The growth in Swedish haulage and transport industry is negative. Media has reported about bankruptcy or reorganizations every week since this summer. Several of the established and well-renowned businesses have also reported problems and I think it is awful.  

The transport prices need to be raised to turn the growth around and maybe there is a need for large subsidies from the government for those operating in rural parts of Sweden.

With that in mind, it almost feels unbearable that the haulage industry will suffer increased costs, in part due to the directive regarding sulphur regulation which will increase prices for freight by sea, in part due to the kilometer tax the government loves so much.    

When put together, the increased costs for these two will have the effect of raised prices for the transport industry. This will, in turn, lead to raised prices for the end consumers.

It does not feel like the kilometre tax will happen any time soon, since Stefan Löfven called for a reelection yesterday. We will just have to wait and see. The kilometer tax and other transport and logistic issues may not be the first thing on the minds of the politicians. There is a chance the Swedish economic politics will be paralyzed in 2015.

I will have reasons to get back to this subject in the future. 

– it will hit the traders in rural areas the most
 

This week there is a convention for retail logistics at the Waterfront Congress Center in Stockholm. The upcoming kilometer tax will be a hot topic of debate.

I have in earlier posts cautioned for the unfair competition a kilometre tax can bring, when the chances are that only some vehicles (i.e. those with Swedish license plates) will be affected by this. If the tax was to be introduced, it is of utmost importance that all hauliers on Swedish roads pay the same amount.  

Another downside that the kilometre tax brings is higher prices. This is a business with already low margins. Higher fees for us mean higher fees for our customers. By extension, this means that the end-consumer’s price will be raised.

And the question is whether the traders will be able to sell their products when they are forced to raise their prices? It will hit the stores in rural areas the most, since they are increasingly dependent on longer transports. A kilometre tax will make it even more difficult to trade outside the large and medium-sized cities. The question is how many of the small business owners in rural areas that will have to shut down because of this?Clearly the competitiveness of the Swedish business sector is likely to deteriorate in a dramatic way. 

During the convention the new chairman of the Committee on transport and communication Karin Svensson Smith will debate against Joachim Glassell, the economic policy expert in the transportation and logistics issues of the Swedish Trade Federation. It will be exciting to see what they come up with. I am certain I will revisit this topic. 

 

Thomas Ström

Founder and CEO of NTEX

It is not only here in Sweden we have difficulty finding fair and clear regulations regarding transporting goods. It is now clear that the EU Commission has not been able to develop common guidelines for the ports in Europe. Right now, the government subsidies varies and it is interpreted differently in every country which leads to an unfair competition.

The fact that the regulations for government subsidies are interpreted differently in every EU Member State is a public secret, says Gitte Small Lundbech, Head of the Danish Ports.  With this as background, it has been difficult – if not impossible – for the European Commission to develop common guidelines.  

The lack of common guidelines makes it possible in some countries to get subsidies for projects that will not be supported in others, and that some projects will receive subsidies from the EU but not from the country’s own government. The different conditions results in different pricings in each country. Therefore says Gitte Small Lundbech that there is a need to investigate and oversee the competition.

I can only agree. We need to have the same conditions in all EU countries!

The population decreases in approximately half of Sweden’s 290 municipalities. The big challenge for these municipalities is to continue offer its citizens a good municipal service and a good living despite lower tax revenues. A new research report highlights how the municipalities handle this challenge.

This is evident in the research report “Policies for shrinking municipalities”, written by human geographer Josefina Syssner. The report shows that the uneven population growth creates big differences in planning conditions between small and large, growing and declining municipalities.  

The report shows that representatives of the municipalities with a decreasing population rarely speak about it. They seem to consider this to be a political failure which has to be hushed up. Furthermore, one can deduce that these municipalities rarely have strategies prepared to meet the challenges a negative population growth brings.

“It is unfortunate from democracy and citizens’ perspective. The municipalities are facing major challenges, but they do not discuss them with the citizens in a structured way”, says Josefina Syssner.    

At the same time, measures are taken to adapt the organization and operations of the municipalities in question based on conditions that are brought on by a smaller population.
“Municipalities with a decreased population base should develop a local adjustment policy”, says author Josefina Syssner. That kind of policy establishes how to prioritise and organise the municipality with decreasing resources.

“It’s about shrinking wisely. Instead of having unrealistic expectations of getting more people to move there, they should focus on developing ideas on how to manage their municipal assignments innovatively despite a decreasing population”. 
Let’s hope the country’s municipal politicians and officials embrace the content and follow the author’s recommendations. 

The report “Policies for shrinking municipalities” is published by the Centre for Municipality Studies at Linköping University, and it is fascinating. 

A while back the Norwegian National Rail Administration announced the good news that they have been commissioned by the Ministry of Transport and Communication to investigate the possibilities for a new double track railway mainly for freight between Oslo and Gothenburg. This is exactly what I have been talking about for a long time and I really do hope it becomes a reality.  

Region Västra Götaland, the public transportation company Västtrafik and a number of municipalities have long been pushing for a new railway for freight through Dalsland, a region in Sweden bordering Norway. The reason is because the E6 soon won’t be able to take more traffic. It already suffers from heavy congestion now and then. On average, there is about 2 500 trucks a day driving the road between Gothenburg and Oslo and in comparison there is only three freight trains a day.

Let’s hope the Swedish government also will invest in this.

The next step, and one I sincerely hope the Swedish government quickly claim responsibility for, is to build a railway connection to and from the harbour in Gothenburg. It would be fantastic if this could be discussed at the same time as the new railway to Oslo.   

There are some points in the government proposal which will directly affect this business. It proposes a fee for wear and tear of the road, or a kilometre tax, which will be introduced for heavy vehicles and this worry Swedish hauliers that drive long distances every year. 

Unfortunately, I believe this will hit the Swedish industry in general and the rural areas in particular. There are not really any alternatives to transports by road in these areas.

A fee of 1 to 2 Swedish kronor per kilometres is what the government is suggesting in the proposal. The government hopes to obtain between 3.5 and 4 billion Swedish kronor a year.   

That money will be used for other infrastructure. Mainly railroad. In theory, this sound very good. But will it be fair this time? Will all hauliers be affected? Or will some of them be spared and will therefore be able to continue on competing with price dumping.

The proposal of the kilometre tax states that there will be different fees for different parts of the country. In the metropolitan areas the fee will be higher and lower in the rural areas. Consideration will be given to whether the trucks have environmentally-friendly engines or if there is no alternative to transport by road in the area.     

I think this is quite in order. But the big question is whether the foreign registered vehicles will be spared this fee the same way they are spared the congestion charge. In that case, the competition will be really skewed.

For example, a Swedish haulier with about 80 trucks drives around 8 500 000 kilometres yearly which in turn means close to 20 million Swedish kronor in additional costs. If this haulier was to continue competing with large, foreign companies, which are also spared the fee, it wouldn’t take long before it was time to close down the business.  

 

Thomas Ström
Founder and CEO of NTEX

Many costs will be levied from Swedish haulage companies in the future. Our new government has announced that a kilometre tax will be introduced, which I will discuss again later on. In Norway it was decided about a month ago that all trailers that weigh more than 3.5 tons must have snow tires. This is an extension on the requirements introduced last year on heavy-duty trucks and tractors.   

– The requirement of snow tires has been an important step towards road safety and accessibility, says Bodil Rønning Dreyer, manager of the Norwegian Public Roads Administration.

And it is true. But at the same time I wonder how many accidents there were in Norway last year because the trailer itself did not have snow tires. In any case, the ban comes into force January 1st of 2015 and will be in force from November 15 to March 31.  

The hauliers are the losers here, because they are the ones who will have to use money earmarked for other things. As is well known, a trailer has six tires and each tire costs approximately 500 to 600 euros. Every trailer can therefore be up to 4 000 euros more expensive.

I think it is a great initiative if it actually will improve road safety. In addition, it applies to all trailers, Norwegian as well as foreign ones. And it will be simple enough for the Norwegian police force, who is the designated controller, to make sure everyone follows these rules.

Unlike in Sweden, the change affects everyone. In Sweden a congestion charge has been put into force and it only affects Swedish drivers. Now I am afraid the same thing will happen with the kilometer tax.

Vehicles with a foreign license plate will not have to pay and this is not acceptable.

To talk about something else, it has been a blast to watch the Frölunda Indians’ hockey warriors on the ice this season. It has been a long time since supporters could go to a Frölunda game as league leader supporters. 

 

Thomas Ström
Founder and CEO of NTEX

Last week, the left-wing majority in the Stockholm Municipality presented a proposal to close down Bromma airport in 2022. Residences will be built there in its stead.

In my opinion, this is crazy talk. It would be a big blow to the Swedish industry. The fact is that flight capacity is completely crucial for the competitiveness of the industry.

The air service will be affected if Bromma closes. Sweden will be less able to compete with other countries. In addition, economic growth will be stunted and several job opportunities will disappear or never exist. This will not only affect the Stockholm region. The north and the south will lose their airway link to the capitol.

The suggestion that the “important” air traffic is to move to Arlanda airport is downright flippant, since the flight peaks at Bromma airport are at same time during day as the peaks at Arlanda.     

The Swedish business manager Jacob Wallenberg says today that this announcement is a big blow to Swedish companies and organizations.  

Before the election the new Swedish Prime Minister, Stefan Löfvén, said that Bromma airport will stay open. When he was questioned about his view on the proposal by Expressen, a Swedish newspaper, last week he answered:

Now there is a local majority in Stockholm that has expressed its view. Firstly we’ll have to see if the Stockholm Municipality comes to the government with a request, because as of now, they have not done so. But if they do, we will appoint a negotiator and then we will have to see how it develops.

This is likely not the last time I air this subject.

Thomas Ström
Founder and CEO of NTEX

I have recently discussed the new directive regarding sulphur regulation put forth by the EU and the UN which will come into force January 1st of 2015.

This means that the sulphur content of the flue gas from all the ships in Northern Europe must reduce their emissions from the current permissible level of 1.0 percent to 0.1 percent. To meet these demands, every shipping companies that travels by the Baltic Sea and the North Sea (Scandinavia), as well as the English Channel, has to invest extensively in their ships. 

I am convinced very few of the companies will carry these environmental investments through, which is a necessity for this to become a reality. And why won’t they do it? Well, there are no helpful tools and no authority has been appointed responsible for ensuring that the new rules are followed.  

For NTEX, the new directive will lead to distinctively higher costs for freight across the North Sea, and above all, the Baltic Sea. We are talking several millions Swedish kronor which we will have to invest in our transportation fleet.

In the end this affects the customers.

We recently received new price lists from some of the shipping companies that we use for freight and according to those our prices will rise significantly. If this becomes a reality NTEX alone will have an increased cost of close to 16 million Swedish kronor a year because our trailer trucks travel by these seas.

This is a cost that unfortunately will have to be paid by our customers.

Thomas Ström
Founder and CEO of NTEX

Shipping companies on the Baltic Sea will ignore the new directive regarding sulphur regulation but will still raise their prices

 

But how will this be regulated and by who?

The new directive regarding sulphur regulation put forth by the EU and the UN will be in force from January 1st of 2015. This means that the sulphur content of the flue gas from all the ships in Northern Europe must reduce their emissions from the current permissible level of 1.0 percent to 0.1 percent.

But since there will be no follow-ups, I am certain many shipping companies will ignore the directive and still charge higher fees even though they have not made the investments in environment as required by the directive.     

The proposal has been criticised by the shipping industry, which believes the regulations will work in favour of southern Europe while be a disadvantage for the northern countries. And although it is a fair assumption, I believe there will be different consequences.

Some shipping companies have ordered LNG carriers to meet the demands. LNG terminals are also being installed in several of Sweden’s larger harbours, for example in Gothenburg. But the main question is whether we can trust that the shipping industry will follow these directives for the Baltic Sea, the English Channel and parts of the North Sea, along the west coast of Sweden for example.

As with regulations within the Swedish transport industry there are no follow-ups. No ideas have been presented as to how, and by whom, this would be regulated. All of this points to the shipping industry ignoring the new directive regarding sulphur regulation.      

This also means that this new directive will not lead to more of the cargo being transported by train or road, which the shipping industry has feared. It will probably also not lead to any greater effects on the environment but rather a bigger competition, where rouge businesses continue to run ships on HFO and old engines. 

On the other hand, one obvious side effect will be that the price for freight by sea to and from Sweden will rise, maybe with as much as 30 percent. And if the companies ignore the requirements that are needed to lower the sulphur emissions, they will make a large profit since the customers still will be charged for the “increased costs”.

This will result in a large number of unscrupulous shipping companies making a profit by ignoring the directive.

So, how can I be certain of this?
The answer is simple.

No authority has been appointed responsible for ensuring that the new rules are followed. There will of course be shipping companies that decide to follow the new directive; however the question is whether the ships’ skippers will do it. They are in fact required to be as profitable as possible and therefore they might save money by using the cheaper and, for the environment, inferior oil.  

The truth in this becomes very obvious when you consider ships that start somewhere else and then enter these affected areas. The idea is that these ships will change fuel when they enter the area, but what are the chances that they will actually do it if they can save a great deal of money by not doing it?

Because the big question is: How will this new directive regarding sulphur regulation be regulated and by who?
As of today, there is no one!
And in approximately three months the shipping companies will substantially raise their prices!

 

The transport industry is among the first industries to notice shifts in the economy, due to the increase or decrease in orders. After an amazing summer when NTEX’s business was booming, with the exception of the first two weeks of August, which were calmer, it seems like business is here to stay. 

NTEX get new clients all the time, at the same time as many of our larger, existing clients indicated, after the summer, that they will have an even greater need in the future. In the past, this has been a leading indicator of an upcoming upturn in the business cycle. Maybe that is the case now as well. At least, let’s hope so. 

Moreover, I can’t help but talk about ice hockey, now that autumn really is here to stay. I saw the Indians first game against Brynäs at Scandinavium and I must say I am impressed. I have not seen the Gothenburg team Frölunda Indians so alert in a long time. Maybe there is an upturn on the way there as well. 

After the first game, they lost big to HV71, from Jönköping, won against Örebro after sudden death overtime and most recently won against Djurgården, from Stockholm, 2 to 1. I am excited to see how the season turns out for Roger Rönnberg and his boys and I will also tell you everything here. 

 

There are many important issues our industry will be facing in the next couple of years. I have already discussed some of them, like clearer legislation and repercussions for offenses. What will probably be the most important issue for the Swedish haulage industry is the question of how we can attract young people to work as truckers. 

There is a great shortage of truckers in Sweden and in the rest of Western Europe. The biggest problem is that very few youths choose to enter the haulage industry. The average age of truckers in this part of Europe is over 50. 

The fact that fewer youths acquire their driving licenses is a central cause. People have different priorities today in comparison to a few years ago. The reasons are probably economic and environmental. But no one can know with certainty. I believe this has to be the central point of our industry. Otherwise, we might not have any truckers left in a few years, which is disquieting since transports will increase.    

The industry must make an effort to find solutions to this problem, or else there will soon not be any truckers left.

Expand the railway between Oslo and Copenhagen.

With only days to go until the Swedish election, I can’t help but wonder why there has not been a debate about Sweden’s lousy infrastructure? The discussion is centred on work and work opportunities for everyone, while expanding the railway, partly at the expense of the ROT tax deduction, has been discussed only briefly 

Why is there not a discussion about an extensive investment in infrastructure? That alone would create a large amount of work opportunities for several years. Moreover, Sweden will have an infrastructure which works well and which will last.  

Other countries prioritize roads, railways and airports, but in Sweden it feels like people are wondering if a new road or railway really is necessary. 

I argue that the railways need to be upgraded and become more effective. For example, there is no effective train service between Oslo and Copenhagen. That is definitely a line which should be expanded as soon as possible.

Beside maintenance of several already existing roads, building cross country roads, from the east coast to the west coast, is of utmost importance when it comes to the road network. And here I mean roads that are built for heavy traffic with two lanes in both directions. 

Regardless of the outcome in the election on Sunday I sincerely hope the new government will do something about the Swedish infrastructure soon. 

Why is this not an important political issue? 

There is an election in Sweden next Sunday. It becomes abundantly clear by all the signs along the roads. At some places they are even hazardous. I wonder if the Swedish transport administration, which usually removes all kind of advertisement along the roads quickly, really has permitted this. I wonder what the consequences would have been if a company had covered the towns and cities in a similar way?

As with many other things concerning road transport, there is a lack of clear rules and regulations. And where there in fact are rules there is no one controlling that the companies follow them. As a consequence there are now more rogue haulage contractors in Sweden and they use social dumping among other things.

The business is under a lot of pressure from other contractors, who do not follow current legislation. According to the Swedish Association of Road Transport Companies, surveys show that approximately 50 % of traffic on for example the E4 are made up of foreign-registered vehicles. Because of this thousands of job opportunities are lost in Sweden. 

NTEX also has a few foreign-registered vehicles doing round trips to Sweden with goods from and to their home countries in Europe. We follow the current rules and regulations, but we are also aware of the fact that there are people who don’t. These are the companies that are threatening the entire Swedish haulage industry.  

I hear stories daily about weary hauliers who cannot lower their prices anymore. The profitability is still low and they cannot hold their own in the competition since their costs are higher because of wages and large investments. 

The big question is why no party has seized upon this? There is talk of making all truckers liable to pay taxes in Sweden, but nobody is taking it further. There is not one politician who talks about how the legislation regarding the haulage industry can be applied so foreign-registered vehicles can be prosecuted in a satisfactory manner as well. Instead, they are talking about introducing a kilometre tax, which probably would be the deathblow for the Swedish haulage industry.  

Please note that the queries posted below are not my personal opinions but rather a wonder of how we should proceed: 

Should Sweden keep a Swedish haulage industry which employ approximately 100 000 truckers?

Should we stick to the collective agreement? Or should the Swedish haulage industry adapt to the current conditions of the competition?

Should it, similar to ship transport, “register under flag of convenience” and relocate its business to “cheaper” countries. 

Or should contractors employ workers from low-income countries?