Impact of the EU Mobility Package

The EU Mobility Package, which came into force in 2021, has placed significant pressure on the Lithuanian transport sector, leading to increased operating costs and reduced competitiveness. One of the most burdensome requirements is the mandatory return of drivers to the company base or place of residence every 4 weeks, as well as the mandatory return of trucks to the country of registration. This leads to additional, often empty, mileage (e.g., 1,600 km just through Poland), which significantly increases costs.

Changes in salary calculation have also significantly affected companies' financial standing. The prohibition on including daily allowances and accommodation expenses in the minimum wage leads to a sharp increase in driver labor costs, sometimes up to 60% in this item alone. Overall costs for carriers, depending on the type of transport performed, can increase by 20-100%. All surveyed companies confirmed that the "Mobility Package" exacerbated the driver shortage problem, as the mandatory return of trucks means that fewer of them can undertake freight trips, which, in turn, creates additional demand for new heavy trucks.

In response to these challenges, hundreds of Lithuanian transport companies (over 800 companies with 8,000 vehicles) have opened subsidiaries outside Lithuania, predominantly in Poland (700 companies with 7,000 trucks), as well as in Germany, Denmark, the Netherlands, and Belgium. This allows them to protect themselves from the consequences of the "Mobility Package" and take advantage of a more favorable tax and regulatory climate, as well as more flexible conditions for hiring drivers from third countries. This trend leads to a significant loss of revenue for the Lithuanian state budget, as the transport sector generates up to 13% of GDP.

The problems associated with the "Mobility Package," driver shortages, and the relocation of businesses abroad represent not just a set of individual challenges, but a single systemic crisis undermining the economic foundation of the sector. The "Mobility Package" directly increases operating costs and logistical complexities, which, in turn, exacerbates the driver shortage, as companies are forced to seek more flexible hiring conditions and more attractive tax environments. The result is a massive transfer of operations to neighboring countries, leading to a loss of tax revenue for Lithuania and a decrease in investment in its own fleet. This requires comprehensive strategic intervention from the state to stop the "leakage" of transport capital and restore the sector's competitiveness in the domestic market.

Infrastructure Limitations

One of the most pressing problems is the lack of safe parking spaces for trucks. In Lithuania, as in other European countries, there is a severe shortage of adequate and safe parking spaces along major transport corridors, such as highways A1 and A2. This forces drivers to park in unguarded or unauthorized locations, which jeopardizes the safety of cargo and the personal safety of drivers. More than 60% of companies frequently experience trailer thefts in parking lots, and 10% — very frequently. According to IRU data, only 3% of existing parking spaces in the EU are certified as safe.

There are also problems with road quality and inefficient use of funds. In 2023, up to 60% of paved state roads were in poor or very poor condition. At the same time, a significant portion of funds (39%) was directed to paving gravel roads with low traffic intensity (an average of 500 vehicles per day), while major highways (12,000 vehicles per day) remained in poor condition. Cases of work being carried out on roads in good condition, a lack of road condition assessment, as well as delays and non-fulfillment of planned work are noted.

Large infrastructure projects, such as Rail Baltica, designed to improve rail connections with Europe, face delays. These delays are often due to lengthy public procurement processes and a shortage of design resources, for example, high-speed rail design experts. This slows down the development of multimodal transport, which is a strategic direction for Lithuania.

There is a significant gap between the government's stated strategic goals in infrastructure and their effective implementation on the ground. The Ministry of Transport and Communications has clear goals for infrastructure modernization, multimodal transport development, and the creation of modern logistics centers. However, reality shows serious systemic problems with road quality, an acute shortage of safe parking, and delays in major projects due to bureaucracy and a lack of resources. This gap undermines the sector's competitiveness, increases operating costs for carriers (vehicle wear and tear, repair costs, insurance), reduces the safety of drivers and cargo, and also makes the driver profession less attractive. The problem lies not only in insufficient funding but also in management, planning, quality control, and overcoming bureaucratic barriers.

Economic Pressure and Competition

The Lithuanian transport sector is under significant economic pressure. In 2024, 134 bankruptcies were registered in the Lithuanian transport and logistics sector, which is 74% more than in 2023 and 35.4% more than in 2022. Unlike other sectors, transport has not yet shown signs of recovery. Investments in fixed assets, especially in transport equipment, decreased by 1.1% in 2024, which is explained by the oversupply of logistics services in Europe.

Rising costs and declining productivity also affect competitiveness. Nominal labor costs have grown by more than 40% since 2021, while real productivity has declined by almost 5%. This weakens Lithuania's international competitiveness. The average salary grew by 10.2% in 2024 and is expected to increase by 9.2% in 2025. Despite rising costs (salaries, fuel, new diesel and CO2 taxes), freight rates remain unstable, and transport companies find it difficult to pass on increased costs to customers.

Geopolitical factors also have a significant impact. Lithuania, being in close proximity to Russia and Belarus, is particularly vulnerable to external shocks. Rising energy prices after Russia's invasion of Ukraine led to a sharp rise in inflation. Relations with China have also become complicated, leading to a suspension of imports and exports.

The analysis shows a strong dependence of the Lithuanian transport sector on the state of the broader European market. The decline in investment in transport equipment in 2024 was caused by an "oversupply of logistics services in Europe." The European road transport market was sluggish, and the number of bankruptcies in Lithuania correlates with the truck mileage index in Germany, which fell to a minimum. This demonstrates that even with improved domestic conditions, external conjunctures (e.g., reduced demand in major EU trading partners, overcapacity in the European market) can limit growth and profitability. This means that Lithuanian companies need not only to solve internal problems but also to increase their resilience and competitiveness at the European level, possibly through specialization, innovation, or diversification of transport geography.

Environmental Requirements and Sustainable Development

The transport sector faces growing environmental requirements. The European Union has introduced strict rules for reducing emissions as part of the "Green Deal," which provides for a 90% reduction in emissions by 2050. The transition to zero emissions requires significant investment in eco-friendly vehicles and appropriate infrastructure, such as charging stations for electric vehicles.

There is a gap between awareness and action: although 69% of Lithuanian companies invest in combating climate change, the proportion of companies taking action to increase resilience to climate change remains relatively low (less than 50%). Progress in the transition to a circular economy also remains slow, despite government commitments. Product use indicators in Lithuania were three times lower than the EU average in 2021.

III. Solutions to Problems and Prospects for Sector Development

To overcome current challenges and ensure sustainable growth, the Lithuanian transport sector is actively seeking and implementing various solutions.

Attracting and Retaining Drivers

Companies are focused on improving working conditions and increasing the attractiveness of the profession. They offer competitive salaries and bonuses, health insurance, pension plans, and paid leave. Flexible schedules, guarantees of home time, and improved rest areas at parking lots are also being introduced.

Training and career development programs are of great importance. Opportunities for promotion (e.g., to fleet managers, dispatchers, safety instructors), mentorship programs, and continuous professional development are provided.

Simplifying the hiring of foreign specialists is a key direction. The Linava Association urges the government to simplify the hiring of drivers from third countries, pointing to the need to abolish quotas and the 1.65 coefficient when calculating salaries. Large companies, such as Girteka, are creating their own driving academies outside the EU (e.g., in Uzbekistan) to ensure an influx of qualified personnel, conducting comprehensive test drives and practical assessments. To attract new talent, especially women (who account for only 0.5% of drivers in Lithuania) and young people (although Lithuania leads in the share of young drivers under 25 – 10.9%), it is necessary to reduce barriers to entry into the profession and improve working conditions.

Infrastructure Modernization

The strategic development of a multimodal transport system and the creation of modern logistics centers ("freight villages") is a priority for the Lithuanian government to ensure effective interconnection between different modes of transport. The Rail Baltica project, which aims to improve rail links with Europe, continues to be implemented. However, it is necessary to solve problems with inefficient use of funds for road construction and improve road quality, as well as optimize planning and control processes.

It is extremely important to increase the number of safe and well-equipped parking spaces for trucks with the necessary infrastructure (showers, toilets, food, safe sleeping areas) to ensure the safety of drivers and cargo, as well as improve rest conditions. The introduction of parking space reservation systems is also a step in the right direction to improve logistics efficiency.

Digitalization and Innovation

The introduction of digital platforms is one of the key directions. Digital freight platforms, such as marketplaces, transport management systems (TMS), and freight exchanges, automate booking, provide real-time cargo tracking, offer dynamic pricing, and forecast routes and traffic jams. This leads to a reduction in empty mileage and CO2 emissions.

The use of advanced technologies, including the Internet of Things (IoT), digital twins, and artificial intelligence (AI), is actively applied to improve operational efficiency, monitor the performance of transport systems, and optimize routes, especially in urban logistics. The Lithuanian transport sector attracts significant venture investments (€23.2 million in 2024), which indicates the potential for technological growth and innovation. The transition to paperless document management, in particular the implementation of global standards such as e-CMR for digital exchange of waybills, customs, and permits, is an urgent need to increase the efficiency of cross-border transport.

Government Support and Regulation

The government needs to create a more favorable tax and regulatory climate by reviewing tax policy and the conditions for hiring drivers from third countries. This will help stop the outflow of companies abroad and restore competitiveness, given that Lithuanian firms negatively assess the political and regulatory climate. Lithuania must continue to adapt to EU requirements while supporting the export of transport services, which is an important part of the economy, and promoting the development of the fintech sector, which is one of the leaders in Europe.

The government actively supports decarbonization initiatives, including the expansion of infrastructure for charging electric vehicles (60,000 points planned by 2030) and the electrification of railways, as well as promoting the transition to a circular economy.

Business Adaptation Strategies

Companies demonstrate examples of successful adaptation through service diversification. For example, BTR Logistics specializes in niche areas such as agriculture, livestock, and electronics, offering comprehensive logistics solutions that take into account the specific requirements for handling and transporting sensitive goods.

Increased operational efficiency is achieved through investments in modern fleets, route optimization, and the use of advanced management systems to reduce costs and increase productivity. A focus on sustainability and innovation is also an important direction: companies adopt eco-oriented solutions (eco-vehicles, waste reduction) and integrate digital technologies to reduce environmental impact and increase competitiveness.

Table 3: Overview of Key Problems and Proposed Solutions in the Lithuanian Transport Sector

Conclusion

The Lithuanian freight transport business segment is experiencing dynamic development, showing impressive growth in transportation volumes, especially within the automotive sector. However, this growth comes with a series of deep and interconnected challenges. The driver shortage, exacerbated by regulatory changes from the "Mobility Package" and restrictive immigration policies, is leading to a significant outflow of companies and capital abroad. Infrastructure deficiencies, such as a lack of safe parking spaces and issues with road quality, create operational costs and safety threats. Economic pressure, manifested in rising costs, declining investments, and bankruptcies, as well as a strong dependence on the European market situation, demand increased adaptability from companies.

To ensure the long-term sustainability and competitiveness of the sector, a comprehensive approach is essential. Improving working conditions and simplifying driver recruitment, modernizing infrastructure, active digitalization and innovation, and creating a favorable state regulatory and tax climate are key directions. Business adaptation through service diversification and increased operational efficiency also plays a crucial role.

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