5. LESSONS LEARNT, OPPORTUNITIES AND OBSTACLES

CONSIDERATIONS REGARDING URBAN WATERWAY TRANSPORT

POTENTIALS

• IWT offers potential for urban logistics as shown by the number of existing projects and those under development. Several projects are operational, showing that inland waterway transport in urban areas can be an economically viable activity under specific circumstances, despite the competitive pressure from road transport. Wiegmans and Konings (2016) had already shed light on the potential of IWT in urban contexts.¹²⁰
  Of course, one of the main pre-conditions for IWT to be considered as part of the urban logistics/passenger transport chain is the location of the waterway, which must be close/flowing through urban centres. This might be the case in most cities, but not in all.
• It seems that specific market segments are suitable for IWW transport in cities, namely, transport of passengers (touristic and commuting activities), parcels, building material, food and retail products as well as waste.¹²¹
  France, Belgium and the Netherlands appear as the countries where urban transport using waterways has developed the most. Another interesting element is that such transport solutions seem to be viable in very large cities (as shown by projects in Paris or Amsterdam) but also in medium-size cities such as Lyon or Lille. An advantage of inland navigation is that it can transport such goods in different forms (pallets, bulk, barrels, containers).
• The fact that IWT enables the reduction of congestion on roads as well as other negative externalities, in particular accidents, thereby addressing safety and environmental challenges, are without doubt essential factors for a potential scale-up.
• Combining low emission inland vessels – for example fully electric or vessels with hybrid propulsion – with an environmentally friendly last-mile transport mode (e.g. bicycles or electric trucks) creates an efficient, clean, and sustainable urban transport system. Several projects already in operation demonstrate that this can be possible.
• Other technological developments, in particular automation and digitalisation, could also play in favour of IWT in urban centres, in particular from a cost perspective (reduced labour costs when sailing during transshipment).
• Public policy plays an important role for the development of IWT in urban centres. For instance, with regard to the transport of building material, IWT can be encouraged by integrating specific clauses in government tenders relating to the construction of important public projects as is the case with the Grand Paris Express project. Similarly, some European cities are restricting access to specific areas for heavy-duty vehicles through low-emission zones which can be a lever for the development of IWT.
• However, there are remaining obstacles to be overcome to allow the full potential to unfold. The following paragraphs aim to shed light on these aspects. Obstacles range from regulatory barriers up to a traditionally biased mindset of stakeholders without excluding stricto sensu economic factors.

 

OBSTACLE 1: REGULATION AND ADMINISTRATIVE COSTS




• Regulation tends to lag behind innovative solutions. An example lies within the autonomous sailing on waterways in city centres. No regulation has yet given the green light even on trials on public waterways without at least one skipper onboard. In Belgium, a decree was passed in 2019 that can give temporary exemptions in testing innovative solutions in this regard.¹²²
• Competences and processes for permission often go hand in hand with immense administrative costs and time. As start-ups might not have those capacities in terms of time and human resources, promising projects might be slowed down or even halted. For this issue, the platform Interlud in France helps to consult and harmonise agreements between various stakeholders and institutions from cities to agglomerations or counties.
• Vessels face costs for docking stations, ports’ admissions and other permissions for navigation from which road transport is mainly relieved. Hence, regulations in this regard are not favourable to IWT compared to road transport, and thus do not provide equal opportunities for the different modes of transports.

 

OBSTACLE 2: ECONOMIC VIABILITY




• The economic viability of urban freight transport is difficult to assess in a global or even quantitative way, as each project is embedded in its own market environment and has its own specific conditions, operational areas, vessel capacities, turnaround times, competitors and other framework conditions.
• It can be observed that many pilot projects or even projects that are already in operation received public subsidies, in particular in the event of investing in a vessel with better emission performance (i.e. in the case of urban transport, generally operating with batteries). It will be relevant to assess in a few years whether such public supported projects have been able to maintain a viable business case even without public support.
• In general, it is observed that many existing and economically viable projects are operating with personnel. However, when it comes to pilot and research projects, stakeholder interviews often revealed the aim of developing urban freight projects with no personnel onboard (automation). As a reason, high staff costs were put forward.
• However, automation still requires in certain cases some kind of human interaction in the sense of loading, unloading or monitoring and remote control. Apart from that, automation creates challenges on the technological level for ship design and ship technology, challenges which are currently difficult to overcome. The economic viability of such projects can be out of reach if research and development costs cannot be lowered in the near future.
• Automised vessels need to be developed, designed and tested in towing tanks and in natural test areas. The technology required for autonomous sailing is ambitious and requires high costs in research and development. The uncertainty of achieving a positive return on investment after a number of years of successful operation might deter many actors from such a project right from the start.

 

OBSTACLE 3: COMPETITION FOR SPACE WITH OTHER ECONOMIC SECTORS IN CITIES




• The continuous demand for space that comes from the housing market, in particular defines another barrier for inland navigation in an urban setting. Within this competitive setting, it is often the case that not enough space can be granted for logistical purposes.
• In cities, competition exists also between tourism and logistics. Indeed, transport infrastructure needs to integrate well in the urban landscape. A significant example can be seen in Lyon, where the development of city logistics on the Saône is hampered, as platforms for loading and unloading of freight in the heart of the historical city centre of Lyon would probably not be well seen. On the Rhône, quaysides and logistics infrastructure are often hidden under bridges, which support their development. Another example is Strasbourg, where pioneer companies, willing to develop inland waterway transport solutions in the city center are criticised for placing an industrial set-up in one of the most visited areas and thus ‘reducing’ the beauty of the sight itself.
• To address this, it is important to anticipate the integration of transport logistics in cities, for instance in the context of the multiannual urban planning of relevant cities, and to ‘reserve’ some space for logistics activities.

 

OBSTACLE 4: ROAD TRANSPORT CULTURE IN LOGISTICS AND LACK OF KNOWLEDGE ABOUT IWT




• Another obstacle that emerged on many occasions during the interviews relates to a cultural preference for road transport. Compared to IWT, road is perceived as more flexible and is more familiar to the operators, even if it might not be the most environmentally friendly modal choice. This issue was also identified as an obstacle in the other pillars.

CONSIDERATIONS REGARDING CIRCULAR ECONOMY AND WASTE TRANSPORT

POTENTIALS

• Demographic growth, in combination with saturated road infrastructure and high emissions and other negative external effects provoked by road transport in cities, are important factors which offer great potential for inland waterway transport of waste in urban agglomerations.
• In addition, electricity generation from municipal renewable waste has strongly increased in the last 30 years, a growth which is expected to continue with the transition towards circular economies. New transport flows are expected to emerge from such a transition.
• Inland ports are also ideal locations for the development of circular economy activities, which is certainly an opportunity for the transport of products resulting from circular economy activities by inland vessels.

 


OBSTACLES

• Obstacles identified are merely identical to those obstacles put forward for urban freight transport (see 5.1). Because of the specificity of this type of cargo, there might be a reluctance to allow for waste handling in city centres.

CONSIDERATIONS REGARDING TRANSPORT OF CARGO FLOWS TRIGGERED BY THE ENERGY TRANSITION

• The growing pressure to extend capacities for renewable energies at the expense of fossil fuels presents a potential market in which inland waterway transport can be advantageous. The research carried out within this report by means of face-to-face semi-structured interviews and analysis of available data focused on the transport of wind turbines, biomass, biofuel and hydrogen. The results of this qualitative-quantitative analysis lead to different considerations for the three sectors considered.

TRANSPORT OF WIND TURBINES

Potentials
• For wind energy, IWT appears to be advantageous for many reasons:
  – No competition from rail, only from road;
  – Inland vessels can cope with increasing size of the turbines;
  – Fewer size restrictions or administrative barriers for inland vessels compared to road, and their capacity makes them suitable for this market.
• A key success factor for IWT to be a preferred mode of transport over road, lies in the proximity of the wind turbines production site or the end site where the wind turbines are delivered to the inland port. Indeed, it is an essential element to limit transshipment costs.
• Other trends, in particular the increased production of wind turbines outside Europe, acts in favour of IWT. This trend leads to more wind turbines being imported to Europe via maritime transport and seaports. Hence, IWT is becoming the logical follow-up mode of transport towards the hinterland in these cases.
• The further potential of transporting components of wind turbines is of course intensively linked with the further development of the wind energy industry itself. In the last 20 years, a considerable growth in this sector has taken place, in particular in Germany. But the outlook is somehow less growth orientated, due to a certain saturation (scarcity of space for new turbines), social opposition against the further installation of new wind turbines, and a shift from subsidy to auction systems.
• In this respect, the role of public policy, pushing or not for the development of this renewable energy, or pushing for the development of certain renewable energies only, is paramount. Indeed, the availability of funding and financing solutions to support investment in wind parks as well as technological development is crucial.

 
Obstacle 1: Need for adequate infrastructure, facilities and vessels


• As has been shown, wind turbines are growing in size. While this is an advantage for IWT in general terms, the absence of vessels and infrastructure in ports equipped for handling ever larger components could be an obstacle for a modal shift to inland waterways.
• In addition, the lack of adequate waterway infrastructure, and availability of road access from and to inland ports, is a barrier to the further development of IWT in this market.

 
Obstacle 2: Natural and social limits for further expansion of wind turbines


• The actual potential of wind turbines as a new market for IWT depends on the level of ‘geographical’ saturation of this market, especially for onshore wind energy. Indeed, once the available space for building wind parks is more or less saturated, further growth will then only depend on repowering of existing turbines. Repowering can create a high volume of investment (and transport of turbines) on its own, but this presupposes favourable and growth orientated regulations and schemes in wind energy policy.
• Another limit lies in the social or public and political acceptance of this market. As observed, growing public opposition to wind turbines is prompting governments to be more cautious about further funding of the sector. This uncertainty about future wind energy developments casts a shadow of caution over the potential of this renewable energy as a new market for IWT. At the same time, governments are more and more focused to reduce emissions and to decarbonise the energy and transport sector. It is therefore very likely that wind energy and wind turbines will continue to play a role in the future, but the actual conditions for growth will be different from one country to another.
• For offshore wind energy, different challenges exist which relate in particular to environmental and habitat protection in maritime waters. Technical challenges can also be observed (costly installation of cables and transport of electricity underwater, etc.)

 
Obstacle 3: Change in regulation of the wind energy market


• Regulatory change can have a major impact on the development of the wind energy market, as the German example shows. The shift within the German energy sector from a subsidy scheme towards an auction system has caused some wind energy companies to float into troubled waters and lead to a general slowdown in the construction of new wind turbines. Such changes affecting the wind market itself can potentially hinder the transport of wind energy components by inland waterways. This is confirmed by expert interviews. In reaction to this, the German government introduced a new regulation allowing the construction of wind turbines to continue also during any litigation process. This example proves once more the important role of government and public policy in the development of this market. Regulation can therefore be either an obstacle or an opportunity.

 
Obstacle 4: Road culture in logistics and lack of knowledge about IWT


• The interviews with logistical players active in the wind turbine market showed this phenomenon quite clearly. It is indeed very difficult to overcome this obstacle, as it often concerns a lack of information about IWT on behalf of logistical companies.

 
 

BIOMASS AND BIOFUEL TRANSPORT

Potentials
• Biomass can be used to produce biofuels, heat and electricity, and its use is on an upward trend. This versatility is undoubtedly an important factor in its attractiveness. The advantages of inland waterway transport are linked to the reliability of this mode of transport, its safety and the possibility of transporting large quantities of mass cargo. In addition, unlike wind turbines, for which ports and waterways might need to adapt their infrastructure, cargo handling in inland ports does not need special adaptations of handling equipment.
• It should also be mentioned that electricity and heat from biomass is independent from weather fluctuations, an important aspect when thinking of the fluctuations of wind and solar energy.
• While dry cargo transport in general has tended to decline in the last years in German ports, the examples of the Port of Mannheim and the Port of Straubing show that biomass has enabled inland waterway transport and inland ports to grow within segments that embrace biomass, such as agricultural products and foodstuff. Furthermore, projections of bioenergy demand from 2018 to 2030 – made in the framework of the Interreg Energy Barge project¹²³ – suggest that the market still has untapped potential. Among the three types of biomass considered by this research project, the demand for bioheat should stay at constant levels in both the BAU and worst-case scenario, while in the best case there will be a surge in demand.

 
Obstacle 1: Future regulation of biomass and biofuel of the first generation


• We have seen that despite being a well-performing sector in different ports and in different regions, there is a concrete risk of stricter regulations on the production and use of biomass and biofuels of the first generation. This is something that is already being discussed at European and at national level and it should be taken into account when looking at future potentials for biomass. It is possible that advanced biomass will have better growth prospects in the future, as a competition with food production will hereby be avoided. The industry, more precisely Cargill in Ghent, has shown efforts in constructing a new plant for advanced biomass underlining the shift towards more sustainable feedstock.

 
Obstacle 2: Early phase of deployment of advanced biofuels


• The deployment of advanced biomass and biofuels is currently still at a very early stage, and it can be expected that it will take considerable time until such a deployment is reached. New biorefineries based on advanced biomass need to be developed, and the necessary pre-project studies need to be carried out. This is a time-consuming process which can take more than ten years in total. Regarding the supply chains for these advanced biofuels, it can be supposed that inland vessels will play a role, but there can be competition from other modes of transport such as rail or pipelines.

 
Obstacle 3: Uncertainty regarding the energy transition trajectory of our societies


• Despite the comprehensible need for clarity about the future shape of energy supply, technological development is characterised by uncertainties, path dependencies and by the interplay of technology and commercial success or failure. The energy transition trajectory which our societies will follow, and in particular the type of energy that will be used in the future, remains to some degree uncertain. This technological uncertainty can lead to a specific form of inertia. Why invest in new production processes for alternative technologies, when uncertainty remains regarding their future use and demand?

 

HYDROGEN TRANSPORT

Potentials
• There is a growing interest at European level for hydrogen as a clean energy source. We have also seen how it can be transported in different forms and have observed that maritime vessels, inland vessels, pipelines and electricity as such are possible modes of transport.
• In addition, applications of hydrogen are manifold (industrial sector, transport sector, power generation) and demand has been growing since 1975.
• While it is today overwhelmingly produced from fossil fuels, hydrogen can be produced from renewables (i.e. electrolysis is carried out by using green energy). There is still a significant potential for emission reduction.
• Last but not least, it is clear that both at European and national level, public policy is pushing for the development of hydrogen, with the adoption of hydrogen strategies.
• These different factors make it a promising cargo for the future, since it is in its early stage of development.

 
Obstacle 1: Immature sector and high production costs


• The fact that hydrogen is still in an early development phase is reflected by the lack of infrastructure for electrolysis on a large scale as well as by its very high production costs.

 
 
 
 
Obstacle 2: Competition with pipelines


• A risk for IWT is that the transport infrastructure for hydrogen that needs to be built up, could be focused on pipelines rather than ships. Indeed, some technical hurdles still need to be overcome with regard to transporting hydrogen on inland vessels. Additionally, the cost factor might be the final decision maker. Lanphen (2019) assessed the costs of importing hydrogen to the Port of Rotterdam via different carriers and concluded that hydrogen via pipelines, i.e. in gaseous form, is less costly.¹²⁴