Cabotage is a term that refers to transportation of goods in a country by a carrier registered in another country. Originally it meant shipping along coastal routes, from port to port and comes from the name of the 15th century explorer Giovanni Cabote, who used to travel along the coast of the explored lands. Initially a shipping term, now cabotage also refers to railways, aviation and road transport.
Cabotage rights is the right of a company from one country to trade in another country. Most countries all over the world do not permit aviation cabotage, for reasons of economic protectionism, national security or public safety while road cabotage is quite a common practice. One noteworthy exception is the European Community, whose members all grant cabotage rights to each other.
Contemporary road transport has developed considerably during the past decade. As a result of the EU’s pre-accession strategy, trade with Central and Eastern European countries had grown considerably, which also stimulated the development of freight transport.
Most of these countries are Member States now, and apart from a precondition that road transport cabotage must be of a temporary nature, access for carriers from the new Member States to the Single Market is unrestricted. Due to this liberalization of international transport the intra-EU transport has increased rapidly while the national transport markets are still regulated. A company that wants to operate in the national market of another country on a regular or permanent basis needs to be legally established in that country. To allow for a more efficient use of resources (less empty mileage), transport companies are allowed to perform transport cabotage with the restriction that it must be temporary.
After several twists and turns article 1 of Council Regulation 3118/93 has been formed saying that “any road haulage carrier who is holder of the Community authorization (provided for in Council Regulation 881/92) is entitled to operate national road haulage services for hire and reward in another Member State without having a registered office or other establishment therein, provided these services are performed on a temporary basis”. This regulation lays down the conditions under which non-resident carriers may operate national road haulage services within a Member State with the aim of increasing transport efficiency and reducing the number of empty journeys.
New rules came into force with Regulation (EC) No 1072/2009 with the aim of removing the uncertainties that had developed as a result of different national interpretation of the previous cabotage rules as set out in Regulation (EEC) No 3118/93.
Read about: Requirements that a carrier must meet to be able to undertake a cabotage journey