms in work practices. Subsequently, two

tier wages structures were introduced. Other factors include falling oil prices and the lower

maintenance cost and fuel consumption of minibuses.

Table 9: Bus and coach staff employed by type of employment1

Thousands

Platform

staff2 Maintenance

staff2

Otherstaff2

All staff

1983 103.2 --- 84.2 --- 187.4

1984 101.1 --- 80.4 --- 181.5

1985/86 105.4 37.3 31.6 174.2

1986/87 103.9 32.9 29.9 166.8

1987/88 104.0 29.9 25.9 159.8

1988/89 104.5 29.1 25.6 159.2

1989/90 105.5 27.9 24.7 158.1

1990/91 104.6 27.2 23.5 155.3

1991/92 103.6 25.8 22.0 151.4

1992/93 103.2 24.5 20.7 148.4

1993/94 105.0 23.9 19.1 148.1

1 For 1985/86 and 1986/87, figures shown are annual averages; for all other years, they relate to the year

end.

2 Up to 1984, the full-time equivalents of all part time staff, and all working proprietors, were counted as 'other staff'. From 1985/86 they are classified according to their main occupation.


Fourth, there was a decrease in all vehicle stock in the early to mid- 1980's, followed by a

gradual increase up to the present day, with a significant expansion in the year 1993/4

(Table 10 and Chart 2). The figures show changing patterns of passenger carrying

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transport - most of the increase has come from small single deck vehicles in categories up

to 16 seats and 17-35 seats. The number of double deck buses has shown a steady decline,

as has the larger single deck buses.

In terms of public expenditure, support payments (to entire networks and low fare levels

prior to 1988, subsequently for tendered services only) fell by about 55% outside London,

and about 70% in London. However, the separate payments made in respect of

compensation for concessionary fares (mainly to pensioners) were largely unchanged.

Table 10: Bus and coach vehicle stock by type of vehicle1

Thousands Single deckers Double

deckers All vehicles

Up to 16 seats

17-35seats

36 plusseats

Allsingle deckers

1983 6.4 --- 38.5 --- 44.9 25.3 70.21984 6.0 --- 37.2 --- 43.2 25.6 68.8

1985/86 6.5 3.1 33.2 42.9 25.0 67.9

1986/87 6.9 5.0 33.2 45.2 24.5 69.6

1987/88 8.0 7.8 31.8 47.6 24.1 71.7

1988/89 7.7 9.8 31.0 48.5 23.5 72.0

1989/90 8.4 10.3 31.0 49.8 22.7 72.5

1990/91 8.1 11.5 30.2 49.8 22.2 71.9

1991/92 7.9 12.4 29.8 50.1 21.3 71.4

1992/93 8.7 13.6 29.5 51.8 20.9 72.7

1993/94 9.4 14.6 30.8 54.8 20.1 74.9

1 For 1985/86 and 1986/87, figures shown are annual averages; for all other years, they relate to the year end.


Large parts of the industry have experienced very low profitability since deregulation. For

example, in an analysis of 150 published accounts of bus operators it was found that the

net profit margin (profit before interest and tax, divided by turnover) average 3 per cent

over the period 1986-88 (Utton 1991,4). Comparisons with other service sectors indicated

that the 'bus and coach industry' averaged 0.5% compared with 4.8% in road haulage and

－138－

1.3% for travel agents. Authors of the report concluded that in the post-regulation years,

profitability was below the 'risk-free' return and that returns would have to increase if the

industry was to be viable in the long-term. The current regime appears to be discouraging

investment in fleet renewal. The average age of buses and coaches is rising fast, according

to a census by the Society of Motor Manufacturers and Trades (Freight October 1994, 11).

At the end of 1993 of the 74,478 buses and coaches on the road, 58.8% were more than

ten years old. This compares with 40% in 1982. This means that innovations such as less-

polluting engines will take longer to come into large-scale use.

Chart 2 : Bus and coach vehicle stock


Under the existing financial regime, investment can be achieved through higher profits,

which some companies (such as Stagecoach) are already achieving. However, the

achievement of higher profits may be inconsistent with the philosophy of maximizing

competition within the bus industry. Rationalisation of competing services through

－139－

voluntary agreement is often deterred through competition rules enforced through the

MMC. The overall outcome is thus one in which costs and public expenditure have fallen

but the contribution which buses make to the passenger system as a whole (i.e. passengers

travelled) shows an alarming decline outside London and Northern Ireland. The

combination of more bus-kilometres and fewer passengers has produced a very sharp fall

in average load carried - in mainland Britain outside London - of about 35%. The relative

efficiency advantage of buses over cars in terms of energy and road space use has thus

diminished (although still significant).

Professor White concludes that these outcomes suggest that the policy of not extending full

deregulation to London is correct. Substantial cost reduction and public expenditure

savings in London have been obtained without the large losses of passengers found

elsewhere. A system of competitive tendering under a regulated framework enables cost

savings to be made, while retaining the user benefits of comprehensive information,

network planning and travel cards available on all services.

Environmental considerations

This industry, like the freight industry, is likely to be affected increasingly by

environmental considerations. The 1994 Report of the Royal Commission on the

Environment Transport and the Environment has recommended greater emphasis on public

transport to cut down the volume of car traffic in cities. Improvements may take the form of

investment in fixed-track, 'high tech' options such as light rail or other rail based systems,

which are substitutes for buses. Current examples include the Manchester Metro-link

opened in 1992. Other options which support increased use of buses include separate

busways. Britain's first guided busway, in Leeds, was under construction in 1994, and

bus priorities are being expanded in many areas, notably London suburbs (White 1994,

52).

－140－

Competition policy since deregulation

Studies of the effects on competition within the market post 1980 have found evidence of

market imperfections despite the intention to encourage new entrants. Mergers, restrictive

practices and aggressive competition, particularly through 'predatory pricing' have been

major determinants of the structure of local markets. These forms of behaviour are so

common that they now account for a large proportion of cases referred to the MMC. Indeed

"no other single industry has received such intensive investigation in the 46 years of

competition policy" (Utton 1991, 3). For example, competition within some of the

metropolitan areas has been restricted. In at least four Metropolitan Authorities, despite the

provisions of the Restrictive Trade Practices Act, there were indications that transport

companies had 'understandings' with newly privatised ex-NBC companies not to invade

each other's territories.

Mergers

Despite the view in the 1984 White Paper about the contestability of local bus markets, no

one organisation was allowed to acquire more than three units of the former NBC.

Subsequently there were no further restrictions, except those provided by the Fair Trading

Act. Since the market has in theory become more open however, there has been a

considerable amount of merger activity. Between October 1988 and September 1990, six

mergers were referred to the MMC. Five were found likely to operate against the public

interest.

The regulatory system itself has come under criticism because that it appears that the

Secretary of State's intentions have been in conflict with the MMC. These conflicts have

created delays, confusion and inconsistencies. For example, the Secretary of State has been

prepared to refer sizeable mergers in the industry even though they had been completed;

usually five to six months afterwards, with the MMC report published five months later. In

four of the five cases where the MMC's verdict was against the merger, the Secretary of

－141－

State moved for divestment even though the MMC had recommended it in only one case. In

the others the MMC relied on 'undertakings' from the companies concerned. In four cases

the stronger stance taken by the Secretary of State was stalled at the moment of decision by

the High Court.

Anti competitive practices

OFT's procedure for assessing allegations of predatory pricing consists of three elements:

i) are market conditions such as to make predatory pricing feasible?

ii) have prices below variable to average total costs been charged and, if so, what were the

circumstances in the market?

iii) is there any evidence of predatory intent by the price cutting firm?

Predatory pricing will only be feasible where the firm believes that the strategy of low

prices and losses (possible large losses because of the assumption it is the market leader) in

the short term will be at least compensated by excess profits in the long term.

Two examples are given to illustrate this theme. In the first, the OFT concluded that there

had been no predation, and in the second, that it had (see Myers 1994).

1. The Thamesway investigation, 1993

Bus services in Southend-on-Sea had been provided by two companies for many years,

Thamesway and Southend Transport. At the time of the investigation, there were three

other small bus operators, but the vast majority of services was provided by the two

large operators. Since the deregulation of buses, there had been various competitive

'skirmishes' between Thamesway and Southend Transport. On June 7 1992, Southend

Transport launched the 'New dawn for Public Transport' campaign, involving new bus

services and increased frequency on existing routes. On the same date, Thamesway

－142－

halved the price of its Dayrider ticket, allowing unlimited travel on its network for a day

for ￡1.00, and return tickets were sold at the single ticket price. Southend Transport

alleged that Thamesway's price cut was predatory, i.e. designed to cut its competitor

out of the market by excessively low pricing. Predation was held to be feasible because

Thamesway had market power, large financial resources, and the ability to cross-

subsidise. Although the market was evenly divided between the two, Thamesway was

a subsidiary of Badgerline, one of the largest operators in the country, and was

therefore able to cross-subsidise, whereas Southend Transport was owned by the local

council.

The investigation concluded that Thamesway's action had led to some activity losses

but that they were not deliberately incurred. Over a period of time, the company had

taken a number of actions designed to improve network performance, such as cutting

costs by reducing bus mileage and disposing of a depot. Therefore, the price cut was

only one of a series of actions to improve its position. There was no evidence that

Thamesway had specifically targeted its behaviour against Southend Transport.

2. The Fife Scottish investigation

The duplication by Fife Scottish of subsidised bus services by a competitor was held to

be predatory, mainly because there was no expectation of profitability.

In 1990, Moffatt & Williamson won a number of contracts to operate services

subsidised by Fife Regional Council on six routes on which Fife Scottish operated

commercial day-time services. In July and August 1992, Fife Scottish duplicated the

subsidised services (without receiving a subsidy) by adding extra journeys to its

existing services. Moffatt & Williamson alleged that Fife Scottish's registration of

commercial services in competition with its subsidised services was designed to drive it

out of tendered and commercial services and involved reputation effects. The allegation

was therefore treated as one of predation.

－143－

In this case, competition was localised and Fife Scottish was able to specifically target a

competitor. It was the largest local operator, had market power and the ability to cross-

subsidise from other profitable routes in Fife. Fife Scottish had access to financial

resources because it was a subsidiary of Stagecoach Holdings, one the largest UK bus

groups. Fife Scottish might have expected to recoup losses on both tendered and

commercial services. A reputation for duplicating services lost to competitors in a

tender might deter some operators from entering future tenders or add a risk premium to

their tender bids. In addition, smaller operators often use subsidised services as a basis

from which commercial services are developed. Therefore, Fife Scottish's actions

might also reduce the degree of competition faced on non-subsidised services.

The investigation found that on each of the six routes in question, Fife Scottish incurred

incremental losses, and activity losses on five of the six routes. It was concluded from

the evidence that the company's actions were targeted against the tendered services of

Moffatt and Williamson.

Conclusions

The evidence points to considerable dis-benefits of deregulation in the bus industry. While

some customers are getting a better service, for example in towns where frequency of

service has increased, the downside has been a considerable increase in congestion and

environmental pollution in cities. Moreover, the social costs of reductions in employment

are not included in cost-benefit calculations of gains and losses of deregulation. On the

other hand, there are clear benefits to the legal profession arising from the number of cases

concerning anti-competitive behaviour.

Express coach deregulation

An 'express service' is that of a scheduled service carrying all of its passengers at least 30

miles (measured in a straight line). Under the 1985 Traffic Act, the dividing line was

－144－

revised downwards to 15 miles. This market is effectively de-regulated except that Operator

(O) licenses are subject to PSV operators licences, drivers hours, safety and environmental

regulations.1

The 1985 Act also removed previous distinctions between other types of service, such as

'excursions', 'tours' and 'contract'. In national statistics all services which are not local

buses are described as 'other'. In 1993/4, this category represented about 1,440 million

vehicle-km (compared to 2,580m 'local') and revenue of ￡960m (compared with ￡2,260m

local) (DoT 1994b). However, the scheduled express element within this element was very

small, figures for 1994 showed that passenger trips on services other than 'stage carriage'

(known as 'local') totalled 587 million. Of these only 17 million were express scheduled,

30 million were excursion and tour, and the majority, 540 million, were 'private hire' and

contract. The last category is that in which the entire vehicle is hired out, for example, to a

club or society, or to a body such as an employer or education authority, who then

provides free travel to a designated group of users.

An incentive exists for operators to register services as 'local' (i.e. to ensure that stops are

provided at least every 15 miles), since most of the fuel duty is rebated on such services,

but no rebate is available for 'express operation' as such (or any 'other' service category).

This effectively halves the cost of fuel to the operator. Many commuter, regional, and

cross-country services seen by users as 'express' are in fact registered as local services.

Deregulation and privatisation of National Express

Deregulation of express coach services took effect under the 1980 Transport Act. In 1980

the network of coach services offered by regional bus and coach companies within the

National Bus Company (NBC) was given the name National Express. National Express

(NE) was subsequently set up as a private company, and as part of the NBC privatisation,

1The discussion of express coach deregulation is taken from White (1995)

－145－

it was privatised through a management buy-out in 1988. After a subsequent change of

ownership, it was floated on the stock-exchange in 1992. National Express Group PLC is

the holding company, of which National Express Ltd, is the largest subsidiary, operating

the express network. It owns a small number of vehicles, but contracts-in vehicles from

other operators, on a distance-based rate.

In 1984, NE had some 80% of the national market of ￡17 million a year. Since then its

dominance has increased, notably through the incorporation of Scottish Citylink in 1994.

An enquiry was carried out by the Monopolies and Mergers Commission (1994) following

the merger. This concluded that the main competition lay between coach and rail, noticeably

in pricing, and that the merger enabled both operators to escape a loss-making situation on

the trunk London routes. Its approach contrasts with that of enquires into bus competition

by the MMC, in which competition between bus operators has been examined, but not the

issue of competition between buses and other modes.

A different pattern existed in Scotland. At the time of deregulation, the Scottish Bus group

(SBG) traditionally operated trunk routes between London and major Scottish cities, while

other cities in England were connected by joint NE/SBG routes. Independent operators

took a greater role than in England. SBG subsequently placed trunk routes between

London and Scotland, and within Scotland, under the 'Citylink' company, which formed a

similar role to NE in England and Wales.

Impact of deregulation

The deregulation of express coach services under the 1980 Transport Act had immediate

and dramatic effects; there was rapid growth in passengers carried until 1985 (Table 11).

From the mid-1970's the volume of passengers carried by NE had declined, with just over

a million trips in 1980. The early 1980's saw a rapid growth, peaking at 15.4 million in

－146－

1985. National road traffic estimates produced by the DoT indicated a rapid growth in

coach and bus vehicle km on motorways in the early 1980's; by 54% between 1978 and

1986, exceeding the growth rate for cars in the early 1980's. Since 1985 the number of

passengers carried by NE has declined to a similar level to that in 1980. The initial phase of

growth in long-distance express travel in the early 1980's was largely explained by a

combination of higher frequencies on trunk routes, greater motorway running to raise

speeds, and fare reductions of about 50% immediately upon deregulation, together with

increased public awareness of coach travel.

The largest single source of traffic growth was from rail, and some of the coach growth of

the early 1980's may simply have represented a recapture of traffic lost to rail in the late

1970's when BR was able to introduce a range of pricing innovations aimed at traditional

coach users such as students and the elderly, which coach operators initially could not

match. However, despite quality improvements, a survey showed that few business trips

are made by coach (4-6%). Most are to visit friends or relatives (44%).

Table 11: National Express passenger trips 1980-1993 (million)

Year Passenger trips (million)

1980

1982

1984

1985

1986

1988

1989

1990

1992

1993

9.2

14.0

15.0

15.4

14.4

13.1

13.9

13.5

10.5

9.8

Source: National Express, and technical press results in White (1995) Note: Changes in some years are associated with changes in definition and scope. Totals from 1989 were increased by the introduction of Scottish services.

－147－

In addition to growth on long-distance services, substantial expansion has been seen in

coach operation at the regional level, notably between London and Oxford on the M40

(where two operators run - one every 20 minutes), and in Northern Ireland, where

Ulsterbus has expanded its 'Goldline' network. The Stagecoach company has expanded its

regional limited stop services operated through local subsidiaries, notably a Glasgow-

Dunfermline-Dundee/Edinburgh/St Andrews network. In some cases, independents are the

main operators, with NE operating a very limited service or none at all (for example the

Gatwick- Heathrow-Stanstead-Cambridge services provided by Cambridge Coach

Services).

Airport access is an important area of growth. Following deregulation in 1980, many

services were diverted to service Heathrow airport. Subsequently direct links have been

established to Heathrow and Gatwick from many parts of Britain.

International services have also increased. Studies on behalf of Eurotunnel showed that in

1976 1.5 million trips for cross-channel coach passenger travel were made, by 1994, this

had risen to 8.1 million. This is associated with rapid-growth in roll-on-roll-off ferry

services, notably concentrated on Dover-Calais.

Conclusions

In sum, following the impact of the 1980 Transport Act, the UK network has been re-

oriented to provide fast-high frequency services (typically every two hours or better)

between London and main centres, together with major cross-country services. 'Hub'

interchanges are provided at London Victoria, Bristol (in the South West), Birmingham and

other centres.

However, further scope for express service improvement potentially is curtailed by

increasingly restrictive regulations on speed. Under 1994 EU regulations speed is limited to

－148－

105 km (65 mph). The government is considering banning coaches from the fast lane of

motorways. Such regulations may reduce the competitive advantage vis a vis rail.

REFERENCES

Bradley, K and Nejad, A (1989) Managing Owners: The National Freight Consortium in

perspective Cambridge University Press, Cambridge

Cooper, J (1994) Structure of the freight transport sector Centre for Logistics &

Transportation, School of Management, Cranfield University Bedford UK

Department of Transport (1985) Competition legislation and the bus industry: Changes

made by the Transport Act 1985: A guidance note for bus operators July 1986, London

Department of Transport (1994a) A guide for taking your lorry abroad Department of

Transport IRF/OUT GV270 (rev 1/94), HMSO, London

Department of Transport (1994b) Bus and coach statistics 1993/4 HMSO, London

Department of Transport (1994c) Transport Statistics Great Britain 1994, HMSO London

Department of Transport (1994d) The Transport of Goods by Road in Great Britain 1994

HMSO London

Kennedy, D (1994) London Bus Tendering: The Impact on Costs LSE Greater London

Group working Paper JEL Classification Numbers: D40, D44

Mulley, C and Wright, M (1986) Buy-outs and the privatisation of National Bus Fiscal

Studies

Myers, G (1994) Predatory behaviour in UK competition policy Office of Fair Trading

Research Paper Number 5, November 1994

－149－

Royal Commission on Environmental Pollution, (1994) Transport and the Environment

CM 2674 HMSO, London

Transport Studies Group, University of Westminster (1993) Performance Trends in Road

Transport A Report Commissioned by Lloyds Bowater Corporate Finance Division,

Bournemouth

Transport Studies Group, University of Westminster (1994) Road Transport Industry -

Financial Trends A Report Commissioned by Lloyds Bowater Corporate Finance

Division, Bournemouth

Utton, M (1991) Competition policy in the de-regulated local bus market NERA, 1991,

London

White, P (1994) Can buses take the strain? Parliamentary Brief, December 1994

White, P (1995) Long term impacts of express coach deregulation Paper presented at

Universities' Transport Study Group Conference, Cranfield University, January 1995

(unpublished). To be presented in revised form at PTRC European Forum, University of

Warwick, September 1995

－150－

Appendix 1

TOP 100 - RANKED BY TURNOVER RANK COMPANY NAME DATEOF

LATEST YEAR END(￡m)

TURNOVER

(￡m)

PREVIOUSTURNOVER

(￡m)

PRETAX PROFIT

(￡m)

PREVIOUS PRETAX PROFIT

EMPLOYEES

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

NFC plc LEP Group plc P&O Industrial Services Div Ocean Group plc Parcelforce Transport Development Group Tibbett & Britain Group plc Hays plc BET Distribution Services Securicor Group plc Wincanton Transport Ltd TNT Express (UK) Ltd BOC Distribution Services Christian Salvesen Distribution Mayne Nickless (UK) Ltd DHL International (UK) Ltd TNT Express Worldwide (UK) Ltd UPS (UK) Ltd DFDS Transport Ltd United Carriers Group Ltd Ryder plc AAH Holding plc NYK Holding (UK) Ltd British Rail Parcels Hogg Robinson Transport Limited Frans Maas (UK) Limited Kuehne & Nagel Limited Russell Davies Limited NFT Distribution Limited MAT Group Limited Frigoscanida Limited Taylor Barnard Group Limited Inter Forward Limited Dart Group plc Sommer Holdings Limited Davies Turner & Co Limited Humberside Holdings Limited Exxtor Group limited Danzas (UK) Limited ANC Limited Gefco UK Limited GB Express Limited Business Post Group plc Eddie Stobart Limited The Currie Group Limited The ICS (Management Services) Ltd Schenkers UK Limited

1/10/94 31/12/93 31/12/93 31/12/94 27/3/94 31/12/94 31/12/94 30/6/94 2/4/94 30/9/94 31/3/94 2/7/94 30/9/94 31/3/94 3/7/94 31/12/94 2/7/94 31/12/93 31/12/94 31/12/94 31/12/94 31/3/94 31/12/93 31/3/93 31/3/94 31/12/93 31/12/94 31/12/92 31/3/94 30/9/94 31/12/92 31/12/92 31/12/92 31/3/94 30/6/93 31/3/94 31/3/94 31/12/93 31/12/93 31/12/94 31/12/93 31/12/94 31/3/94 30/11/94 31/10/93 31/3/94 31/12/93

2034.9 1283.9 1280.0 1026.1 498.0 496.5 460.0 396.5 381.8 312.5 304.0 257.6 202.4 168.0 156.3 156.2 149.3 144.8 134.7 123.5 120.0 100.5 95.4 88.7 86.1 83.7 83.7 78.6 78.2 73.6 69.1 57.3 53.6 52.2 51

50.6 50.6 49.5 49.2 47.8 47.2 45.6 41.8 41.1 38.7 37.6 36.2

1901.6 1346.6 1560.7 963.7 501.0 549.5 360.4 304.2 400.1 241.1 284.9 242.6 168.3 158.7 153.2 131.1 139.5 104.5 110.0 108.6 100.4 90.2 60.2

101.5 90.3 78.5 66.9 68.4 80.8 70.6 68.1 49.3 60.2 42.8 60.0 43.9 48.6 50.5 48.2 42.2 41.8 33.7 33.7 34.8 27.0 32.5 34.5

105.66.5 83.4 50.5 -19.033.9 26.9 46.4 30.8 9.9 22.5 19.2 19.0 15.5 6.4 5.1 -4.2 -0.5 1.7 1.9 5.8 2.3 -2.2 -22.94.7 2.7 2.1 2.6 2.3 0.6 4.0 3.9 -5.8 2.3 0.5 1.5 6.7 6.6 0.0 4.8 6.9 1.6 5.3 2.4 1.6 0.1 -0.1

104.9 4.3

104.4 51.0 -13.0 26.9 24.2 36.7 23.3 5.7 18.2 15.8 16.9 13.7 10.0 2.3 -2.0 1.2 1.4 1.7 3.8 3.6 -9.2 -32.3 6.0 2.9 1.7 2.2 1.0 0.5 2.9 4.2 -9.7 1.7 0.9 1.8 5.0 5.6 0.0 2.9 8.1 1.0 4.2 1.2 0.7 0.2 -1.4

n/a n/a n/a

11,800 13,600 8,894

14,200 5,319 6,314 8,708 8,329 6,597 4,185 5,162 4,871 1,877 1,590 2,794 951

3,665 1,796 1,022 1,447 n/a 636 319 417 930

1506 n/a

1412 1410 935 443 256 372 771 366 635 630 125 515 591 897 320 810 197

－151－

48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

Thomas Cradley Holdings Limited Merlin Distribution Limited Mercantile (GB) Limited Applied Distribution Limited Hoyers (UK) Limited Target Express Parcels Limited CAT - GB Services limited Tuffnells Parcels Express Limited W H Malcolm Limited Burlington Air Express Star Cargo plc Cave Wood Transport Limited Carmens Transport Limited Bibby Distribution Services Dukes Transport (Craigavon) Limited Rockfield Union Limited Amtrak holdings Limited Group 4 Nightspeed Limited A A Griggs & Co Limited Redland Distribution Limited Archbolds Freightage Limited S Jones Industrial Holdings Limited Otis Transport Services Limited Murfitts Transport Limited Rosier Transport Group Limited Cert plc John G Russell (Transport) Limited W H Bowker Group Limited Turners (Soham) Limited R P C Transport Limited A & J Bull Limited John Raymond Transport Limited Road Ferry Limited Mainland Car Deliveries Limited Fred Sherwood & Sons (Trans) Ltd F B Aitkins & Sons Limited Panick Link plc Trans Euro plc Falcon Distribution Group Limited Gloystame & Co Limited Transcontinental (Rosslare) Limited Bullmatt Limited A One Transport (Leeds) Limited Maxi Caledonian Holdings (Scot) Ltd City Link Transport Holdings Ltd Gregory Distribution Limited Eleco Holdings Laser Transport International Limited S A M Anderson (Newhouse) Limited Leggett Freightways Limited R Durham & Sons Norbert Dentressangle Transport Ltd Michael Gerson Limited

30/4/94 31/3/94 31/12/93 31/12/94 31/12/93 31/10/93 31/12/93 31/12/93 31/12/93 31/12/93 30/9/94 31/12/94 31/12/93 31/12/93 31/12/93 1/1/94 29/5/94 31/12/93 30/4/94 31/12/93 31/12/93 31/3/94 30/9/94 31/5/94 31/12/93 30/6/93 31/3/94 31/12/93 31/12/93 31/12/93 31/7/94 30/9/94 2/10/93 31/3/94 31/3/94 31/12/94 31/12/94 31/1/94 31/12/93 1/1/94 31/12/93 31/12/93 31/12/93 30/9/93 26/12/93 30/9/94 30/6/94 31/12/93 30/9/93 31/3/94 1/5/94 31/12/94 31/10/94

34.6 34.4 33.7 32.2 33.1 33.0 32.6 31.9 30.6 29.2 28.5 27.0 26.4 25.7 25.0 24.1 23.5 22.6 21.2 20.3 20.2 19.5 19.1 18.0 17.7 17.6 17.6 17.5 17.4 17.1 16.7 16.5 16.4 16.3 16.0 15.4 15.4 15.4 15.0 14.5 14.4 14.3 14.1 13.6 13.1 13.1 12.8 12.3 11.3 10.0 9.9 9.6 9.5

29.4 28.5 29.3 26.4 32.2 27.7 24.4 27.8 26.9 27.6 25.1 19.4 24.3 23.7 20.8 25.6 19.2 23.0 17.4 18.3 20.2 17.0 16.4 13.1 8.9 19.4 15.4 16.2 16.5 17.4 10.2 12.7 15.1 12.8 14.9 11.9 13.2 12.8 10.6 14.1 13.5 13.5 15.3 11.8 9.2 9.7 13.5 11.7 10.3 9.4 9.0 7.6 8.1

2.9 2.3 2.7 4.2 0.4 5.8 2.9 2.9 2.2 -1.0 1.0 0.2 0.8 1.5 0.9 -0.5 1.9 -0.7 1.1 0.2 0.9 0.2 0.7 1.0 0.2 0.3 0.5 0.7 2.3 1.0 0.2 0.3 0.4 0.2 0.8 1.2 1.8 0.4 0.3 0.6 -0.5 0.8 -0.1 1.9 1.8 1.1 0.1 0.2 0.4 0.0 -1.1 0.2 2.0

3.1 1.8 1.9 3.6 0.2 4.8 1.5 1.8 1.0 -0 6 0.7 -0.7 0.3 0.4 0.3 -0.9 1.6 0.4 1.0 0.0 1.3 -0.2 0.4 0.8 0.4 0.2 0.0 0.4 2.0 1.6 0.0 0.0 0.1 0.1 0.3 0.1 1.0 0.4 0.0 0.0 0.1 1.0 -0.3 0.9 0.8 1.4 -0.1 0.1 0.2 -0.2 0.0 0.1 1.8

425 625 33 871 397 497 104 907 667 349 124 350 219 535 550 159 183 820 300 214 147 230 137 211 185 340 365 143 396 n/a 127 315 58 199 81 156 204 159 183 379 102 538 248 223 349 490 n/a 185 n/a 235 214 28 76

DEREGULATION AND PRIVATIZATION IN THE UK ...(iv) there is no evidence of restrictive practices and predatory pricing in the freight industry as in the coach and bus sector, which in

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