9. OUTLOOK FOR INLAND WATERWAY FREIGHT TRANSPORT

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• Traditional market segments, such as the steel, agricultural / food and chemical segments, form the basis of inland water transport. Steel demand is foreseen to remain on a positive path throughout 2022 and 2023 but at a more moderate pace. The chemical industry faces a lower demand for chemical products due to supply chain disruptions and increased production costs.
• With regard to the food and agriculture segment, Ukrainian grain is blocked within the country, which further fuels an upward surge in commodity prices and a scarcity of grain in importing countries.
• Therefore, alternative trading routes for grain need to be established. These new routes could at least partly benefit inland navigation. One example is the higher export of grain from regions in northern France to North Africa, involving inland waterway transport in the hinterland.

 

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

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    Iron ore and steel segment
     

  • On the Rhine, around 24.4% 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 40.3% for the Middle Danube.
  • Steel production in Rhine countries recovered in 2021, reaching 70.8 million tonnes in 2021, which was 13% higher than in 2020. But there was still a gap of 2% compared to 2019. Iron ore transport volume on the Rhine reached 21.4 million tonnes in 2021, 16% higher than in 2020, leaving only a small gap of 1% compared to 2019. In 2021, iron ore transport performance was 22% higher than in 2020 and 3% higher than in 2019.

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


     

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

  • Steel production in Danube countries60 amounted to 20.5 million tonnes in 2021, an increase of 19% compared to 2020.

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


     

    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 Association Eurofer,61 steel demand is expected to continue its recovery in 2022, but at a more moderate pace. The reason for the moderation after the vigorous recovery in 2021 is related to Russia’s invasion of Ukraine in February 2022. This led to wide repercussions on energy prices, global trade and supply chains.
  • In 2022, the growth of production of steel-using sectors is expected to continue, but the rate of growth was revised downwards from +4 % to +2 %. The new situation has cast wide uncertainty on the outlook for 2023. Nevertheless, a modest growth rate of 2.3% is foreseen for this year.
  • The World Steel Association differs in its outlook from Eurofer. In its short-range outlook dating from April 2022, the Association underlines a slight decline of steel demand within the European Union and the UK of 1.3% in 2022 and a rebound of 4.0% in 2023.62 However, uncertainty prevails for 2022 and 2023. Due to inflationary pressure and the war in Ukraine, the expectation of a continued and stable recovery from the pandemic has been shaken.

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    Agricultural and food products
     

  • Agricultural and food products have a share of around 10% in Rhine navigation and around 23% in Danube navigation. In general, agricultural transport on inland waterways in one specific year is partly determined by harvest results in the previous year.

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


     

    Source: Eurostat [apro_cpsh1] and [iww_go_atygo]
     

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


     

    Source: Eurostat [apro_cpsh1] and [iww_go_atygo]
     
    Outlook for the agri-food segment
     

  • The war has disrupted the Ukrainian and Russian export of grain, wheat, and maize, mainly due to the closure of Ukrainian ports and sanctions imposed on Russia. The consequent rapid increase in the prices for agricultural commodities is expected to last throughout 2023, pushed by the lagged impact from the harvest in 2022.
  • This situation led to a large stock of corn in Ukraine (13 million tonnes by the end of March), which can be transported only by rail since the seaports have been blocked. The growing inventories and the limited sales opportunities put further pressure on corn prices.
  • The Ukrainian export of grain is not likely to recover quickly since the war has caused devastation and contamination of the harvest. It has also severely disturbed the planting of new crops. Thus, countries which are highly dependent on agricultural imports from Ukraine (mainly North Africa, the Middle East and Asia) are expected to address their demand also towards other grain exporters.
  • One such region could be the Middle Danube region, from which grain could be exported in higher volumes on the Danube. However, in March 2022, Hungary as one Middle Danube country with large agricultural production decided to restrict the export of grain and other agricultural commodities. The decision was taken as a reaction to the tense situation on the world grain market due to the war in Ukraine.
  • Another region with a high agricultural production is northern France. The river-sea Port of Rouen is the largest export harbour for grain in Europe. The volume in the harvest season from mid-2021 to mid-2022 is foreseen to lie between 7.5 to 8.0 million tonnes. During the harvest season stretching from mid-2019 to mid-2020, the volume amounted to 9.9 million tonnes. Given the geopolitical tensions, old trading partners such as Algeria, Morocco, Tunisia and western African countries return towards the Port of Rouen to cover their demand for grain.63 This revival of old trade patterns could have a positive effect on the grain exporting activity of the Port of Rouen and therefore also on the hinterland transport of grain on inland waterways in northern France.

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    Chemicals
     

  • The share for chemicals transported on the Rhine (year 2021) amounts to 11.6% and to 10.8% on the Danube. The transport performance for chemicals in Rhine countries has remained at more or less stable levels over the last five years, with only one significant drop in 2018 (low water effect). The volumes of chemicals transported along the Danube, albeit on a lower level, follow a positive trend, with some fluctuations. From 2019 to 2020, a significant 39% increase can be seen within the transport of chemicals on the Danube.

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





    Source: Eurostat [STS_INPR_A], [IWW_GO_ATYGO]
     
    Outlook for the chemical segment
     

  • The chemical industry is an energy intensive industry. It uses in particular petrochemical substances as feedstocks. Given the sharp price increase in crude oil and petroleum products, the industry faces rising production costs.
  • The Association of the Chemical Industry in Germany sees this development as a main reason for its downward revision of the economic outlook. In addition, due to disruptions in supply chains, the production level in different areas of the economy is cut back. This leads also to less demand for chemical products. For the German chemical industry, a gas embargo or a halt in gas supplies from Russia would have additional “devastating effects”.64