Own-account Transport and Third-party Transport – What’s the Difference?

There are national laws and EU directives to distinguish between own-account and commercial third-party freight transport. And as is often the case with legislation, the devil is in the details. The question of when a transport is considered “own-account” and when “third-party” is not always answered at first glance. Our overview of the two types of transport and the respective EU regulation creates transparency.

Why Is There a Distinction Between Own-account Transport and Third-party Freight Transport?

Freight transport – or, more precisely, road freight transport in this context – is the transportation of freight or goods (as the name implies) from one point to another by means of a motor vehicle on the public road network. Thus, the term freight transport here refers only to road freight. Own-account transport is a subcategory of freight transport and also takes place on the road. It should be clear that own-account transport is different from intralogistics: intralogistics refers to the logistical flow of materials and goods within a company’s premises.

If trucks travel on roads for both third-party and own-account transport, why should there be a distinction between the two? The reason for this has to do with transport regulations and issues of official control and licensing of commercial transport using public infrastructure. Slightly different rules may apply in individual EU countries, but these must comply with EU Directive 1071/2009/EC on common rules for access to the international road haulage market.

Definition Third-party Road Freight Transport

Third-party transport (or road haulage) is the commercial transportation of goods by motor vehicles. According to national regulations, there are third-party transportation licenses for a gross vehicle weight up to 1.5 tons, 3.5 tons or exceeding 3.5 tons (in each case including trailers).

Usually, it is a service provider from the transport logistics sector who carries goods on behalf of a company: for example, from the production site to the distribution warehouse.

Definition Own-account Road Freight Transport

Own-account transport is road transport that is used exclusively for the internal purposes of a company. Own-account transport may only be carried out by the company’s own vehicles and, in most cases, by the company’s own personnel. Only goods that either belong to the company or are directly related to the company’s internal processes may be transported. And: Transportation must be an ancillary activity within the company’s operations.

Because of the final regulation on auxiliary activities, transport service providers are excluded as parties involved in own-account transport from the outset.

• The purpose of transport is the delivery of goods to the company or their dispatch from the company, as well as the transport of goods within the company; transport outside the company is considered own-account transport only if it serves the company’s own use of the goods.
• The vehicle in which the goods are being transported is either the property of the company or is rented for the purpose.
• The goods being transported must be the property of the company or have been manufactured, processed, or repaired by the company.
• Drivers are either vehicle owners, company employees, or temporary workers.

Difference Between Own-account and Third-party Road Freight

Depending on the country, the regulations for own-account transport may be very detailed. Thus, it can be difficult to distinguish between own-account and third-party transport. Is your own truck now being used for own-account transport or for third-party transport?

The answer is easy only if a company transports exclusively its own goods with its own personnel in its own vehicles. However, transportation to a construction site can also be considered own-account transport: e.g., when a construction company’s trucks transport materials or tools to the worksite where they are needed for its own activities.

To illustrate how complicated the distinction can be, consider an example from the waste management industry according to German legislation. The main issue here is the aspect of ancillary activity:

• If a waste management company collects waste from garbage cans and containers and then transports it to a landfill, this is considered third-party transport because the primary activity is to transport the waste on behalf of someone else (e.g. the municipality).
• If a waste management company transports the collected waste to its own premises for sorting and recycling, this is own-account transport. Here, the transport is only an ancillary activity, and the sorting and recycling is the core business.

Licensing and Insurance Aspects of Third-party and Own-Account Transport

Because the regulations can be confusing, and are critical to licensing and insurance issues, it is recommended that companies seek advice from a competent authority when in doubt.

Notification Requirement for Own-account Transport, Licensing for Third-party Transport

The licenses and specifications required to conduct commercial freight transportation may vary depending on the country or region in which you operate. In the EU, road freight providers must register with the national customs authority in their home country.

In the case of cross-border operations, the same rules apply to own-account and third-party transport, which are governed by EU Directive 1071/2009/EC. However, also in the case of international transport, only employees of the company may be involved as drivers.

Insurance Obligations Depend on the Type of Transport

There is no compulsory insurance for own-account transport in the EU. In some countries, however, it is mandatory to conclude a carrier’s responsibility insurance when operating for third parties. This professional liability insurance is also in the interest of the transport companies themselves – after all, they are transporting goods that do not belong to them.

The situation is different in the case of own-account transport, which usually involves the company’s own goods. Consequently, there are no liability issues related to the damage of the transported goods. Nonetheless, since the company’s own assets are at risk from damage during transportation, special insurance policies are available to cover damage to transported goods. Such voluntary own-account transport insurance is a matter of individual cost-benefit considerations.

A different type of insurance is the goods transport insurance for customers of forwarding services, about which we will soon inform you in Freight Connections. This insurance provides comprehensive coverage for transportation damages or losses beyond the limited liability of the carrier under the carrier’s responsibility insurance.