• Inland navigation is today at a crossroads, facing several influencing factors. These embrace water levels and hydraulicity issues, difficult macroeconomic conditions, i.e. slowdown in world trade, evolving sectoral, industrial and economic trends, the structural decline of carbon-related cargo and – most recently – the Covid-19 crisis. It is therefore essential to think about the development of new markets for inland waterway transport (IWT). This report will shed light on these opportunities, and on the drivers and barriers related to them.
  • A new market can be described as a branch where inland navigation is either not yet present or in an early stage of development and could be considered in the coming years as a suitable transport solution. However, existing markets also see innovative changes and are showing growth potential, for instance in light of energy transition and the sustainability pressure.
  • To develop this report, qualitative and quantitative research was carried out. Within the more quantitative part, desk research was used to analyse new markets for IWT that show growth potentials. This part entailed also the analysis of statistical data on the development of these new markets. Within the more qualitative part, interviews with relevant experts and actors from different sectors (logistics in general, IWT, ports, science and universities) were carried out, in order to gain further insight into the suitability of these new markets for IWT. This approach has led to the identification of three main pillars for IWT development.
  • These include urban logistics, new cargo flows triggered by energy transition (transport of alternative energies, e.g. biomass and biofuel, hydrogen, components such as wind turbines) as well as the circular economy and transport of waste. These three fields are interrelated and partly overlap. An example would be the transport of household waste in an urban agglomeration which would then be recycled to serve as a new energy which would again be transported on an inland vessel. This case would apply to all the three fields simultaneously.
  •  

     

  • Those three pillars show promising potential for IWT development. Another market that could be a growing segment in IWT in the future is the short distance container transport.1
  • For each of the three pillars, the report will present real-world examples or projects where inland waterway transport is already involved. In addition to that, some interesting research or pilot projects that test the integration of IWT in innovative urban waterway transport will be presented. It is worth noting that the projects presented in this report should not be considered as an exhaustive list. A more detailed annex with additional relevant projects is also available. The report will also highlight the barriers and drivers for the development of new markets in IWT.

 
 

EXISTING MARKETS FOR INLAND WATERWAY TRANSPORT – STATE OF PLAY2

  • Before embarking on an analysis of these identified pillars and related new markets, it is necessary to summarise the current state of the most relevant markets for IWT to understand where or where not to expect more growth. This endeavour will help to understand the need for new markets. The three main cargo segments in IWT embrace dry cargo, liquid cargo as well as container transport. In its present structure, IWT rather relies on traditional market segments. The future trend developments differ within the three main categories. Passenger transport (ferry transport, other public waterway transport, day trips, river cruises) is also an important component of IWT transport which, while having suffered greatly from the Covid-19 crisis, has seen positive demand trends in the past decades.
  • Overall, it is seen that the energy transition will have an important effect on freight volumes in inland navigation. This concerns coal in particular. Liquid mineral oil products will continue to be an important component of the energy sector and of inland navigation for the next decade, but a gradual decline is underway. For chemicals, the outlook is far more positive. Regarding foodstuffs, it is expected that a certain reduction of emission intensive livestock activities, combined with a change in consumer habits, will influence the transport of feedstuff. The more trade-related cargo segments (in particular container transport) will be influenced by structural slowdowns in world trade. A more detailed analysis per market segment is provided in this chapter.
  •  

    DRY CARGO

    • The dry cargo segment accounts for 59.8% of IWT volume in EU-27 in 2020 and can be further sub-categorised into five segments:
    •  
      Agricultural products

      • Agricultural and food products currently have a share of around 9% of goods transport on the Rhine and around 16% of goods transport on the Danube. Agricultural products show strong correlation with harvest results, a correlation that dominates the volumes transported each year. Bad harvest results lead to a decrease in volumes transported, good harvest results increase transport volumes. IWT seems to be a preferred mode of transport for long-distance transport of agricultural goods.

       
      Feedstuff and food products

      • In western Europe, densely populated areas such as the Netherlands and Belgium are experiencing problems with high nitrogen emissions, due to intensive livestock activities. Political pressure to reduce these emisisons could lead to a reduction of these activities in western Europe. Additional influencing factors for this trend stem from a change in consumer habits towards less meat consumption. In the case of a reduction of livestock activities in western Europe, a shift of these activities to other parts of Europe (eastern Europe) or to overseas countries (South America) is likely.
      • In both cases, food products such as meat would then need to be imported, which would create transport activities. The case whereby these products are transported by inland vessels, however, is not very likely. The feedstuff needed for feeding cattle (livestock activities) would no longer be transported in the same volumes in western Europe, which would reduce transport demand, also on inland waterways. Therefore, the current trends in this sector point to a reduction of feedstuff transport in the future in western Europe.
      • A completely different market is the transport of food products in cities, which is beginning to develop, and which will be dealt with in this report as a new market in IWT, and illustrated by some successful projects (e.g. in Paris and Ghent).

       
      Iron ore, steel and metals

      • Iron ore, steel and metals represent an important segment for inland navigation. For the Rhine their share accounts to 25% of total goods transported and for the Danube, the share reaches even around half of total goods transported.
      • For western Europe, the transport demand outlook for iron ore is not growth orientated, due to a high environmental pressure to reduce emission intensive steel manufacturing processes for which iron ore and coaking coal are needed as raw materials. Iron ore transport is also very vulnerable to macroeconomic fluctuations and a reduction of world trade, as steel production reaction is very sensitive to these factors. This was once again shown during the Covid-19 crisis.
      • Apart from these environmental and cyclical factors, iron ore and steel demand seem to be more saturated in western Europe than in eastern Europe. This last point is related to long-term economic catch-up mechanisms in eastern Europe. For the Danube region, these catch-up mechanisms contribute to a more growth-oriented outlook for steel and iron ore.3
      •  

      Sand, stones, gravel and building materials

      • A main positive trend is captured in the segment of sands, stones, gravel and building materials, possibly more pronounced in western Europe than in eastern Europe. This consists in a growing activity in the housing market, in parallel with demographic growth. The last-mentioned factor divides western Europe, where demographic projections are positive (in particular in France, the Netherlands and Belgium) from eastern Europe, where they are more orientated towards stagnation or even a decrease.
      • For western Europe, a concentration on larger waterways (consolidation process) is likely to take place, in parallel with a concentration on larger production sites within the construction sector itself. In the coming years, in western Europe, large volumes of sand and gravel are expected to come on the market as a result of dredging and the great need of materials for dike reinforcement. Untapped potentials lie in the urban inland waterway transport and transport of construction materials to construction sites. This urban transport of building materials is one example of a new market in IWT. Therefore, this market segment comprises both traditional long-distance transport as well as new urban short-distance transport.
      •  

      Coal

      • Coal faces an almost complete phase- out in western Europe, as far as steam coal (hard coal used in the energy sector) is concerned. The reason is the energy transition in the major IWT countries in western Europe. Indeed, among other measures, with the exit from coal, governments aim to reach the goals of the Paris Agreement of the United Nations, adopted by 196 parties on 12 December 2015 and which entered into force on 4 November 2016.4 In Germany, for instance, the government decided on a gradual exit from hard coal until 2035 and lignite until 2038.5 For coal transport in IWT, only hard coal is relevant as lignite is not transported on inland waterways.
      • Figure 1 shows the decrease in coal transport in the EU-27 that started in 2015. Around 90% of the series ‘Coal and lignite, crude petroleum and natural gas’ concerns hard coal, as neither lignite, nor crude petroleum or natural gas are transported on inland waterways in large quantities. And within this amount of hard coal barge transport in the EU (27.4 million tonnes in 2019), 84.8% was transported on German inland waterways (23.3 million tonnes). One could also mention that coal transport by inland vessel is even higher in the Netherlands (25.3 million tonnes in 2019) than in Germany, but these similarly high numbers reflect the fact that coal is transported from the Amsterdam-Rotterdam-Antwerp (ARA) seaports in the Netherlands to Germany, for providing coal fired power plants and the steel industry with raw materials.
      • The amount of 27.4 million tonnes of hard coal barge transport in the EU does not contain coking coal or coke (2.5 million tonnes in 2019). The entire coal volume on EU inland waterways is therefore around 30 million tonnes per year. The coal transport by inland vessels in Germany represents around 84% of total coal transport by inland vessels in the EU.
      •  

        FIGURE 1: TRANSPORT OF FOSSIL FUELS BY IWW IN THE EU 27 BETWEEN 2008-2020 (MILLION TONNES)

        Chart by Visualizer

        Source: Eurostat [iww_go_atygo]
         

      • However, hard coal is at the beginning of a phasing-out process in the energy sector in Germany. Figure 2 shows the planned reduction of power plant capacities for hard coal (in GigaWatt) in Germany. The first power plants were taken off the grid in 2020, and already by the end of 2024, the original power plant capacities will have been halved. Based on this series, a complete phase-out of steam coal transport on German inland waterways can be expected by 2036.
      • Steam coal is the type of coal used in the energy sector, while coking coal or coke is the type of coal used in the steel industry. Based on the Eurostat data, the large majority of hard coal transport in the EU would be steam coal (27.4 million tonnes), and only a small fraction would be coking coal (2.5 million tonnes). However, evidence about the use of coal in Germany points to a much higher share of coal used for steel manufacturing (according to coal import statistics, coal used for steel production accounts for at least 50% in Germany). The classification within the Eurostat NST 2007 system might not reflect this pattern entirely.
      •  

        FIGURE 2: REDUCTION OF POWER PLANT CAPACITIES FOR HARD COAL IN GERMANY (GIGAWATT)

        Chart by Visualizer

        Source: Bundesministerium für Umwelt, Naturschutz und nukleare Sicherheit
         

      • At present, the Danube area is less affected by the energy transition, as it is progressing at a slower pace in this region. However, it is expected that all IWT regions will be impacted by the energy transition developments in the near future.
      • The series ‘Coke and refined petroleum products’ will be discussed in the next part on liquid cargo. It has to be clarified that this NST 2007 group contains mainly refined petroleum products (share of 97%), while coking coal is represented only marginally in this series with 3%.

       
      Liquid cargo (chemicals and petroleum products)

      • Volumes of liquid cargo account for 28.1% of the IWW transport volume in EU-27. A main distinction must be made between chemicals and refined petroleum products. On the Rhine, the share of petroleum products is very high with 17.3% of total cargo transport in 2020, and 27.6 million tonnes in absolute numbers, forming the largest cargo segment on this most important inland waterway in Europe. Petroleum products are also very important for IWT volumes in Belgium and the Netherlands.
      • Although petroleum products such as gasoil/diesel, gasoline and kerosine are still expected to be part of a propulsion mix in the next decade, there are no growth prospects, and a gradual decline is assumed, possibly reaching near zero by 2050. Indeed, the long-term vision of “a zero GHG emissions inland navigation sector by 2050” is a shared political goal at various levels.6 Electrification of the transport sector, which makes petroleum products gradually redundant, acts as another influencing factor that puts pressure on liquid cargo volumes in IWT.
      • For chemicals, a far more growth-oriented development is expected. IWT is the preferred mode of transport in the chemical industry, and chemical production itself has overall more growth prospects in Europe than mineral oil production.
      • Petroleum products have lost some transport performance in recent years (mainly due to low waters and the Covid-19 crisis), but there was no real downward trend so far in this segment (see figure 1, series ‘Coke and refined petroleum products’). However, a significant drop in this segment would prevail in the case of a major electrification of road transport. The reason is that liquid fossil fuels used in the road transport sector, together with heating oil, form the backbone of the petroleum products transport in IWT.
      • Electrification of the European transport sector is still in an early phase, allowing the IWT sector to adapt and explore new market opportunities. For instance, in 2019, the share of electric cars within the total number of new registered cars was 1.6% in Germany, 1.0% in France, 0.8% in Belgium, 11.4% in the Netherlands and 2.1% in Switzerland.7 For Germany, national figures for 2020 (for other countries, Eurostat figures were not yet available for 2020) point to a strong increase of this share up to 6.6%.8
      • According to these national data, a major absolute increase of newly registered electric cars can be observed in Germany in 2020 (194,163 units) representing a major uptake compared to 2019 (63,281 units). However, this number is very low compared to the stock of cars (47.716 million units in 2020) in this country, of which the vast majority is still propelled by liquid fossil fuels.
      • Also in Europe overall, new registrations of electric cars have shown strong increases both in absolute and relative terms. According to the European Alternative Fuels Observatory (eafo), new registrations of electric cars in 2021 amounted to 16% of all newly registered cars, whereas the value for 2020 was far below at only 10.5% and 3.0% in 2019.9
      • Altogether, the very recent uptake in electric cars registration can explain why liquid petroleum products has not experienced any clear structural downward trend within inland waterway transport to date. However, electrification of the transport sector is currently gaining momentum, also underlined by a further rise in the share of new electric cars in the first seven months of 2021 (reaching 10.7% of all new registered cars) in Germany.10 The trend in Germany is of high relevance, as the Rhine market represents – together with the ARA region market – the core region of the liquid cargo transport in Europe.

       
      Container

      • Container transport accounts for 12.1% of IWW transport volumes in the EU-27. Already before the Covid pandemic in 2020, the world trade of goods slowed down, and this trend is expected to continue. The importance of global trade in goods is decreasing in trend terms, while trade in services is increasing. This structural change in trade can be explained by the following factors:11
        1) Shift of consumer demand away from tradeable goods to services in developed countries (dematerialisation).
        2) Growing incomes and wages in emerging market countries leading to less wage and cost differentials worldwide, and therefore to less incentives for worldwide trade of goods.
        3) Technical innovations such as 3-D printers reducing trade in goods further.
      • Further reasons taken from van Dorsser et al (2018)12 for the structural change in container throughput are:
        4) Declining population growth in Western Europe.
        5) The fraction Labour/ Population, i.e. the share of population contributing to economic output is decreasing, not only due to ageing populations but also due to the retirement of the baby boom generation. In addition to that, job losses linked to artificial intelligence put approximately 40-50% of jobs at risk.
        6) The growth rate of the fraction GDP/Labour decreases, which reflects a decreasing productivity growth, resulting from lower economies of scale in innovations. This trend affects technology frontier countries.
        7) Reverse globalisation (decreasing ratio Trade/GDP), i.e. a higher focus on local production.
        8) Containerisation coming to its saturation limits.
      • These tendencies would create more regional logistic and production chains and would certainly have negative effects on seaborne container transport, as around 90% of world trade in goods is carried out by seaborne trade. Furthermore, these trends would affect seaport hinterland container transport on inland waterways. This is because inland waterway container transport is strongly linked to maritime container transport. However, if container transport would be able to integrate more in regional and urban logistics chains, and if it would be possible to build up short-distance container transport, it would keep a higher growth rate overall.

     

    PASSENGER TRANSPORT

    • Passenger transport demand can be split into touristic activities and public transport activities. The latter also includes the traditional ferries, crossing waterways transversely in the form of floating bridges. This characteristic plays a crucial role in urban mobility. During the pandemic, the touristic passenger transport came to a complete halt. The relaxation of sanitary measures is expected to lead to a slow recovery in this market. It might take some years before the demand reaches its pre-crisis level.
    • Passenger transport in the form of public transport services, including ferries, on urban waterways can be considered as an important tool for making cities greener and more sustainable. The fact that urban passenger transport on waterways can be carried out by electric propulsion, given the limited distances in cities, is one major reason for its potential for making cities more environmentally friendly. At the same time, waterway transport reduces the overutilisation of roads and related negative effects (accidents, traffic jams in cities). Passenger transport in cities in the form of public transportation systems has huge potential, as the example of the waterbus in Brussels shows. The present report will focus only on public passenger transport in cities, not on touristic transport.
    •  
       

UNTAPPED POTENTIAL FOR INLAND WATERWAY TRANSPORT – MAIN DRIVERS

  • The following chapter will analyse the main trends that are expected to act as driving forces for urban mobility. As will be seen, the characteristics of inland navigation make it suitable as an alternative transport solution in urban areas in light of the current challenges that urban environments are facing. New markets in inland navigation can therefore emerge in light of climate policies favouring the decarbonisation of societies and insisting on more sustainable, resilient and future proof transport modes. IWT could therefore play a crucial role for making societies, in particular cities, more sustainable from an environmental and social point of view, resulting in new market opportunities. The social point of view refers to a reduction of accidents and noise by a modal shift from road to IWT, and a reduction of related negative externalities.
  •  

    SATURATION OF EXISTING TRANSPORT INFRASTRUCTURE IN CITIES

    • Nowadays, large agglomerations are facing important challenges at the demographic, economic and environmental levels. Currently, more than half of the world population lives in urban areas and this share will increase further in the future. The World Urbanisation Prospects of the United Nations Department of Economic and Social Affairs (see figure 3) projects that this percentage will increase to 68% by 2050. In the EU, urbanisation rates are among the highest in the world. Around 74% of the EU population already lives in urban areas. The share of urban population reaches for instance 98% in Belgium and 91% in the Netherlands, both countries being important for European IWT. Other relevant IWT countries such as France, Germany and Romania are projected to see a steady decrease in their rural population by 2050.
    •  

      FIGURE 3: SHARE OF URBAN AND RURAL POPULATIONS IN EUROPE BETWEEN 1950 AND 2050 (% OF TOTAL POPULATION)

      Chart by Visualizer

      Source: World urbanisation prospects – United Nations, Department of Economic and Social Affairs, Population Division (2018)
       

    • The demand for goods, of which cities are net importers, rises with the size of urban population. In parallel, the production of waste increases and solutions to remove such waste must be found. This also leads to an increase in the demand for transport infrastructure. For this reason, the EU is dedicated to promoting sustainable urban transport systems. Traffic congestion in cities is the cause of substantial economic loss, estimated to account for EUR 180 billion per year in terms of delay costs and about EUR 32 billion per year in terms of deadweight loss at EU-27 level.13 According to the Staff Working Document of the Smart and Sustainable Mobility Strategy, ‘[t]he delay cost gives a value of the travel time lost relative to a free-flow situation. The deadweight loss costs is the part of the delay costs which is regarded as a proper basis for transport pricing.’
    • Current transport systems are mainly based on fossil fuels and are therefore not sustainable in the long run, given the related negative externalities, scarcity of resources and energy dependence of the EU.14 Road transport is by far the dominant mode of transport and represents 76.3% of total inland freight transport (excluding pipelines) in the European Union, compared to 17.6% for rail transport and 6.1% for inland waterway transport. In some countries, IWT has a higher modal share than rail transport, such as in the Netherlands and in Belgium.
    • Changing habits among consumers places another strain on urban logistics. The rise of e-commerce and the necessity of ever faster and personalised deliveries incentivise the fragmentation of deliveries, leading to 23% of vehicles on the road travelling unloaded, according to a case study conducted in Austria.15 The increase in the number of vehicles is also linked to the phenomenon of logistics sprawl, whereby, due to high land costs in the urban perimeter, logistics operators prefer to move their sorting centres further and further away from the centre. These elements put additional pressure on environmental indicators in large agglomerations, as they lead to even more road transport.16 Innovative solutions for urban freight delivery are called for to avoid the negative impacts that this framework would cause either to the economy and to the environment.
    • Cities located near and around waterways could take advantage of their location to make deliveries of goods in specific sectors more efficient and less polluting, through an increased use of IWT solutions. Moreover, due to historical reasons, inland waterways are often located in the heart of city centres. This feature makes them a natural infrastructure suited to deliver transport services of different types (goods for shops, restaurants, hotel and accommodation, etc.) in areas that are more and more precluded to road transport.
    • Contrary to road freight, IWT is an unsaturated mode of transport, as it uses transport infrastructure with free capacities, and a safer mode of transport. The lack of congestion facilitates on-time deliveries and the overall efficiency of urban transport flows, while generating fewer accidents and fatalities and consequently reducing the related negative external costs (health treatment costs, societal costs due to fatalities).

     

    GREENHOUSE GAS AND POLLUTANT EMISSIONS OVERALL AND IN SELECTED CITIES

    • The transport and storage sector (NACE H) is responsible for approximately 15% of total greenhouse gas emissions in the EU and has not seen a significant decline in this respect as other polluting sectors, as shown in Figures 4 and 5.17
    •  

      FIGURE 4: GREENHOUSE GAS EMISSIONS – DEVELOPMENT AS INDEX IN THE EU-27 (INDEX 2008 = 100)

      Chart by Visualizer

      Source: CCNR elaboration based on Eurostat data [env_ac_ainah_r2]
       

      FIGURE 5: ABSOLUTE DEVELOPMENT AND STRUCTURE OF GREENHOUSE GAS EMISSIONS IN THE EU-27


      Source: CCNR elaboration on Eurostat data [env_ac_ainah_r2]
       

    • Alongside GHG emissions, air pollutant emissions are also very problematic. The very small particles, known as PM10, common air pollutants, are inhalable and can cause health problems. For this reason, the EU sets the limit that PM10 emissions in cities must not exceed 50 µg/m3(daily average concentration) on more than 35 days per year. Figure 6 shows the 36th highest PM10 emission value per year as average of a constant panel of air quality stations in each city18 for Amsterdam, Berlin and Brussels.19
    • In order to respect the threshold or emission limits set by the EU, the values in figure 6 should not be higher than 50 µg/m3. The values are almost always below this threshold. However, for Amsterdam and Berlin, the emission trend between 2016 and 2018 was slightly upward orientated. Figure 6 shows also that Berlin exceeded the emission limit in 2014.
    •  

      FIGURE 6: YEARLY DATA FOR THE 36TH HIGHEST PM10 EMISSION VALUE FOR PARTICULATE MATTER (< 10 µM) IN SELECTED EUROPEAN CITIES BETWEEN 2012 AND 2018 (µG/M3)

      Chart by Visualizer

      Source: European Environment Agency and CCNR analysis, average air pollutant concentrations for a panel of air quality measurement stations in each city
       

    • The PM10 data for Paris were not complete (missing values for certain measurement stations in certain years) and could not be shown on a representative basis.
    • NO2 is another important pollutant, affecting health and air quality in cities. Figure 7 shows the annual average concentrations of nitrogen dioxide (NO2) measured at the level of a panel of air quality stations in Amsterdam, Berlin, Brussels and Paris. In Paris, the average concentration of nitrogen dioxide was constantly above the limit set by the EU, which states that the annual mean concentration of NO2 should not exceed 40 µg/m3 on more than 35 days per year. Values near the emission limit are also observed for Berlin and Brussels.
    •  

      FIGURE 7: YEARLY DATA FOR THE 36TH HIGHEST EMISSION VALUE FOR NITROGEN DIOXIDE IN SELECTED EUROPEAN CITIES BETWEEN 2012 AND 2018 (µG/M3)

      Chart by Visualizer

      Source: European Environment Agency and CCNR analysis, average air pollutant concentrations for a panel of air quality measurement stations in each city
       

    • As would be expected, emission data collected by the European Environment Agency show that PM10 and NO2 levels tend to be much lower in rural areas, and on the outskirts of cities. This provides an incentive to focus efforts on reducing emissions in urban areas. Inland waterway transport – in the form of electrified urban water transport or using other clean propulsion methods – could help to reduce these emissions. The further use of low-emission vessels would be a positive contribution for enhancing air quality and reducing congestion in cities. The combination of both factors could result in growing market opportunities for IWT.
    •  

    RISING PRESSURE TO IMPROVE THE SUSTAINABILITY OF OUR ECONOMIES

    • Addressing climate change is a political priority for institutions at all levels (international, national, and local). Public policies aiming at an emission-free economy often highlight the relevance of sustainable transport solutions. Inland navigation should play a relevant role in this transition process. The European Green Deal (EGD) 2019 calls for 75% of inland freight transport to shift from road to rail and inland waterways. Main European cities are restricting access to specific areas for heavy-duty vehicles through low-emission zones. Public policies related to the energy transition are fundamental levers for the market development of IWT. While the energy transition of the IWT sector itself is out of the scope of this report, there is no doubt that the ‘greening’ of IWT could strengthen its position as a sustainable mode of transport – both from an environmental and an economic point of view.