• Inland waterway transport in its present structure relies on traditional market segments, such as the steel segment, the agricultural and food segment and the chemical segment.
• For transport related to the steel and chemical industries, a recovery is foreseen in 2021 and 2022. For agricultural products, lower harvest results in 2021 are expected to dampen transport demand in 2021, and also partly in 2022.
• Container transport will be subjected to less favourable macroeconomic framework conditions in the mid and long-term, as the world trade of goods is expected to experience a structural slowdown, due to ongoing trends such as digitalisation, and the growth in the service sector.

 

SHORT-TERM OUTLOOK

 

  • Inland waterway transport in its present structure relies on traditional market segments, which form its quantitative basis. Examples are the steel segment, the agricultural and food segment as well as the chemical segment.

 
Iron ore and steel segment
 

  • On the Rhine, around 25% of all cargo transport is related to steel production (iron ore, scrap steel, coking coal, metals, metal products). On the Danube, this share is even higher and amounts to 45-55%, for the Middle Danube.33
  • Steel production in Rhine countries was quite stable in the time period 2014-2018, but decreased in 2019 and 2020, due to trade barriers and the downward trend in automobile production. This affected iron ore transport on the Rhine (see figures below).
  • According to the German Steel Federation (Wirtschaftsvereinigung Stahl) the modal share of IWT within the logistics of the German steel industry was 30.5% in 2019. In 2018 it had dropped to 28.8% due to the low water levels. In the previous years, the modal share was 31.3% (2017) and 30.6% (2016).34 Overall, these figures do not point to modal share losses as being the main explanation for the reduction in iron ore transport on the Rhine. The reduction seems to be driven mainly by the macroeconomic factors mentioned above.

 

FIGURES 1 AND 2: STEEL PRODUCTION IN RHINE COUNTRIES AND TRANSPORT OF IRON ORE ON THE TRADITIONAL RHINE

Chart by Visualizer

Chart by Visualizer

Sources: World Steel Association, Eurofer, Destatis, CCNR analysis
 

  • Between 2014 and 2020, total steel production in Danube countries followed a similar trend as in Rhine countries. But in contrast to the Rhine region, iron ore transport increased. This can be explained by the fact that in the Danube countries where steel industry makes intensive use of inland waterway transport (Romania, Hungary and Serbia), steel production increased between 2014 and 2019: by 9% in Romania, by 54% in Hungary and by even 231% in Serbia.
  • Iron ore transport performance on the Lower Danube (Romania, Bulgaria) reflects not only the iron ore demand in Romania and Bulgaria, but also the demand for iron ore in Middle Danube countries such as Hungary and Serbia. The reason is that iron ore is transported upstream on the Danube, from the Black Sea region towards Hungary and Serbia. Parts of the transport performance for iron ore in Romania and Bulgaria are therefore directed towards the Middle Danube region.

 

FIGURES 3 AND 4: STEEL PRODUCTION IN DANUBE COUNTRIES AND TRANSPORT OF IRON ORE ON THE LOWER DANUBE

Chart by Visualizer

Chart by Visualizer

Sources: World Steel Association, Eurofer, Eurostat [IWW_GO_ATYGO]
* Lower Danube = Romania and Bulgaria. Data for Middle Danube countries were mostly missing.

 
 
Outlook for the steel segment
 

  • According to the European Steel Federation Eurofer, apparent steel consumption (steel demand) suffered considerably in 2020 due to the pandemic and saw a decrease of -11.1%. A rebound of +11.7% in 2021 is expected with a further growth in 2022 of a moderate +4.9%, reaching pre-pandemic levels. The increase lies in the enhancement of demand from steel using sectors.35
  • The World Steel Association, in its short-range outlook from April 2021, also foresees a recovery of steel production in the European Union in 2021, by +10.2% in 2021 and by 4.8% in 2022.36

 
Agricultural and food products
 

  • Agricultural and food products have a share of around 9% in Rhine navigation and around 16% in Danube navigation. As was described in chapter 1, harvest results in Europe (and in the US) were rather low in 2020, which is also confirmed by Eurostat figures on grain harvest production. But agricultural transports in one specific year are partly determined by harvest results in the previous year. This explains the high transport performance in Danube countries.

 

FIGURES 5 AND 6: GRAIN HARVEST PRODUCTION IN RHINE COUNTRIES AND TRANSPORT OF AGRICULTURAL PRODUCTS

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Chart by Visualizer

Source: Eurostat [APRO_CPSH1] and [IWW_GO_ATYGO]
 

FIGURES 7 AND 8: GRAIN HARVEST PRODUCTION IN DANUBE COUNTRIES AND TRANSPORT OF AGRICULTURAL PRODUCTS

Chart by Visualizer

Chart by Visualizer

Source: Eurostat [APRO_CPSH1] and [IWW_GO_ATYGO]
 
 
Outlook for the agri-food segment
 

  • The transport of agricultural products is correlated with grain harvests. This is in particular visible for France, where long-term data for both variables can be expressed by a positive linear trend curve,37 but it is also the case for other Rhine and Danube countries.
  • Due to the storage of harvest products, the production level in one specific year influences also the transport volume in the following year. The weak harvest result in 2020 will therefore have a negative impact on the transport of agricultural products in 2021.
  • Also, according to the Danube Commission market observation, forecasts for the market for cereals (wheat, barley, corn) indicate a trend decline in transport volumes in the 2020/2021 season, due to the severe impact of the drought in the spring and summer in the south-eastern Danube countries.

 
Chemicals
 

  • The share of chemicals within total goods transport on the Danube and the Rhine amounted to 10.8% and 11.8% respectively in the year 2019.
  • The transport performance for chemicals in Rhine countries has remained at more or less constant levels over the last five years, with only one significant drop in 2018 (low water effect). As far as the Danube countries are concerned, the volumes of chemicals transported along the Danube are smaller than on the Rhine. However, the performance follows a positive trend, with some fluctuations. In particular, from 2019 to 2020, a significant 39% increase can be seen in the transport of chemicals on the Danube.

 

FIGURES 9, 10, 11 AND 12: INDEX OF CHEMICAL PRODUCTION IN RHINE AND DANUBE COUNTRIES AND TRANSPORT OF CHEMICAL PRODUCTS

Chart by Visualizer

Chart by Visualizer

Chart by Visualizer

Chart by Visualizer

Source: Eurostat [STS_INPR_A], [IWW_GO_ATYGO]
* Data for Bosnia-Herzegovina, Croatia, Serbia and Slovakia unavailable.

 
Outlook for the chemical segment
 

  • According to the CEFIC Economic Outlook 2021 for the European chemical industry,38 the chemical industry’s output is expected to grow by 3% in 2021 and by 2% in 2022. However, uncertainty reigns on the longer-term economic outlook given the pandemic and its ongoing impacts.

 

LONG-TERM OUTLOOK

 

TABLE 1: TRADITIONAL CARGO SEGMENTS

SegmentPotentialMost important driving factorsLong-term trend for IWT
Chemicals++High degree of innovation of the chemical industry in EuropeIWT remains the preferred transport mode for chemicals.
Containers+Reduction of growth rates in world trade and maritime shippingGrowth continues but with lower rates.
Sand, stones, building materials+IWT is a preferred mode of transport for shipping companies, and growth in the construction sector will be positive in western Europe (WE).Moderate growth on existing long-distance routes, urban areas have high potential.
Metals and metal products0/+Economic growth in emerging markets leads to more demand for steel.Metals and steel transport can grow on a limited basis.
Mineral oil products0/-Mineral oil products are still needed as a fuel in the next decade, but a gradual decline is already underway.Gradual decline in most regions but positive exceptions are possible.
FoodstuffsWE*: 0/-
EE: 0/+
Decrease of livestock activities in western Europe due to nitrogen and other emissions, delocalisation of parts of these activities to eastern Europe (EE)Decrease in foodstuff transport due to less livestock activity in WE. For EE, a more stable or even positive evolution is expected.
Iron oreWE: -
EE: +
WE) A certain saturation in steel demand and less iron ore intensity in steel production
EE) Stronger growth potential in steel demand
Iron ore transport is expected to decrease in WE while it is thought to increase for a certain period in EE.
CoalWE: -
EE: 0/+
Phasing out of coal in the energy sector and gradual decline of coal use in the steel industryDecrease in coal transport in WE, at least stagnation in EE

*WE = western Europe; EE = eastern Europe
 

TABLE 2: NEW CARGO SEGMENTS

SegmentPotentialMost important driving factorsLong-term trend for IWT
Project cargo, heavy and oversize cargo+Energy transition (windmills), electricity demand (transformers), bottlenecks for transporting this type of cargo by other modes of transportIWT benefits from its large space capacities for project cargo, heavy and oversized cargo, and its flexibility.
Recycling, circular economy +Industries in Europe must become more energy efficient and reduce emission-intensive production. Besides, the availability of base materials is limited in Europe, and the prices of base materials will increase on a global scale due to demand increase in emerging market economies.IWT is already active in the transport of recycling material and is expected to increase this activity.
Biomass +Energy transition, need for more biofuel, compensation for reduction in foodstuff productionIWT has large capacities for transporting these materials.
Hydrogen, methanol, synthetic fuels +In the future energy system, these fuels can be important elements, possibly in combination with electricity and batteries.Trend is still at the outset, transport possibly by pipeline or by containers on maritime ships and inland vessels (or by a combination of these modes). Large potential from 2030 onwards.

Source: CCNR, Royal HaskoningDHV