Development of Road Haulage market challenges and opportunities

Development of Road Haulage market: challenges and opportunities author of the presentation Oskars Juhnevics

According to statistics, transportation and logistics branch in Latvia makes approximately 6% of GDP. Due to it’s geographical position, Latvia is an important area connecting EU, Russia, Belarus etc. Important indices of Transportation and warehouse branch LV LT EE Sector contribution to GDP 5. 9% 4. 6% 5. 1% Number of companies 5 387 7 264 3 861 Turnover (mil. EUR 4 485 5 397 4 143 Number of employees 77 556 99 667 40 257

Freight traffic – export services. The company in Latvia gains investments from EU and Russian Federation. This dicreases unemployment and makes additional taxes to the state. Turnover 1 st quarter of 2011(mil. tonn km). LV LT EE Freighting mil. t/km 10 590 19 398 5 611 Import (mil. EUR) 8 745 17 650 9 242 Eхport (mil. EUR) 7 158 15 716 8 753

1. Problems in freight traffic sphere: ØNon organized infrastructure n n There are 200 laybies in Latvia, only 6 parking places are functioning. Parking places are bad equipped. Basic things are absent (toilets, shower, security, water)

Tax rates are far too high. • Road tax is very high (in Lithuania and Estonia this kind of tax does not exist) Road tax for the vehicles Ls / year Type of the vehicle car biaxial lorry half-trailer Technical specifications of the vehicle: gross weight 1950 kg Gross weight > 15000 kg X Pneumatic suspension X 120 Mechanic suspension X 195 180 Year: till 2005 90 X X Year: after 2005 75 X X

• Proof of technical inspection in Lithuania is more advantageous than in Latvia Proof of technical inspection of the vehicle LV LT annual х Once in 2 years х Technical specifications car lorry The first roadworthiness test of the vehicle: petrol 16, 47 Ls 29, 63 Ls diesel 19, 63 Ls 33, 54 Ls Petrol/gas 18, 06 Ls 8. 57 Ls 16. 73 Ls 8. 57 Ls 19. 59 Ls 8. 57 Ls 31, 59 Ls 22. 64 Ls Repeated test of the vehicle: petrol 8, 89 Ls 8. 57 Ls 15, 47 Ls 10. 61 Ls diesel 10, 47 Ls 8. 57 Ls 17, 42 Ls 14. 69 Ls Petrol/gas 9, 69 Ls 8. 57 Ls 16, 45 Ls 17. 45 Ls

Ø The competition among the companies in of other countries is not fair Fines for working and rest time defaults • Fines for the lorry drivers in Latvia are higher than in Lithuania Fine for the driver Fine for the company Default LT LV Not to stop driving after period of 1530 min to 10 LVL - to 10 LVL 50 -150 LVL more than 30 min, but not more than 1 hour 20 -40 LVL - 30 -50 LVL 50 -150 LVL more than 1 hour, but not more than 2 hours 40 -60 LVL - 50 -100 LVL 50 -150 LVL more than 2 hours, but not more than 3 hours 60 -100 LVL - 50 -100 LVL 50 - 300 LVL

• • Excise. Slovakia returns the excise to local companies – 10 Euro cent for 1 liter. There is no contract with Russia to avoid double tax adjustment. In Lithuania this contract is already working.

Ø Ø Not organized and disadvantageous system of salary and subsistence allowances for persons outside Latvia. The tax rate of a year is approximately 15+15=30%.

2. Oportunities. 2. 1. The project will help to solve following problems : Ø Parking and recreation places for the drivers will be equipped according to all EU rules. • After calculation of the traffic flow, it will be possible to find where and how many parking places are needed.

Ø Roads will correspond the EU rules. Drivers will have a chance to avoid populated places.

2. 2. The solution of the following questions must be found! : Ø There are no tax allowances connected with selling old cars and buying new. (the tax rate of the car sold is 15% for the reinvested income. Ø It is necessary to cancel the advance payment for the companies.

Ø Ø Ø Building equal conditions foreign and local companies. Perspective of allowances for local businessmen. Advancement of traffic among the big port-cities of Baltics and transit roads. • Rezekne – Kaunas, • Panevezys – Daugavpils, • Liepaja – Klaipeda, • Siauliai – Jelgava, • Riga – St. Petersburg, • Kaunas – Riga, • Vilnius – Riga, • Riga – Daugavpils, • Riga – Liepaja, • Riga – Ventspils etc.

3. Activity complex : (opportunities) Ø Ø Reconstruct and widen the roads (most important roads will have 4 lanes). Competitiveness of the transportation in Latvia must be raised. Improve the infrastructure of road haulage. Capacity of traffic and speed must be increased. Improve parking-places to make the correspond EU rules.

Ø Ø To make tax allowances to local companies in order to buy new vehicles. Penalty amounts will be made according to conditions. To adjust penalty amount to the means of the Baltic States. To create a law to protect local road transportation companies.

Ø Ø Ø Develop infrastructure and renovate the existing ports. Build new ports. To change the system of double tax rates for the fuel: excise and VAT. Develop and finish the agreement with Russia to avoid double tax rates.

Thank you for your attention !