• The still ongoing expansion in the construction sector, which started in 2014, benefited the IWW transport of sand, stone, gravel and building materials.

• This correlation can be seen by comparing construction activity to the volumes of sand, stone, gravel and building materials transported via IWW; this phenomenon is best visible in the Netherlands.

• The EUROCONSTRUCT outlook foresees a slowdown in growth for the European construction market in the period 2019-2021. Nevertheless, the building activity should continue to grow in the medium and long-term.

• Other goods segments also have a positive outlook, for example chemicals, due to the evolution of life sciences in modern economies, and metals.

 

 

TRANSPORT OF SAND, STONES, GRAVEL AND BUILDING MATERIALS

 

  • The transport of sand, stones, gravel and building materials is quite important in inland waterway transport, especially in western Europe. The volumes and shares of this segment in important IWT countries are given below (There are indeed statistical problems for this segment. Within the NST 2007 goods classification, a distinction between sand, stones, gravel and building materials from ores is not possible anymore. (It was possible under the previous goods classification NST/R). Due to this change in the goods classification, a split between the two product segments is only possible on the basis of very detailed data, which are unfortunately not available for many European countries. The data for Rhine countries and for Romania were produced by analysing detailed data from national statistical offices (for Belgium, Germany, the Netherlands, Romania), and VNF (France). In this instance, the following NST 2007 Codes are taken into account: 035 (sands, stones, gravel, tone), 092 (cement, chalk, burnt plaster), 093 (other construction materials)):
    • 74.0 million t in the Netherlands in 2018 (20% of total IWT)
    • 50.0 million t in Belgium in 2017 (25% of total IWT)
    • 26.7 million t in Germany in 2018 (14% of total IWT)
    • 21.9 million t in France in 2018 (37% of total IWT)
    • 6.1 million t in Romania in 2018 (21% of total IWT)
  • The construction sector, which is the underlying sector of activity for this goods segment, expanded its activity in large parts of western Europe in recent years, especially in Germany, the Netherlands and in Belgium. The reasons for this expansion are analysed by economic research institutes, such as the Ifo Institute for Economic Research which has a longstanding tradition of research in the construction sector.

 

PRODUCTION VALUE OF THE TOTAL CONSTRUCTION SECTOR IN EUROPEAN IWW COUNTRIES (IN BILLION EURO)

Source: Eurostat [sbs_na_con_r2]

 

  • The Ifo Institute for Economic Research is a Munich-based research institution and one of Germany’s largest economic think-tanks. According to its assessment, a cyclical upward movement started in 2014 in the European construction sector, caused by several economic and demographic factors (See: Dorffmeister, Ludwig (2019a), Europäische Bauwirtschaft bleibt bis 2021 auf Expansionskurs (European Construction sector stays on expansion path until 2021), in: ifo Schnelldienst 2/2019, p. 47-54; and: Dorffmeister, Ludwig (2018), Europäischer Bausektor: Aufschwung verliert bis 2020 spürbar an Kraft (European Construction sector: upward movement loses momentum until 2020), in: ifo Schnelldienst 13/2018, p. 61-68):
    • The recovery of European macroeconomic framework conditions after the financial crisis
    • Persistently low interest rates in Europe
    • High demand for residential building construction
    • Internal migration towards urban regions and immigration from abroad
    • Higher public investment in the construction of new transport infrastructure
  • The overall level and evolution of the transport of sand, stones, gravel and building materials on inland waterways in Western Europe is shown in the following figure on a quarterly basis:

 

QUARTERLY IWW TRANSPORT VOLUME OF SAND, STONES, GRAVEL AND CONSTRUCTION MATERIAL (MILLION TONNES)

Source: CBS, Stat.Bel, Destatis, VNF

 

  • These quarterly data show seasonal variations in this sector which follow a similar movement between the countries under analysis (see 2013-1, 2015-2, 2016-2, 2018-1, 2018-2, 2018-3) and a rising tendency in Belgium and the Netherlands.
  • Using monthly data for Germany allows tracing the link between the construction activity and the IWW transport of sand, stones, gravel, etc. The correlation is quite intense, but the low water levels disturbed this correlation (in autumn 2015 and 2016, and in the second half of 2018). Large volumes of sand, stones and gravel were lost for German waterway transport due to these low water periods, at least temporarily.

 

MONTHLY PRODUCTION LEVEL IN THE GERMAN CONSTRUCTION SECTOR AND IWW TRANSPORT OF SAND, STONES, GRAVEL AND CONSTRUCTION MATERIAL IN GERMANY (INDEX 1/2011 = 100)

Source: CCNR based on Eurostat [sts_copr_m] and Destatis

 

  • In order to answer the question regarding the impact of the upswing that started in 2014, it is necessary to compare the (seasonally adjusted) figures for the activity in the transport sector with seasonally adjusted data for IWW transport on a country level. The seasonal adjustment makes apparent the business cycle and trend components of the series which is crucial for detecting upswing or downswing patterns.

 

QUARTERLY PRODUCTION LEVEL IN THE CONSTRUCTION SECTOR AND IWW TRANSPORT OF SAND, STONES, GRAVEL AND CONSTRUCTION MATERIAL (INDICE 2015 = 100)*

Source: CCNR based on data from Eurostat [sts_copr_m], CBS, VNF, Destatis, Statbel
* Seasonally adjusted data

France

Germany

Belgium

Netherlands

 

  • The upswing in the construction sector from 2014 onwards is best visible in the Netherlands. In the three other countries, it came with a delay. There is a certain correlation between the activity in the construction sector and the transport of related goods, but this correlation is not perfect, due to quite different additional influencing factors which are at play.
  • For Belgium, France and Germany, the recovery of construction activity that occurred in 2015 and at the beginning of 2016 seems to have produced an impulse for the IWW transport of sands, stones, gravel and building materials. For the Netherlands, this impulse came earlier.
  • The Ifo Institute for Economic Research is also a member of a European network of economic research institutes (EUROCONSTRUCT), that conducts forecasts for the whole European construction sector twice a year. At its latest meeting in late November 2018, this consortium made an assessment on the economic outlook for the construction sector during the period 2019-2021. According to this outlook, the growth of the European construction market should slow down in the forecast period (2019-2021), as shown by falling growth rates in the following figure.

 

FORECAST ON YEARLY GROWTH RATE OF TOTAL CONSTRUCTION OUTPUT PER COUNTRY (IN %)

Source: EUROCONSTRUCT

 

  • There are several reasons for easing growth rates, but capacity problems in the building industry seem to play one major role. A shortage of labour, and rising costs, as a result of the strong expansion of building activity in recent years, represent a bottleneck for further development at the same pace as previous years. Secondly, bottlenecks are also present when it comes to zones and areas for newbuilding which have become scarce (See: Dorffmeister, Ludwig (2019b), Zu den Kapazitätsengpässen in der Bauwirtschaft (capacity bottlenecks in the construction sector), in: ifo Schnelldienst, p.50-54).
  • Nevertheless, the building activity will continue to grow, although at a slower pace than in recent years. For inland waterway transport of sand, stones, gravel and building materials, a forecast was established which is based on the expected growth rates of the building sector according to EUROCONSTRUCT.
  • The following figure shows the evolution including the forecast values. The volumes in the Netherlands are expected to grow further until 2021 to a value of more than 80 million tonnes per year. Absolute growth is also foreseen for Belgium. For Germany, the results were corrected for the low water effects in 2018. The outlook for France and Germany points to a more stagnant evolution over the foreseeable horizon.

 

EVOLUTION OF YEARLY VOLUME OF SAND, STONES, GRAVEL AND BUILDING MATERIALS TRANSPORTED BY IWT AND FORECAST FOR 2019, 2020 AND 2021 (IN MILLION T)

Source: CCNR

 

TRENDS FOR IWT MARKETS

 

  • Long-lasting push factors for the construction sector are, as mentioned in the previous part, demographic growth in urban areas and also immigration. The more short- and medium-term factors (macroeconomic climate, interest rates) can change in a cyclical way.
  • For chemicals, the outlook is also positive, and the evolution of life science segments in modern economies can be a push factor for growth in the future. Regarding metals, the outlook is positive as well, although the growth potential is not as strong as for the construction sector and for chemicals.

 

GROSS REAL OUTPUT IN DIFFERENT ECONOMIC SECTORS IN THE EUROPEAN UNION *

Source: Oxford Economics
* in billion US-$, 2010 prices

 

  • Coal demand in the energy sector (steam coal) is decreasing, but for coal used in the steel industry, (coke), the outlook is far better. The transport of mineral oil products has a quite positive underlaying trend, and besides, IWT can gain further market shares in this segment due to its high safety level. The production of fertilizers is also expected to increase until 2050, as it is the case for the agricultural production and for food production.

 

GROSS REAL OUTPUT IN DIFFERENT ECONOMIC SECTORS IN THE EUROPEAN UNION *

Source: Oxford Economics
* in billion US-$, 2010 prices