EUROPEAN

COMMISSION

Brussels, 22.4.2014
COM(2014) 231 final

REPORT FROM THE COMMISSION TO THE COUNCIL

Fifth report on the implementation of Council Regulation (EEC) No 3577/92 applying

{SWD(2014) 143 final}

EN EN
 REPORT FROM THE COMMISSION TO THE COUNCIL

Fifth report on the implementation of Council Regulation (EEC) No 3577/92 applying

Council Regulation (EEC) No 3577/92 applying the principle of freedom to provide services
to maritime transport within Member States (maritime cabotage)1 was adopted on 7 December
1992. The objective of the Regulation has been to gradually implement this freedom, thus
creating an internal market for the provision of maritime cabotage services.
Pursuant to Article 10 of the Regulation, every two years the Commission shall submit to the
Council a report on the implementation of this Regulation and, if appropriate, shall also put
forward any necessary proposals.
This is the fifth periodical report. Following the consultation of Member States on the content
and frequency of reports announced in the previous report2, and in the light of the Council
conclusions3, the Commission decided to cover by this report the years 2001- 2010, and later
where available. The justification for this approach was twofold. Firstly, the Commission
intended to fully assess the impact of maritime cabotage liberalisation in Greece, which was
the last Member State to open its market. Secondly, it aimed at analysing the cabotage in
Member States which accessed the EU since the adoption of the previous report in 2002 (i.e.
enlargements of 1 May 20044, 1 January 20075 and 1 July 20136).
This report focuses on countries which have access to the sea7. It has been based on the
studies carried by independent consultants8, the results of consultations of stakeholders and
Member States undertaken by the Commission in 2009 and the answers from the Member
States to a questionnaire addressed to them by the Commission in 2012.
This report is divided in four chapters. The first depicts the recent Court's case-law and the
legislative developments in Member States and the EFTA countries. The second presents
market trends in Member States and EFTA countries. The third recapitulates the available

1
OJ L 364, 12.12.1992, p. 7.
2
Fourth report on the implementation of Council Regulation 3577/92 applying the principle of freedom
to provide services to maritime cabotage (1999-2000) of 24.4.2002, COM (2002) 203.
3
Council conclusions of 5.11.2002.
4
Cyprus, Estonia, Lithuania, Latvia, Malta, Poland, Slovenia, see also footnote 7.
5
Bulgaria and Romania.
6
Croatia.
7
Austria, Czech Republic, Hungary, Luxembourg and Slovakia are not covered.
8
Consultrans (member of the ECORYS Lead Framework Contract Consortium), "Study in view of the
preparation of the 5th periodical report on the implementation of Regulation No 3577/92. Economic part 2001-
2005", July 2007. Gomez- Acebo & Pombo Abogados, "Study on the implementation of Council Regulation
(EEC) No 3577/92 applying the principle of freedom to provide services to maritime transport within the
Member States. Legal developments (2001-2005)", June 2007.

2
data on employment in maritime cabotage. Due to the lack of reliable and conclusive data this
part no longer contains the statistics on the crew costs. The fourth chapter highlights the
outcome of the consultations undertaken on the occasion of preparation of this report. Finally,
the last chapter contains conclusions and presents the Commission's view regarding future
reports.
The Commission Staff Working Document accompanying this report presents more detailed
statistical data and analysis of certain issues mentioned in this report.
This report is presented together with the Commission's interpretative communication on
Regulation (EEC) No 3577/92.9

1. LEGISLATIVE DEVELOPMENTS
This chapter analyses the Court of Justice's case-law and the developments in EU Member
States (1.1) and in EFTA States (1.2) regarding the categories of liberalised services, access to
the cabotage, rules on manning, PSO (Public Service Obligation) and PSC (Public Service
Contract) within the period of reference. A more detailed description of legislative
developments is recapitulated in the Table 1 of the Commission Staff Working Document
accompanying the present report.
1.1. Legislative developments in the EU Member States
1.1.1. Liberalised services
Almost all categories of maritime cabotage services have been opened to the beneficiaries of
Regulation (EEC) No 3577/92 since 1 January 1999, the date when most of derogations set
out in Article 6 of the Regulation came to an end.
The only remaining derogation, until 1 January 2004, laid down in Article 6(3) of the
Regulation concerned two categories of island cabotage services in Greece: regular passenger
and ferry services as well as services provided by vessels smaller than 650 gt.
Following the adoption of Law 2932/2001 published on 27 June 2001 Greece liberalised these
cabotage services, well before the expiration of derogation period in 2004. However, the full
alignment with the Regulation was achieved in Greece only in 2011, through a series of
amendments introduced by Ministerial Decision 3323.1/02/08, Presidential Decrees 38/2011
and 44/2011, and Law 3922/2011 of 4 March 2011. This legislation was adopted in Greece in
the context of an infringement procedure that was closed by the Commission in 2011.
In addition, Greece has liberalised its cabotage market even more widely than required by the
Regulation by opening it in 2010 to cruise ships registered in a third country (Law
3872/2010).
1.1.2. Access to the provision of maritime cabotage services
The Regulation foresees that, for a ship to be allowed to provide cabotage in another Member
State, it must fulfil all the conditions required for admission to cabotage in the Member State
in which it is registered.

9
Communication from the Commission to the European Parliament, the Council, the European
Economic and Social Committee and the Committee of the Regions on the interpretation of Council Regulation
(EEC) No 3577/92 applying the principle of freedom to provide services to maritime transport within Member
States (maritime cabotage) COM(2014)232

3
Member States allow all vessels registered in their first registers to provide cabotage without
any restrictions. As a consequence, these vessels have unrestricted access to cabotage in other
Member States.
The situation concerning vessels registered in second registers10 can be summarised as
follows:
• vessels registered in the Spanish Special Register of ships and shipping companies
of the Canary Islands (REC), in the Portuguese Madeira register (MAR) and in
Gibraltar have unrestricted access;
• cargo vessels registered in the Danish International Ship Register (DIS) have
unrestricted access, passenger vessels in DIS do not have access to cabotage;
• vessels registered in the German International Register (ISR) and in the Finnish
List of cargo vessels in foreign traffic have limited access on a case-by-case basis
but have no access to regular cabotage;
• France and Italy granted within the period of reference a limited access to cabotage
to the vessels registered in their respective second registers:

- in Italy, the second register, which was originally excluded from access to
cabotage, has been allowed to provide cabotage only on a case-by-case basis and
up to 6 cabotage journeys per month (Law 27, 12/2002 no. 289); Law no. 326 of
24 November 2003 allowed, as an alternative to the 6 journeys per month, to
carry out unlimited cabotage journeys provided that these are over 100 nautical
miles;
- in France, the French Southern and Antarctic Territories' Register (TAAF) that
did not provide access to cabotage has been replaced by the French International
Register (RIF) by Law n ° 2005-412 of 3 May 2005; vessels registered in RIF
have a limited access to cabotage of goods provided they are not solely exploited
on cabotage routes.
1.1.3. Rules on manning
Article 3 of the Regulation allows the application of the host State rules with regard to the
manning of vessels smaller than 650 gt and vessels carrying out cabotage with islands, except
in the case of cargo vessels over 650 gt, when the voyage concerned follows or precedes a
voyage to or from another State.
In 2004 the Court clarified the scope of Article 3 in respect to cruise ships.11 According to the
Court, all matters relating to manning of cruise ships exceeding 650 gt, irrespective whether
they carry out mainland or island cabotage, are the responsibility of the flag State. The host
State rules might be applied only to cruise ships smaller than 650 gt.

10
As recalled in the previous report, the "off-shore" registers of Member States are not beneficiaries of
the Regulation (e.g. the Dutch Antilles Register, the Isle of Man Register, the Bermuda and Cayman Islands
Registers) as EU law does not apply to these territories.
11
Case C-288/02 Commission of the European Communities v Hellenic Republic.[2004] ECR I-10071.

4
In 2006 the Court provided also a clarification on the definition of the 'voyage which follows
or precedes the cabotage voyage'12: this voyage means any voyage to or from another State,
whether or not the vessel has cargo on board.
The rules on manning laid down in Article 3 may be summarised as follows:

Flag State Host State

- vessels over 650 gt carrying mainland - vessels smaller than 650 gt

Only six Member States apply the host State rules: France, Italy, Spain (as it was already the
case in the previous report), Portugal13, Greece14 and Bulgaria15.
The main rules contained in the respective national legislations on manning are set out in
Table 2 of the Commission Staff Working Document accompanying the present report.
1.1.4. Public service obligations (PSO) and public service contracts (PSC)
Recital 9 of the Regulation provides that the introduction of public services entailing certain
rights and obligations for the shipowners concerned may be justified in order to ensure the
adequacy of regular transport services to, from and between islands, provided that there is no
distinction on the grounds of nationality or residence. Article 4 of the Regulation authorises
Member States to 'conclude public service contracts with or impose public service obligations
as a condition for the provision of cabotage services, on shipping companies participating in
regular services to, from and between islands', provided that these obligations are imposed on
a non-discriminatory basis in respect of all Union shipowners.
A judgment of the Court of 2001 clarified that Article 4(1) is to be interpreted as permitting a
Member State to impose PSO on some shipping companies and, at the same time, to conclude
PSC with others for the same line or route in order to ensure the regular traffic to, from or
between islands.16
Further clarification on Article 4 of the Regulation was brought in 2006. The Court judged
unlawful the Spanish legislation which: (1) allowed a concession for cabotage services to a

12
Case C-456/04 Agip Petroli SpA v Capitaneria di porto di Siracusa and Others [2006] ECR I-03395.
13
In Portugal, according to the Decree Law N°7/2006 the host State rule is applicable on the regular
transport services of containerised and solid general cargo between mainland and the islands of Madeira and
Açores.
14
In Greece, all matters relating to manning of ships carrying out island cabotage are subject to host
State rule and regulated by the Greek legislation.
15
In Bulgaria, according to Article 4 of Ordinance No 10 ships of less than 650 gt are subject to the
Bulgarian manning regulation.
16
Case C-205/99 Analir v Administración General del Estado [2001] ECR I-1271.

5
single operator for a period of 20 years; (2) included as a criterion for the award experience in
transport acquired on that route; and (3) allowed the imposition of a PSO on regular transport
services between mainland ports.17
Within the period of reference the following main developments have taken place in the
national legislation on the public service:
• Greece has replaced the administrative authorisation system by a regime of simple
declaration (Law 3922/2011 of 4 March 2011 amending Law 2932/2001).
• Spain replaced the Royal Decree No 1466/97 with the Royal Decree No 1516/2007
of 16 November 2007. The new Decree, determines the legal arrangements for
regular maritime cabotage lines and services of public interest. The Decree 9/2009
of 27 January 2009 of the regional Government of Canary Islands and the Law
11/2010 of 2 November 2010 of the regional Government of the Balearic Islands
have completed this legislative framework.
• France has introduced financial sanctions for the ship owners providing cabotage
to islands if they do not respect the public service obligations (Decree of 18
September 2008).

The situation concerning PSO and PSC is recapitulated in Table 3 of the Commission Staff
Working Document accompanying the present report
1.2. Legislative developments in the EFTA States
On 1 January 2005 Norway introduced an exemption from the requirement of work permits
for non-EEA seafarers serving on foreign vessels transporting goods or passengers between
Norwegian harbours. However, the work permit requirement has been re-introduced in May
2010. This work permit requirement does not apply to EEA nationals or non-EEA nationals
serving onboard EEA-registered ships.
As it was mentioned in the previous report, ships registered in the Norwegian International
Ship Register (NIS) do not have access to the cabotage.
The main provisions regarding cabotage in the EU Member States and the EFTA States are
summarised in Table 4 of the Commission Staff Working Document accompanying the
present report.

2. MARKET DEVELOPMENTS
The Commission encountered difficulties in collecting the data needed to draw this part of
report since the statistical tools used to track maritime cabotage in Member States are
becoming increasingly insufficient and unreliable. As it was pointed out in the previous
cabotage report, Member States no longer collect as detailed statistics as in the past.
Moreover, given that the market has been liberalised, it has become more difficult for the
national administrations to record the market-related data. This often results in statistical
tracking becoming an internal task of the private operators, reluctant in providing data to the
competent authorities for reasons of business confidentiality.
The Commission is currently considering developing a methodology in order to collect
detailed and timely statistics on maritime transport, including on cabotage.

17
Case C-323/03 Commission of the European Communities v Kingdom of Spain [2006] ECR I-2161.

6
This part of the report presents the traffic developments, including the general trends in cargo
(2.1.1) and passenger cabotage (2.1.2), the market shares of the first and second registers (2.2)
and foreign flag penetration (2.3).
2.1. Traffic developments
2.1.1. Cargo transport
According to data provided by Member States in reply to the Commission's questionnaire, as
completed by the Eurostat data, in the period 2001-2007 the maritime cabotage of cargo was
generally stable, in several countries recording a continuous increase in volumes. From 2008
the volume of traffic has been falling due to the effect of the economic crisis. This tendency
has been most visible in Greece and Italy. In Spain, the impact of the crisis has been
recorded mainly in general cargo, due to the decline in general consumption, and in the dry
bulk trades, affected by the slowdown in the building industry.
As in previous years, the cabotage transport of goods is dominated by the United Kingdom
(high share of liquid bulk), Spain (high proportion of general cargo) and Italy (high volume
of liquid bulk traffic). With regards to the EFTA countries the volume of freight transported
in Norway remains high, mainly due to the offshore oil traffic (see Table 1). Available data
on the categories of freight transported are given in Table 5 of the Commission Staff Working
Document accompanying the present report.

7
Table 1: Cabotage transport of goods
Total Volume (in millions of tons)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
BE - - - - - - - - - -
BG - - - - - - - - - -
CY - - - - - - - - - -
DE - 8.4 8.4 8.4 7.8 7.2 7.9 8.1 6.9 6.3
DK* 13.5 12.0 13.7 13.0 14.6 17.0 17.8 16.9 13.2 14.8
EE* - 0.4 0.5 0.7 0.5 0.3 0.7 0.2 0.1 0.2
EL* 23.4 30.5 36.3 35.0 32.4 33.7 34.3 30.8 27.2 22.2
ES 76.9 76.3 78.7 86.3 87.6 87.0 91.4 86.0 76.6 80.7
FI 5.8 6.1 5.5 5.3 5.0 5.7 6.1 6.1 5.3 8.0
FR 9.1 9.8 10.1 10.4 10 9.3 9.9 9 8.7 8.1
IE - - - - 0.9 0.8 0.9 1.0 1.0 0.9
IT 70.2 67.6 59.9 66.1 103. 73.8 72.7 67.6 60.7 58.6
LT - - - - - - - - - -
LV - - - - - - - - - -
MT - - - - - - - - - -
NL - - - - - - - - - -
PL - - - - - - - - - -
PT* 5.6 5.6 5.7 5.8 6.8 6.8 7.7 8.0 7.1 8.3
RO - - - - - - - - - -
SE 12.2 11.6 11.9 11.3 13.1 11.4 12.5 12.1 9.9 11
SI - - - - - - - - - -
UK* 105. 102. 96.4 95.7 97.0 88.7 88.0 84.6 79.6 71.3
IS - - - - - - - - - -
NO* - 46.7 45.0 46.2 46.7 49.0 48.2 46.2 44.0 42.5
* Source: Eurostat. Data collected by Eurostat include information for ports handling more
than 1 million tonnes annually.
2.1.2. Passenger transport
Maritime cabotage of passengers appears stable, with consolidated global numbers similar to
those registered in previous reports. No major increases have been recorded in this type of
traffic; even the seasonal movements associated with the tourist season are not significant
when taken in the context of the total figures. Due to the effects of the economic crisis the
number of passengers has fallen in the last three years (the figures in Spain in 2010 had fallen
back to the levels recorded in 2004- 2005, in Greece to the levels of 2001).
Maritime cabotage of passengers presents an elevated degree of concentration: the two largest
markets are Greece and Italy, followed by Spain. A decrease in the passenger traffic
recorded in Denmark due to the opening of the Great Belt (fixed link between Copenhagen
and the mainland) from the mid-nineties seems to be stabilised now to a lower number of
passengers, oscillating between 8 and 9 million passengers per year (see Table 2).
No statistics on number of passengers are available for EFTA countries.

8
Table 2: Cabotage transport of passengers
Total Passengers (in millions)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
BE - - - - - - - - - -
BG - - - - - - - - - -
CY 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
DE - - - - - - - - - -
DK* 8.4 8.7 8.9 8.9 8.8 9.1 8.9 8.7 8.3 8.2
EE - - - - - - 2.0 2.0 1.9 1.8
EL 50 60 55 66 75 74 76 76 61 52
ES 16.6 16.0 17.0 18.5 18.3 19.4 20.1 19.7 18.4 18.2
FI 0.6 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
FR* 5.0 5.0 4.5 3.7 4.0 4.2 4.5 4.8 - -
IE - - - - - - 0.4 0.4 0.5 0.5
IT 34.4 35.9 32.4 36.9 36.4 42.2 41.0 37.3 38.9 39.0
LT - - - - - - - - - -
LV - - - - - - - - -
MT 3.1 3.3 3.4 3.5 3.5 3.6 3.8 3.4 3.8 4.0
NL - - - - - - - - - -
PL - - - - - - - - - -
PT* 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.3
RO - - - - - - - - - -
SE 1.3 1.4 1.4 1.5 1.5 1.5 1.6 1.5 1.6 1.7
SI - - - - - - - - - -
UK* 4.0 4.2 4.1 3.7 3.2 3.1 3.3 3.1 3.0 3.1
* Source: Eurostat. Data collected by Eurostat include information for ports handling more
than 200 000 passengers annually.
2.2. Respective market shares of the first and second registers
The first register is dominant in the cabotage of passengers. Only Spain and Portugal, which
allow cabotage of passengers by vessels registered in their second registers, record minor
participation of such vessels.
The role of second registers tends to increase in the cabotage of goods. In Italy, further to
relaxing the conditions of access to cabotage of vessels registered in the Italian International
Register a considerable increase of participation of those vessels in cargo cabotage could be
recorded. According to the Italian authorities this trend is likely to continue in the near future.
2.3. Foreign flag penetration
The presence of non-national vessels is most visible in the cabotage of goods. In Finland, the
presence of non-Finnish EEA flags has increased from 25% in 2001 to 36% in 2005 and 47%
in 2010. In Italy, the presence of non-Italian EEA flagged vessels has increased in cargo
transport in mainland cabotage from approximately 43% in 2001 to almost 47% in 2009. In
Germany, on average more than half of the total cargo is transported by non-German EEA
vessels: in 2002 this share represented 52%, in 2010 it has risen to almost 56%.
The predominance of national flags remains considerable in respect to passengers' cabotage,
with a special case of Greece where the quasi totality of the market corresponds to national
flag vessels (out of about 300 ships operating passenger cabotage only 4 are non-Greek
flagged, but Greek owned).
9
The available data is presented in Table 6 of the Commission Staff Working Document
accompanying the present report.

3. EMPLOYMENT
The available information on employment in maritime cabotage is very scarce.
In Finland and Portugal a slight decrease in the number of persons employed in maritime
cabotage has been recorded in 2005 (in Finland a decrease from 1.697 in 2000 to 1.562 in
2005, in Portugal from 167 in 2000 to 149 in 2005)18.
In Spain, the number of seafarers on Spanish flag cabotage vessels has decreased by 49.5%,
from 5.350 in 2001 to 2.649 in 2010, mainly due to the reduction in the number of ships
(small cabotage vessels have been replaced by lower number of modern ships with higher
tonnage).
In Malta, the employment in maritime cabotage sector records 240 persons (including
seafarers) and according to the Maltese authorities has a significant growth potential. It is
estimated that a further 500 persons are to be employed in next years.

4. CONSULTATION
In 2009 and 2012 the Commission consulted the maritime administrations of Member States
and other interested parties19 with a view to assessing the impact of the Regulation.
This consultation proved that the cabotage market is very heterogeneous across the EU. The
submissions received in the framework of this consultation showed that the Regulation seems
to respect this diversity and the demo-geographic specificities of Member States.
It appears that abolishing barriers in access to cabotage markets has not led to any significant
increase in the number of shipowners interested in providing cabotage services. This might be
linked to the inherent features of the cabotage market, which, with a few exceptions of routes
of very high commercial interest20, consists in rather small passenger traffics and limited
cargo volumes. Furthermore, the geographical position often does not give any advantage to
maritime services compared to land transport, for instance by requiring specific technical
features of the ships (e.g. ships sailing in the northern Europe often need to have an ice class).
Moreover, it should be noted that some shipowning companies ensure their presence on
cabotage markets of other Member States by acquiring the shares in national shipowning
companies21 rather than by physically deploying the cabotage services.

18
Source: Consultrans.
19
Conference of Peripheral Maritime Regions (CRPM), European Community Shipowners' Association
(ECSA), European Sea Ports Organisation (ESPO) and European Transport Workers' Federation (ETF)
contributed to this report.
20
E.g. the cabotage transport between mainland France and Corsica, originally provided only by SCNM,
has attracted other shipowners: Corsica Ferries and in 2010 Moby Lines.
21
E.g. in 2008 the Italian shipowning company Grimaldi Compagnia di Navigazione SpA acquired an
additional share in the Greek Minoan Lines S.A. and thus became its biggest shareholder.

10
The received submissions highlighted that the Regulation succeeded in providing a legal
framework for public service contracts (PSC) and public service obligations (PSO) and has
contributed to achieving more transparency in their attribution.
Several submissions emphasised that provisions of the Regulation in respect to PSO and PSC
enable public authorities to negotiate with shipowners in a position of relative strength, and
give the administrations an element of control over the level of fares. This general
appreciation needs however to be mitigated by examples of transport to islands representing
low commercial interest. According to the Greek maritime administration, the lack of
effective competition on some lines appears to have led in Greece to higher costs to
compensate for discharging public service.22
The consultation revealed that the derogation provided in Article 3(2) of the Regulation
allowing the application of the host State rules in respect to matters relating to manning is of
significant importance to several Member States. The submissions highlighted that this
derogation guarantees equal conditions of competition. However, the Commission became
aware that the lack of an easy access by the shipowners to the legislation of the host country
on manning requirements could be a barrier for further development of island cabotage.
Finally, some respondents to the consultation indicated that the opening of the cabotage
market on the commercial routes has in some cases accelerated the modernisation of the fleets
and contributed to improving the quality of services on offer.

5. CONCLUSIONS
5.1. The impact of liberalisation
Almost all cabotage services in the EU have been liberalised from 1 January 1999. The Greek
market, which was the last to be partly protected, has been opened up since 1 November 2002.
Until 2007, the maritime cabotage market was generally stable, recording a continuous
increase in volumes of goods and numbers of passengers transported in several countries.
Since 2008 it has experienced a considerable decline, due to the impact of the economic crisis.
As in previous years, the greatest market for cargo traffic is that of the United Kingdom,
followed by that of Spain and Italy. Liquid bulk continues to lead in terms of cargo
transported.
Regarding passengers, Greece has the greatest traffic, followed by Italy.
The penetration of the national markets by vessels flying non-national flags has increased in
the cabotage of cargo, while it remains limited in the cabotage of passengers.
It is apparent from the consultations conducted by the Commission that the liberalisation has
had an overall modest but positive impact leading in some Member States to the
modernisation of national fleets which have been faced with the increased risk of competition.
5.2. Further actions
Following the consultations of 2009 and 2012 mentioned in section 4 of this report, and
drawing on the experience gained during several years of application of the Regulation the
Commission believes that the Regulation is fit for its purpose and does not require revision.
22
In Greece, public financing for the coverage of public service obligations reached 24 million € before
the implementation of the Regulation, in contrast to more than 100 million € for the years 2009 up to 2011,
constituting an increase of more than 400% on a yearly basis, when compared with 2000.

11
However, the Commission recognises that several questions raised in the submissions witness
problems of interpretation and implementation. Therefore, the Commission has addressed
these issues in its new interpretative communication on maritime cabotage.23
Given that the available statistical information on maritime cabotage has become scarce and
as the liberalisation has now been completed and the market is stabilised, the Commission
proposes to report on the economic and legal progress of liberalisation only in the case of
significant developments in this field and in any case not later than by 2018, in order to fully
assess the impact of liberalisation of maritime cabotage in Croatia, which benefits from the
temporary derogation from certain provisions of the Regulation until 31 December 2014.

23
See footnote 9.

12