Tuesday, 17 April 2018

Update on Germany's heavy (and light) vehicle charging systems

On 1 January 2005, Germany introduced the world's first full GNSS based road user charging system, applying only to trucks with a Gross Vehicle Weight (GVW) of 12 tonnes and above. Unlike the Swiss system (LSVA), which used GNSS technology to supplement the tachograph (primarily for verification and compliance purposes) as a means of measuring distance, the LKW-Maut (as the German system is called) uses an On Board Unit (OBU) with GNSS technology to map match to measure distance for chargeable purposes. A consortium known as Toll Collect won the PPP contract to finance, design, build and operate the system. 

From motorways to all highways

The system has expanded from the original network of around 12,500km of motorways by around 2,300km in recent years (mainly by adding segments of Federal highways that were used by trucks diverting from motorways to avoid charges), but will be expanded again on 1 July 2018 to ALL Federal highways. The charged network will then consist of over 40,000km of roads (see below)
Map of all Germany Federal Highways and Motorways
There are further discussions about expanding the scope of the system to include buses and coaches, and all vehicles with a GVW of at least 3.5 tonnes (which is the widely used definition of "heavy vehicles" in the European Union).   I expect that once the system has expanded to Federal Highways, there will be a need to further expand the chargeable network to include regional and local roads.

As part of the expansion to the whole Federal highway network, the process of charging trucks is to change.  At present, OBUs measure distance and calculate the charge applicable for the vehicle, then transmitting the charging data to the back office to bill the operator.  Charging rate table data is transmitted to each OBU as it is updated, so that all trip data is retained in the OBU.  All that is transmitted is data that a truck with a specific identity travelled X number of kilometres on charged highways over a set period of dates.   This is to change.  All trip data is to be transmitted to the back office, with the calculation of charges undertaken centrally, rather than on each OBU.

It is explained as follows by Toll Collect:

This is necessary because the very large route network will give rise to changes much more frequently in the future, especially on the federal trunk road – e.g. construction sites or traffic blockades. Therefore, route information that determines the toll calculations must be adjusted much quicker than before.

In other words, with some routes likely to be closed at some times (and trucks diverted onto alternative, longer routes), it will be easier to apply exceptions to the current system by calculating charges centrally, than by applying such temporary changes through updates to over 1.1 million vehicle OBUs. 

In the early days of discussions about GNSS OBU technology, options were discussed as to whether OBUs would be a "thick" client or a "thin" client.

A thick client would have all processing undertaken in the OBU, which would then only transmit the calculated charge data to the back office for billing purposes.  There are advantages in reducing communications costs, higher protection of privacy (due to a lack of trip data being transmitted) and reducing the risk of the system not being functional due to breakdown of the centralised system (as OBUs could record trips and store charging data until the back office is ready to receive it).  However, the main disadvantage is the need for updates of charging table and maps needing to be transmitted to all OBUs, which risks updates not being made in a timely manner or not being able to be made swiftly in the event of the need for changes due to roadworks or accidents.

A thin client simply measures the chargeable events and transmits that data to the back office, which collects the data and uses the trip information against maps with charge rates to calculate the charges for each OBU.  The advantages are that the OBU can be less complex and cheaper, with it being much easier to amend change maps and rates for charging, including discounts and exemptions by location and time of day.  Unsurprisingly, the key disadvantage is the need for regular communication of charging data and that transmission of such data may be seen as tracking movements of vehicles.

Alongside this change, new enforcement infrastructure is to be installed on Federal highways.  600 poles will be installed with enforcement equipment (four metres high) to classify vehicles, read number plates and check that vehicles subject to the charge have operating OBUs (or prepaid trip passes).

Use of revenues

The net revenues from the system were originally used to fund maintenance on the motorway network and also contribute towards railway and inland waterway infrastructure improvements, but this was changed in 2011 to be fully hypothecated for Federal motorways and highways. €4.63b in gross revenue was raised from the system in 2016, with an estimate €4.66b in 2017.  About €1.45b is spent on managing and operating the system, and "harmonisation measures", and another €150m is diverted to the Federal Ministry of Finance to makeup for a "shortfall in vehicle tax revenue".  That leaves €3.2b net revenue for expenditure on the Federal motorways and highways per annum.  All net revenues are spent by a dedicated agency, VIFG (Verkehrsinfrastrukturfinanzierungsgesellschaft).  VIFG - the transport infrastructure finance company - is a Federal Government owned company which was set up to implement the heavy vehicle charge and to use the funds collected, as well as manage public-private partnerships.  It now has the function of managing the payment transactions for all expenditure on the construction, maintenance and operation of all Federal highways (and motorways) since 2016.  A total of €7.7b was spent on Germany Federal highways in 2017, so the LKW-Maut contributed to just over 40% of that spending.

€5b in revenue is estimated to be collected in 2018, but expected to reach just under €8b by 2022, due to the expansion of the charged network and growth in freight traffic.

The current tariff rates are shown here.

Change of operator and temporary nationalisation

The Federal Government is also to nationalise the encumbent operator (Toll Collect) of the country's heavy vehicle charging system (LKW-Maut) in order to resolve a 12 year old dispute as the single supplier PPP contract ends in August 2018. The Federal Government has been seeking compensation for lost revenues (worth €7 billion) due to delays in the system commencing, and has been in arbitration since 2006. Furthermore, there are concerns that as Toll Collect is the sole provider of accounts in Germany (with 1.1 million vehicles with registered accounts), that any transfer to a replacement operator could be complex if Toll Collect is not selected for the next contract.  The plan is that on 1 September (the day after the contract expires), the Toll Collect LKW-Maut business will be nationalised, and will then be transferred to the new contractor in due course.

Tenders were called for a new operator from that date with four consortia shortlisted:

• Autostrade, which had won the bid for the cancelled French Ecotaxe system (which would have charged trucks on the national state highway network which competes with France's extensive network of private/commercial toll motorways)

• Skytoll. Operator of Slovakia’s GNSS heavy vehicle charging system.

• Toll Collect (T-Systems, Daimler), the encumbent operator (as a new operator).

• IBM/Continental/Abertis, a new consortium.

Whatever operator is selected should expect to share the market in Germany with new European Electronic Toll Service (EETS) operators.

Further expansion and charges for light vehicles

The German Federal Government is also examining expanding the scope of the charge to include buses and coaches, and all vehicles down to 3.5 tonne GVW. 

In parallel, Germany is developing the PKW-Maut, a time based charge for car use of ALL public roads. It has yet to be implemented due to legal challenges (including concerns from neighbouring countries about discrimination), but when implemented will apply a prepaid charge for access to those roads. Vehicle owners will be required to purchase one year, two months or 10 days of access. Prices will be dependent on a vehicle's emissions rating, ranging from €2.50 for 10 days to €130 for one year.  In parallel with its implementation, the Federal Government plans to reduce annual registration fees by approximately the same proportion.   I wrote extensively about the proposal two years ago.    It now appears this system is to be delayed until 2020 according to Berliner Morganpost (German) having previously been promised for 2019.  The light vehicle charge (known as the "car toll") is expected to raise €481m in revenue in 2020 (almost entirely from foreign users, given German car owners are expected to receive offsetting reductions in ownership based taxes).

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