Liberalization of Transportation Services in the EU: the Polish Perspective

by Andrzej Cieślik (Volume editor) Jan Jakub Michałek (Volume editor)
©2015 Edited Collection 306 Pages
Series: Polish Studies in Economics, Volume 6


Poland’s accession to the EU in 2004 created new challenges and opportunities for its transport service firms operating within the framework of the EU Single Market. This book evaluates the market structure in the Polish road, maritime, rail and air transport sectors and compares them to other EU countries, using both sectorial and firm-level data. Despite infrastructural underinvestment in most transport sectors, Poland enjoys a strong competitive position in supplying international road and rail cargo services, but the modernization of transport infrastructure remains a major challenge.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author(s)/editor(s)
  • About the book
  • This eBook can be cited
  • Table of contents
  • Introduction
  • 1 The European Transport System – Major Challenges
  • 1.1 The role of transport costs in regional and international integration
  • 1.1.1 The role of intangible components in lowering transport costs
  • 1.1.2 Transportation costs and regional trading blocs
  • 1.2 Rationale for liberalization of the transport sector of the EU
  • 1.2.1 From public monopolies to contestable markets in the US and Europe
  • 1.2.2 Potential gains from European integration and the liberalization in transport sector
  • 1.3 Is there a common European transport system?
  • 1.3.1 Liberalization: a sectorial and horizontal approach
  • 1.3.2 Liberalization: a horizontal approach: Services Directive 2006
  • 1.4 The liberalization of European transport services: major challenges
  • 1.4.1 Weakness of common European infrastructure
  • 1.4.2 Roadmap to a Single European Transport Area – Toward a competitive and resource efficient transport system White Paper 2011
  • 2 Transportation Services and Global Value Chains
  • 2.1 The emergence of global value chains
  • 2.2 Transportation costs and global value chains
  • 2.3 Transportation services and inventories management for global value chains
  • 2.4 Some stylized facts on transportation services and global supply chains
  • 2.5 Poland in the global value chain – the role of the transport sector
  • 2.6 Conclusions
  • 3 An Overview of the Inter Modal Transport Sectors in Poland and the EU-27
  • 3.1 The structure of the European transport sectors
  • 3.2 The importance of the transport sector in Poland and the EU-27
  • 3.3 The transport sector in Poland
  • 3.3.1 Developments in transport sub-sectors
  • 3.4 Conclusions
  • 4 The Regulatory Framework and the Market Structure in Road Freight Transportation
  • 4.1 The liberalization of EU rules and regulations
  • 4.2 Road transportation in Poland
  • 4.2.1 Market access
  • 4.2.2 Prices, social conditions, technical conditions, and safety
  • 4.3 Road infrastructure in Poland
  • 4.4 The market structure of the Polish road freight transport sector
  • 4.5 Conclusions
  • 5 The Regulatory Framework and the Market Structure in Rail Transport Services
  • 5.1 International rules and regulations
  • 5.1.1 The International Union of Railways
  • 5.1.2 The Intergovernmental Organization for International Carriage by Rail (OTIF)
  • 5.2 Rules and regulations in the European Union
  • 5.2.1 The First Railway Package
  • 5.2.2 The Second Railway Package
  • 5.2.3 The Third Railway Package
  • 5.2.4 Further steps toward the Single European Railway Area
  • 5.2.5 Trans-European Transport Networks (TEN-T), Pan-European Rail Corridors, and transport infrastructure
  • 5.3 The regulatory framework in the Polish rail Transportation Sector
  • 5.3.1 The organization of Poland’s railways and market access
  • 5.3.2 The state of competition
  • 5.3.3 International transport and the quality of Poland’s rail infrastructure
  • 5.4 Conclusions
  • Appendix to Chapter 5
  • 6 The Regulatory Framework and the Market Structure of Maritime Transportation Services
  • 6.1 Maritime freight transportation services
  • 6.2 International rules and regulations
  • 6.2.1 Regulations relating to safety and the environment
  • 6.2.2 Regulations relating to commercial operations and practices
  • 6.3 European Union rules and regulations
  • 6.3.1 The internal market
  • 6.3.2 Port infrastructure
  • 6.3.3 Social conditions
  • 6.3.4 Safety and the environment
  • 6.4 Polish maritime rules and regulations
  • 6.4.1 The state of competition
  • 6.5 Conclusions
  • 7 The Regulatory Framework and the State of Competition in Air Transport Services
  • 7.1 International rules and regulations
  • 7.2 Rules and regulations in the European Union
  • 7.2.1 The First Aviation Liberalization Package
  • 7.2.2 The Second Aviation Liberalization Package
  • 7.2.3 The Third Aviation Liberalization Package
  • 7.2.4 The Single European Sky Packages I & II
  • 7.3 Regulation of air transport services in Poland
  • 7.3.1 Introduction
  • 7.3.2 Legal framework
  • 7.3.3 Market structure and competition
  • 7.4 Conclusions
  • Appendix to Chapter 7
  • 8 Trade in Transportation Services: Aggregate and Firm Level Data Analysis
  • 8.1 Trade by the transportation services of Poland
  • 8.2 Firm level analysis of the transport sector in Poland
  • 8.2.1 General firm characteristics
  • 8.2.2 Export activity in the Polish transport sector
  • 8.3 Conclusions
  • Appendix to Chapter 8
  • 9 The Implications of the Liberalization of Rail Services in Europe
  • 9.1 Quantification of the restrictiveness of policy in the Rail transportation sector using the gravity approach
  • 9.2 Quantification of the restrictiveness of policy in the rail transportation sector in the context of EU integration
  • 9.3 The impact of institutional liberalization on rail services’ trade
  • 9.3.1 Whole rail transport services (BOP Code 219)
  • 9.3.2 Rail passenger transport services (BOP Code 220)
  • 9.3.3 Rail freight transport services (BOP Code 221)
  • 9.3.4 Concluding remarks
  • 9.4 Conclusions
  • Summary and Conclusions
  • References

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The efficiency of transport services, in terms of costs and delivery times, plays a crucial role in the development of trade flows among countries. The importance of transport costs has been extensively described in international trade models and analyzed in many empirical studies. The theory also suggests that the creation of contestable markets and the liberalization of services should increase their efficiency, lower the costs, and stimulate the expansion of trade.

The role of transport services has been increasing in modern global economies, in which intra-industry trade and intra-firm deliveries dominate international trade flows. In the past, transport services were equally important. During the Second World War, transport infrastructure was damaged in the majority of European countries; in Poland some elements were almost completely destroyed. The reestablishment of the transport system was one of several key tasks and served as a lubricator of economic reconstruction in the post-war period.

The first challenge came in the early 1990s with the transition from a centrally-planned to a market economy. Poland, before the transition toward the market economy, like many other countries in Central and Eastern Europe, relied mainly on public transportation. Large state-owned enterprises were responsible for the vast majority of passenger traffic. The situation changed radically after the transition. The introduction of a market economy and currency convertibility boosted the market for imported passenger cars. Many new private road transportation companies also emerged. The large state-owned enterprises were split and transformed into public or private enterprises. The demand for public passenger and rail transportation decreased dramatically in the first 10–15 years after the transition, while the role of air transportation had been increasing, especially in international passenger transport. During this period, the share of road transport increased sharply compensating for the decrease in rail transportation.

The accession of Poland to the European Union in 2004 created new challenges and opportunities for transport services in Poland. The liberalization packages in maritime, rail and air transport services drastically increased the level of competition among firms in the European Union. This change was hard for large, state-owned transport companies. Only some of them managed to avoid bankruptcies. On the other hand, accession to the Single European Market (SEM) led to a rapid expansion of intra-European trade and created an enormous demand for transport services in Poland, as well as in other New Member States (NMS) of the EU. In the long run, the structural funds of the EU provided the financial means ← 9 | 10 → for the modernization of transport infrastructure. A radical increase of financial support was observed from 2007–2013 and had a visible impact on the modernization of roads, highways and rail transport infrastructure. It is also expected that similar amounts of structural funds will be transferred to Poland during the period 2014–2020.

What is the present market structure of transport services in Poland? Are they competitive in comparison to other European countries? On the one hand, we can argue that the position of Poland in the EU is very strong as Polish road transport firms, in 2012, had the largest share of international road services in the EU. The Polish PKP Cargo company ranked second in terms of total freight transported in Europe, preceded only by the German rail freight carrier. On the other hand, there are many weaknesses in the infrastructure of Polish transport. Until 2012, Poland had the lowest number of highways per square kilometer or per inhabitant among all of the EU countries. The road infrastructure is rapidly improving, however, it is still far behind other large European countries. The speed of Polish cargo trains in 2012 was half of the EU average for cargo trains. This situation clearly reflected the poor state of the railway lines in Poland. From the 1990s until 2005, Poland invested about 10 times less in comparison to other large EU countries despite having a similar or even slightly longer railway network.

Thus, the modernization of transport infrastructure in Poland is a major challenge for its government. The relative underdevelopment of infrastructure, especially in the case of high-speed rail networks, highways and seaports, is probably the most important one. Another problem could arise from a possible European harmonization of working standards as the good competitive position of Poland in road freight relies, in many aspects, on competitive remuneration. Can Polish road transport firms adjust their strategies and still remain competitive? Can Polish cargo and passenger rail companies wait for network modernization and will they be able to face the competition from other European companies? Is there a future for the Polish sea fleet, which was drastically reduced during the transition period; can Polish seaports be competitive in comparison to the largest German, Dutch, Belgian and French seaports? Is there a place for the relatively small Polish air carrier LOT in the world air market?

We will try to provide answers to some of the aforementioned questions. In our book, we will describe in detail the main features of the Polish transport sector. We will also try to analyze the main challenges and opportunities that appeared after Poland’s accession to the EU and the liberalization of its services.

The structure of the book is as follows. The first part of the book provides some general economic analysis and an introduction to the more detailed sectorial analysis. In the first chapter, we will discuss the major challenges faced ← 10 | 11 → by the European transport system. We will show the role of transport costs in international trade, we will overview the main aspects of EU integration in the transport sector, and we will present some of the long-running challenges. In second chapter, we will analyze in detail one particular, but recently very important, aspect of transport services: their role in global value chains. In the third chapter, we will present a general overview of the recent changes in intermodal transport services in Poland within the broader European context.

The second part of the book consists of four chapters and is devoted to the analysis of the main transport sectors in Poland. We will analyze in detail the developments in road, rail, maritime and air services. In each case, we will present the European regulatory framework and the basic elements of Polish law. Thereafter, we will discuss the evolution of market structures and present the major challenges faced by particular sectors.

The last part is devoted to the empirical analysis of European transport services. In the eighth chapter, we will present the evolution of market structures and the export performance of Polish and European firms. In the last chapter, we will analyze empirically the implications of European integration in the selected rail sector.

The book has been written by an international team of authors, collaborating with the Faculty of Economic Sciences (FES) at the University of Warsaw. The main group consists of Andrzej Cieślik, Jan Hagemejer, Jan Michałek and Aneta Mach-Kwiecińska, all of whom are members of the FES staff. Mahdi Ghodsi, a former PhD student at the FES, also made a contribution to the book. In addition, we benefited from the contribution of Armando Rungi, who worked at the University of Warsaw from 2011–2013. Finally, we benefitted from the comments of Subidey Togan from Bilkent University in Turkey.

The inspiration for this book was provided by the FEMISE project no. 35–09 entitled Facilitation of Transportation in Turkey and Poland: a Comparative Study, directed by Jan Michałek and Subidey Togan. We also benefitted from the financial support provided by the Rector of the University of Warsaw.

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Jan Michałek, Mahdi Ghodsi & Armando Rungi

1 The European Transport System – Major Challenges

1.1 The role of transport costs in regional and international integration

1.1.1 The role of intangible components in lowering transport costs

Major changes have occurred since the end of the Second World War that have allowed single countries to become more and more integrated with each other, primarily in terms of trade and investment across national borders, on a worldwide scale. Besides the role of common international political institutions, which have favored the necessary stability and peace to establish enduring economic relationships, the process of economic integration has been lubricated by decreasing transportation costs and the adoption of new technologies. As a consequence, the rate of international trade has consistently outpaced the rate of economic growth.1

The process has been of particular relevance in Europe where the gradual evolution toward a Common Market, extended over time to an increasing number of countries, was grounded from the beginning in a pragmatic approach based on the evidence that an efficient strategy of integration works if focused initially on limited economic areas, which thereafter stimulate expectations of increasing integration spillovers in related areas.2

In this context, the working of a continental market has to be based on both the existence of a common institutional framework, that eliminates barriers to free circulation across country borders, and the existence of good physical transport infrastructure, that permits reducing the high costs that are otherwise ← 13 | 14 → necessary to cover huge geographical distances, for people as well as for merchandise. From this point of view, the establishment of a common European trade policy and the removal of internal tariff and non-tariff barriers among EU member countries has been a story of success: European companies can more easily reach their consumers sustaining lower beachhead costs, for transportation and marketing in a foreign country.

But the endowment of physical infrastructure and the presence of institutional arrangements do not exhaust the characteristics of a transportation system. More intangible components exist that have been relatively neglected from economic studies until the last decade. Most probably because they were difficult to measure and the assessment of their impact on economic integration was hence not possible.

For example Wilson, Mann and Otsuki (2005) document the positive impact on exports and imports not only after an improvement in port facilities, but also after better customs handling, an improvement of the regulatory environment and the provision of private services next to physical infrastructure. Similarly, Behar (2009) reports the negative impact that complicated export documentation may have on export volumes. The role of logistics as a further element associated with transportation costs is documented by Behar, Manners & Nelson (2009), who find that a one standard deviation improvement in it would raise export flows by about 46% for a typical emerging country.

To have an idea of the complexity of the dimensions involved in shaping the efficiency of a transportation system, at least for merchandise deliveries, we report in Figure 1.1 the six components identified by the Logistics Performance Index, as provided by the World Bank in 2014, with relative performance for the European Union, the US and the rest of the world.3 For our purpose, the United States comes as a natural benchmark for Europe as a big comparable geographic area, but with a longer history of economic and political integration. ← 14 | 15 →

Fig. 1.1: The performance of transportation and logistics by the European Union


ISBN (Softcover)
Publication date
2015 (May)
International trade Firm level data analysis underinvestment European integration
Frankfurt am Main, Berlin, Bern, Bruxelles, New York, Oxford, Wien, 2015. 306 pp.

Biographical notes

Andrzej Cieślik (Volume editor) Jan Jakub Michałek (Volume editor)

Andrzej Cieślik is professor at the Faculty of Economic Sciences, University of Warsaw. His research focuses on international economics and economic development. Jan J. Michałek is professor at the Faculty of Economic Sciences, University of Warsaw. His work focuses on trade policy and on various aspects of Poland’s integration with the EU.


Title: Liberalization of Transportation Services in the EU: the Polish Perspective
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