MAKK Prepared for the WWF-Danube Carpathian Programme Prepared by MAKK Hungarian Environmental Economics Centre, with contribution from WWF-DCP

Transcription

1 Socio-economic considerations on Plans for Inland Waterway Transport for the Danube River MAKK Prepared for the WWF-Danube Carpathian Programme Prepared by MAKK Hungarian Environmental Economics Centre, with contribution from WWF-DCP June 2006

2 MAKK - Hungarian Environmental Economics Centre Table of contents 1 Executive summary What is TEN-T? The status of Inland Waterway Transport on the Danube The Danube is different The relevant inland waterway corridors in Europe Geographical determinations the difference in numbers Basic characteristics of the IWT sector Description of conditions The share of the sector Networks Volumes Fleet, personnel Ports The goods on board The Danube IW traffic Trade with Western Europe The role of the IWT service Forecasts Transport trends influencing IWT on the Danube Global trends Logistics of the intra-continental Central European economic centres IMPACTS of river use. I: On society Past trends and impacts on society Impact of waterway developments on the IWT market The role of logistics in spatial co-operation IMPACTS of river use. II: Waterway development and the possibility of benefiting from floodplain ecological services External cost estimations The ecosystem services and their economic valuation within the Danube River Basin General description Ecosystem Services Ecosystem services in the Danube River Basin Valuation studies on Ecosystem Services in the Danube River Basin TEN-T Project measures impacts on ecosystem services Impacts: Conclusion Interests - Conflicts The structure of interest Arguments about navigation goals Arguments about obstacles to IWT development Diverging demand Technical obstacles Regulation bias Network size endowment Natural constraints and interoperability Conclusions about obstacles Summary Annex Project N 2: Removing bottlenecks on the Rhine Main Danube link Calculations on cost of efficiency issues Basic data Efficiency loss calculations Literature

3 DCPszocio Some frequently used acronyms IWT ARA WFD TEN-T SEA DC inland waterway transport the Amsterdam-Rotterdam-Antwerp seaport area Water Framework Directive Trans-European Transport Network Strategic Environmental Assessment Danube Commission 3

4 MAKK - Hungarian Environmental Economics Centre 1 Executive summary Brief description of the problem The aim of this essay is to highlight weaknesses in inland waterway transport (IWT) development plans for the Danube River. The paper provides a multi-view approach. To protect and improve nature s status, the benefits of IWT should be better exploited, but a single-sector development of the IWT sector will not lead to this desired effect alone. Meanwhile, it is important to underline that this issue is not a nature vs. shipping problem. The creation of sustainable conditions to maximize benefits in multiple sectors lies outside of the competence of the direct stakeholders. The problem with this is rooted in inappropriate transport policy and the inappropriate management of transport. The main setbacks are insufficient price regimes (especially in the area of infrastructure use) and deficiencies in the internalisation of external costs, which leads to degradation of natural resources. The removal of bottlenecks as a solution for solving the present problems of the IWT sector is a bad response to a question raised among false conditions. There is huge pressure on the IWT sector to operate efficiently (in economic terms), stemming from competition of other modes of transport. But this is a biased competition, where the different transport modes pay different rates (or nothing) for the infrastructure they use and for the damage they cause to nature and society. The only way the IWT sector can keep up with its competitors is by increasing its efficiency, i.e. better use of load-space and operational time, and reduction in operational (mainly personnel) costs. This leads to growing pressure on navigable time intervals, the reduction of and changes to crews, a shift towards use of larger ships, and efforts towards modification of the waterway so as to be suitable for these needs. This is how a bad market structure forces actors to achieve individual gains at additional costs for society. This is why it is essential to re-define the conditions of the transport sector as a whole in a common market with regard to the direct and indirect effect of its operation on nature and society. This paper does not tackle the problem of the increasing volumes of transport in Europe. Nevertheless, it is wrong to accept this tremendous growth; rather it should be considered an undesirable side effect that has to be tackled. It reduces the benefits that result from the commercial activity itself due to the negative effects of society and nature (see next paragraph). The growing intensity of transport that exceeds the growth rate in the GDP of the EU is a serious characteristic that needs further combating, rather than acceptance. The main adverse effect from transport is generally air pollution (together with congestion, noise pollution, habitat fragmentation, etc.). The direct and indirect costs of transportation are mainly based on per capita energy consumption and the exposure of the population. Different modes of transportation generate different levels of harm. The most harmful is road transportation, while the environmental burdens generated by rail transportation and IWT are more or less similar. The results of studies differ depending on the methodology applied. However, IWT presents negative external effects through the creation and maintenance of its basic infrastructure waterways. The negative external effects of waterway infrastructure can be seen and are accumulating along existing and former floodplains along the river. The volume of IWT has changed little in absolute terms over the past decades. What has changed, and reached a dramatically high level, is the volume of road transport and the adverse effects (and costs to society) it causes. According to our investigation, the shift from road to rail and IWT transport decreases environmental pressure. It would be reasonable to make this shift, but it is also important how we make it. These include market regulation means, the development of port infrastructure and other services, and river construction works to promote change in the narrow or wider sphere of the IWT sector. (The development of port infrastructure and other services are necessary, but not as controversial as the other two, so our focus will be on them.) 4

5 DCPszocio If the goal of modal shift is achieved by increasing waterway capacity, the measures taken have an effect on the river s natural processes. The disturbance or hindrance of these processes causes a degradation of the ecological production of the river valley, which results in a loss and decreased use of environmental resources among a wide range of stakeholder groups. These costs, and the cost of the development programme itself, must be compared to the gains achieved by the modal shift. Conclusion The evaluation of conditions in the IWT sector is not intended for the IWT sector itself, but for society, because of the beneficial effects we can provide as a result. From this point of view, the goal of the development programme is not to provide higher profitability by increasing transport volumes among the current circumstances, but to create a transport structure that delivers these social benefits. The profitability of each transport sub-sector is a side-condition. Extra-industry considerations and interests can be communicated by the means of regulations. In the field of IWT development we have to find a way to combine two indirect effects. Both effects work through nature s ecological services that have an impact on society. We have to find a compromise so as not to lose on the ground, in terms of river damage, what we have gained in the air through the reduction of pollution. The best overall results can be expected by applying the fewest possible river regulations along with the most possible market regulations. Although recent analyses call for the better integration of IWT potential into multimodal transport solutions, this approach doesn t take into consideration an important fact. As an independent modal network, IWT can exist only in a limited geographical area (in the ARA seaport area and its hinterland) where waterway network conditions are particularly favourable. This is only one part of the existing transport corridors, and in fact the smaller part. On other waterway segments, the sector cannot act alone among current market conditions, only in co-operation with other modes of transport. Without this co-operation, the potential for better use of navigation on the existing network cannot be achieved. The conditions for this co-operation have to be set outside the market, taking into consideration wider interests. What is desperately needed is EU-level regulation for setting up sustainable conditions for the entire transport sector. Capacity increases alone cannot solve the problem. The problem is mainly represented by the low level of inter-modal co-operation. Waterway capacity increases are intended to close the gaps in infrastructure characteristics between traffic networks, but this is an unrealistic goal. The degree of difference will always remain, or even increase, for example because of other projects of the IWT programmes (e.g. TEN-T) itself. The process of bottleneck elimination generates a degradation of the river over time, without offering a comprehensive solution for the existing network. Degradation is advanced by each attempt at bottleneck elimination. This process is very destructive because it harms the basic ecological network of the water basin. This network provides a wide-range of services for society, so its deterioration puts an unnecessary burden on public resources. Meanwhile, we can observe that the costs of the river modification to the changing environment are pushed on those who are at the periphery of the network. Waterway modification that aims to satisfy higher future transport demand is a supply-side solution. It is like, for example, building power plants to meet forecasted energy demands without application of energy-saving measures or pricing schemes in order to decrease consumption. This type of solution does nothing to tackle the root cause of the problem. Moreover, the low ability of the sector to service new market segments among present conditions merely reproduces the problem within a higher-costlevel infrastructure. Public participation: a compromise or a deal A deal is needed in order to set out which stakeholder groups will have a share of the benefits of the modal shift and the modification of the river, and who will bear the costs. 5

6 MAKK - Hungarian Environmental Economics Centre In its common transport policy, EU decision makers have to clarify to what extent they are willing to sacrifice the realised benefits in order to compensate the IWT sector for the maintenance of the rivers in the face of the rivers unpredictability (which, by the way, is a fundamental characteristic of river systems). The measure and method of this compensation can open the way for the IWT sector to evaluate its own modification policy. Without clarification of this point, the IWT development process can result in a more profitable sector (for a while), but not in a sustainable solution for the river and for the whole of society. Are rivers for anybody? Recent debates on further river intervention have not achieved a balance with respect to the results of the former types of interventions. The current situation is merely a phase in a long-lasting process of degradation, together with its ecological and social consequences. There is no clear legal framework governing how rights to river (and floodplain) quality are distributed, and how the public can uphold its widespread, long-term interests in the face of concentrated conflicts. This is why the legislation of the EU s Water Framework Directive (WFD) and the accomplishment of Strategic Environmental Assessment (SEA) on the water-basin level are so urgently needed to create a comprehensive framework for the discussion of waterway interventions, such as TEN-T. 6

7 DCPszocio 2 What is TEN-T? The transport element of the Trans-European Networks for Transport (TEN-T) 1 aims to provide the emerging common market with a common infrastructural base to open up and connect national economies, especially those of the new markets in Central and Eastern Europe. The TEN-T objectives are to: ensure the mobility of persons and goods offer users high-quality infrastructures combine all modes of transport allow the optimal use of existing capacities be interoperable in all its components cover the whole territory of the Community allow for its extension to the EFTA Member States, countries of Central and Eastern Europe and the Mediterranean countries TEN-T comprises infrastructures (roads, railways, waterways, ports, airports, navigation aids, intermodal freight terminals and product pipelines) together with the services necessary for the operation of these infrastructures. The priority measures concern the: completion of the connections needed to facilitate transport optimisation of the efficiency of existing infrastructure achievement of interoperability of network components integration of the environmental dimension in the network Projects meeting the above-mentioned criteria are considered to be of common interest. Meanwhile, the characteristics of European transport have undergone a dramatic change during the last decades. Total transport performance in the EU-15 and the EU-25 has increased, and the modal split in transportation changed in an unfavourable direction. On the surface, the reason behind this change appears to be the more than two-fold increase in road transportation, but the driving force behind this increase is the change in the pattern of trade. The table below demonstrates that GDP growth has become increasingly transport intensive, which is negative bearing in mind the negative external cost of transportation (see Chapter 6.1). The decoupling of economic growth and the demand for transport emerges as a highly important requirement for future transport and economic policies. 1 Decision No 1692/96/EC from 23 July 1996 on Community guidelines for the development of a trans- European transport network, 7

8 MAKK - Hungarian Environmental Economics Centre Figure 1 Transport volumes in the EU-15 (Source: Eurostat) 135 Passengers, Goods, GDP = Passengers (1) (pkm) Goods (2) (tkm) GDP (at constant 1995 prices) (1) passenger cars, buses & coaches, tram + metro, railways, air (2) road, rail, inland waterways, pipelines, sea (intra-eu + domestic) A review on the TEN-T programme 2 attempted to tackle problems that have emerged from its transport plans. This paper emphasises the need for inter-modality and modal re-balancing. It also mentions the necessity of structural reforms and demand management. On the other hand, the review still focuses on infrastructure development (reinforced by further elaboration of the Van Miert Report 3 ) and proposes to concentrate financial resources on TEN-T priority projects. Modal split and measures for the better utilisation of existing infrastructure are still supply-side solutions to a structural problem. If we take a closer look at the driving forces of growing trade, it is clear that capacity increases in infrastructure cannot solve the problem (see Chapter 4.3.1). A more fundamental European-level approach is needed to set up a new frame for transportation for the benefit of the European society. The TEN-T programme consists of several infrastructure projects. This paper considers the inland waterway axis Rhein/Meuse Main Danube, designated as Corridor VII. Waterway capacity studies identify bottlenecks on the Danube River downstream of the Main Danube canal. It must be underlined that the bigger the scale of intervention, the bigger the impacts. A detailed description of the corridor-specific plans is attached in the Annex. 2 Extended impact assessment of the proposal amending the amended proposal for a decision amending Decision No 1692/96/EC on the trans-european transport network {COM(2003)564 final} 3 Downloadable at: 8

9 DCPszocio Table 1 TEN-T target developments for Corridor VII (Source: Pine Report, p.142 identified by UN-ECE and INE experts) The sections identified as bottlenecks show close correlation with the most valuable, remaining natural riparian areas that were once part of more extensive floodplains. Most of these bottleneck areas are also listed as EU Natura 2000 sites (see Chapter 6.3 for more information). The cost of all the TEN-T projects is estimated at 693 billion EUR 4, of which 201 billion EUR has already been spent in the period. However, the paper draws attention to the fact that this is a conservative estimation only of the priority projects. The Van Miert Group estimates the cost of the Danube project at 2 billion EUR to improve navigability of the river. Table 2 Cost of interventions (Source: Van Miert Report technical annex) In absolute terms, the total volume of transport on waterways has not declined in Europe during the last decades. Its share in overall transportation has, nonetheless, decreased. The structural change of 4 SEC 2003/1060 p.34 9

10 MAKK - Hungarian Environmental Economics Centre the European economy has also left its mark on inland navigation: the demand for bulk goods and raw materials, which were the traditionally waterborne goods, has declined. Consequently, transport volumes on inland waterways have decreased. At the same time, new types of goods have appeared and have created a new demand for waterway transportation. To put this in context, the volume of rail transportation has undergone an absolute decline. In this respect, the IWT situation does not seem that bad off. The EU-financed restructuring programmes have made the industry more efficient, states subsidise the industry by maintaining the basic infrastructure of the service (the waterways), and further public funds can be raised to develop the service infrastructure as well. However, this statement is in contradiction with the current experience and the prospects of actors in the inland waterway industry. From their point of view, the sector is falling behind and is at a competitive disadvantage in spite of its several attractive characteristics. To reveal the contradiction (and to provide grounds for further discussion), we will review the status of the IWT sector as a whole on the continent. In particular, we will investigate the status of Danube navigation. Inland navigation has a special status in this development process. It is the target of modal shift policies to reduce adverse impacts on the environment. But the planned capacity-building projects mean intervention in fluvial ecosystems. These considerations are usually left out from the comparisons (see Chapter 6.1 on external costs). On the other hand, inland navigation (and especially the market along the Danube) as a market is not in a stable state. The main reason for this is that former market procedures created a rigid market environment where it is now hard to supply demand. If we still want inland navigation to play a role in the transport market, first we must solve its problems. Unfortunately transport development programmes, such as TEN-T, omit this area, which is a big problem as it jeopardises the achievement of their overall goals (see Chapter 7.3). Our discussion focuses on the complex use of public financial resources for an improved approach to the overall European socio-economic goals (including transport). 10

11 DCPszocio 3 The status of IWT on the Danube 3.1 The Danube is different Before an analysis of IWT on the Danube is discussed, it must be put into the broader context of European waterway systems in general. In Europe, the ideal navigation system is that of the Rhine system. It has unique conditions, connects huge economic centres along its path, has a dense canal network at its lower flow, navigable tributaries, and several connection points to other significant IWT systems. Its most important feature (the sea connection) is one of the busiest seaport areas in the world. The volume of goods flow, the density of the network and the density of centres with extremely high economic activity provide the economic base for navigation. Due to the different paths of historical development and different geographical characteristics, the Danube waterway is not a system per se, but rather a line that connects some of the major Central European economic centres along its length. However, it provides no cross-links to other important industrial areas, as it has no extensive canal systems at any of its sections. It has only one connection point to other IWT systems. Moreover, it connects the Central and Eastern European countries with a (less-developed) sea area. As a result, the Danube has not played such an important role as the Rhine in organising the spatial structure of modern industry in the countries through which it passes. In the Danubian countries, direct port connections are not as common as in the Rhine region, where IWT is able to serve all types of trade, domestic as well as international; nor is the Danube the domestic axis of the national economies along its length. It is very important to grasp these characteristics from the beginning. This is because economic and geographical conditions influence the operation of an infrastructural system to a greater extent than the system s characteristics themselves (compared to an ideal state). The fixed geographical conditions and the parallel development of other transport infrastructures create an embedded situation. This is harder to change in the long term. Studies on the IWT sector usually view the waterway systems of Europe as one network and evaluate the market, regulations and other conditions from this perspective. Moreover, there is a background assumption that the different intra- and inter-sectoral goals are bound together: if the volume and share of the IWT sector increases in terms of total transport, then all the connecting goals will benefit. However, in reality (due to the above-mentioned points), navigation can play very different roles in the economies of different waterway systems. It is not wise to assume that these different roles can be fulfilled by the same service, especially if the service is designed to work among the most favourable geographic and economic status. This is why our study concentrates on the Danube, although there are other reasons for having a regional, basin-based viewpoint. The Danube is different (just like the other rivers) and even if unification must be realized, it must be done in a way that maintains these differences, as this is the self-interest of the regions. The Rhine corridor is not merely one large waterway system among the other waterway systems of Europe, but the biggest and most unique of its kind. The other systems altogether represent only a small portion of the total traffic compared to the Rhine. It leads the whole IWT market, and its own market processes influence the status of the other networks. Thanks to its core geographical position, this asymmetrical situation is even exaggerated. In an asymmetrical network, the interests of the core and the periphery are not uniform 5. The Danube is a periphery of this waterway network, and as such, 5 Krugman 1991, Barabasi

12 MAKK - Hungarian Environmental Economics Centre the economies along it have different interests than those at the core of the network. The Danubian economies can play limited functions in this European-wide system. These diverse interests are expressed in the level of inter-operability of the network elements. Complex development goals have to be measured in this complex web of interests. The interests lie mostly on the side of the navigation sector that benefits from greater unification. However, the sector is not monolithic: some of the actors are better off with a lower level of interoperability, i.e. small shippers, regional service providers. Firs, we will highlight these differences in the next chapter. 3.2 The relevant inland waterway corridors in Europe To draw conclusions on traffic, expert papers 6 use the concept of corridors. Four important corridors are defined on the European continent: the Rhine, West, East and South East corridors. Figure 2 The Rhine corridor consists of the rivers and canals in Switzerland, eastern France, Luxemburg and Germany (not including the northern region); Some studies view the West corridor (not boxed on the map) separately from the Rhine, as consisting of the rivers and canals of the Netherlands, Belgium and northern France (on the map this is part of the North South corridor); East corridor includes the eastern and northern parts of Germany, the Czech Republic and Poland; South East corridor includes the river Danube from downstream Kelheim, the canals along it, and usually the Main Danube canal with the river Main from Frankfurt. The North South corridor comprises the navigable waterways of France (with less connection to our topic) The location of the corridors (Source: Pine 2004, p. 122, Fig.21) 6 e.g. Pine Report ( and the Shifting Cargo Study by Ecorys,

13 DCPszocio 3.3 Geographical determinations: the difference in numbers The main role and share of the IWT sector in different countries is determined by the geographical locations of industry. Policy and regulation can shift, but their impact is on a smaller order of magnitude; endowments are very different. The SC Study 7 highlights structural spatial differences in the South East corridor (see next table). Table 3 Distances (by tonnes of consignments) from the shippers to the nearest inland port (in %) Distance to port All corridors South East 0 km km km km >100 km Total Source: SC, 1998, p.44, tab 16/2 This table shows that the South-East corridor has an extremely low number of next-to-the-waterway segments. To provide a contrast from the other end of the spectrum, in Germany 61% of all rail and road transport has one end at a distance of 20 km from an IWT connection, and 80% is located within a radius of less than 50 km. In the case of the South East corridor, the far-away segment makes up nearly half of the consignments (46%). The different geographic conditions, and the resulting differences in the spatial organisation of industry location, also have an effect. In contrast to the Rhine corridor s IWT affinity, the SC Study found that besides the differences in spatial location, the result of the different economic history is that: in the South East corridor, rail offers direct access by rail sidings to the major part of big industrial sites (two-thirds of the interviewed companies in the research sample), which allows big companies to use rail without pre-/end haul by road. (SC Study, 1998, p.44) 8 This results naturally in the different availability of port infrastructure along the corridors. The port density along the Danube reflects the smaller density of industrial centres on its banks. The density of E-ports 9 along the Rhine is every 30 km on average, while along the South East corridor, it is every 90 km on average 10. These conditions can service the needs of long-distance trade, but not of domestic trade. 7 Shifting Cargo to inland navigation; Transport Research 4 th Framework Programme, Waterborne Transport, DG VII-93, Which is a very advantageous situation both for itself and from the point of view of modal competition against road transport, but it is becoming less widespread due to the new, single-motorway-based logistic centre development, for example in Hungary. 9 Inland waterway ports of international importance as defined by the AGN (European Agreement on main inland waterways with international importance). There are 374 of these ports. 10 Pine, 2004, p

14 MAKK - Hungarian Environmental Economics Centre These geographical differences clearly demonstrate that a service type plays a different role region by region. In the countries located along the middle and lower Danube, IWT has served inter-regional trade and has had a very limited role in domestic transport. Unfortunately, it lacks the synergetic effects present when the two roles coincide (as in the Rhine corridor). This different role is nicely confirmed by a distance analysis of the corridors IWT flows. The Shifting Cargo Study finds important differences in the cargo flow characteristics of the different waterways 11. There are clear differences in the distribution of the distances when the cargo is moved by IWT. These differences indicate the different market roles in the corridors. (Short distances indicate spatial distribution of production sites, longer distances tend to indicate trade in raw materials or manufactured products, although these differences may diminish with global trends.) Table 4 Corridor Average distance of IWT transport along the corridors Distance where IWT has maximum share of all transport (km) Share of cargo longer than 300 km of all IWT traffic (%) South East 500 km 700 km 66% Rhine 200 km 500 km 49% East 100 km 400 km 39% West 100 km 300 km 6% Source: SC, 1998 p.6 Table 5 Distribution of transport distances by corridor Corridor < 70 km km km km > 700 km Mean distance West 23.3% 34.7% 32.8% 4.0% 5.2% 217 km Rhine 53.9% 15.2% 18.3% 10.3% 2.3% 169 km East 32.7% 11.9% 18.3% 29.3% 8.8% 314 km South-East 13.3% 15.7% 13.3% 14.1% 43.6% 492 km Total 41.9% 16.3% 18.7% 13.3% 9.8% 244 km Source: SC, 1998 p.31, table 11/2 These basic differences determine and largely explain the distribution of IWT-related data on volumes, fleets, service levels, etc. This explains why the Rhine waterway system has outstanding indicators in terms of both quality and quantity compared to other systems. 11 Its survey is not representative in a strict statistical sense, but its conclusions are drawn from a focus on typical cases. 14

15 DCPszocio 4 Basic characteristics of the IWT sector 4.1 Description of conditions The share of the sector The role of the IWT sector differs greatly country-by-country. The share of IWT in the total inland transport performance is higher than 10% (in t-km) only in countries where the geographical conditions are favourable (in the mentioned three countries: B, 12%; G, 14%; NL, 43%). Here, the division of national/international transport flows is not a relevant indicator of transportation processes, because the transport moves between and within economic regions, and not national boundaries. The data on quantities show some inconsistencies, but it is obvious that the IWT sector performance concentrates on the goods flow between the ARA 12 ports, the waterway network around them, and the nearby German mega-industrial regions. The domestic traffic volumes can be traced back to the same region in the case of NL, B and DE. The other areas show smaller importance. However, a cross-section analysis in the SC study on 1992 EU transport statistics reveals the abovementioned, but less precisely described differences in the IWT market 13. Inside the West Corridor, the ARA ports and their hinterland in the lowlands, the share of IWT on the critical routes is 50% or even higher. Along the Rhine, where there is no such network, but the other economic and spatial conditions are met and the ports and industrial centres are close, the share is between 27 and 38%, while in the remaining directions (including the Danube and the East corridor) this share falls to around 10%. Table 6 The share of IWT at relevant IWT junctions Transport Volume 1992 Cross-sections, sum in both directions 3 Modes [1,000 tonnes] IWT [1,000 tonnes] Modal split of IWT [%] Dutch Belgian border (West corridor) 154,221 76, Belgian French border (West corridor) 72,985 16, Emmerich (German Dutch border) 219, , Bonn (Rhine corridor middle course of 207,408 60, Rhine Karlsruhe (Rhine corridor upper course) 64,137 24, Münster (Rhine corridor East corridor) 153,142 17, Wolfsburg and Wittenberge (East corridor) 56,438 6, Bad Schandau and Oder (East corridor) 34,190 3, Hanau (Rhine corridor South East corridor) 77,417 8, Passau (German Austrian border) 31,692 1, Bratislava (Austria s eastern border) 11,496 1, Source: SC, Table 5/1 pp.7 The proportion of IWT in the Danubian countries is listed in detail next. Table 7 Transport performance and IWT share in selected Accession countries, billion t- km, year Amsterdam Rotterdam Antwerp seaport area 13 SC Study, 1998, p.7, tab 5/1 15

16 MAKK - Hungarian Environmental Economics Centre Source: Pine 2004, Fig 8. ECE Energy and transport in Figures 2003, Tab The respective values for transport performance 14 in the member states are: Germany, total 489 billion t-km, IWT share 14%; Austria, total 46 billion t-km, IWT share 5%; Netherlands, 267 billion t-km, IWT share 43% Networks Meanwhile, since data are not usually collected by corridor, the information sources show small, but not significant differences. To start, we review the networks: Table 8 Motorways and major roads Inland waterway Rail Road** EU-15 30,000 km 155,000 km 320,000 km EU-25 37,000 km 210,000 km 410,000 km Corridor countries* 23,500 km 107,400 km *sum of next table ** motorways and major national roads Source: Pine, 2004, p Transport performance (in tkm) is the transported volume (in tonnes) multiplied by the transported distance (in km) 16

17 Table 9 Network description Country Waterways Density Railways Density Roads* Density km km/100 km 2 km km/100 km 2 km km/100 km 2 Netherlands 5, , , Belgium 1, , , Germany 7, , , France 5, , , Austria , , Hungary 1, , Romania 1,613 7 ~10, , Bulgaria , * highways, state and regional roads Source: SC, 1998, p.55, tab. The above two tables show that the IWT network is concentrated in a limited area of the continent, although one with a high level of economic activity. This area contains 60% of the waterways, while the rail network share is smaller at 50% (although there are no comparable data, it is obvious that roads provide an even more equalized service). The network densities ( Table 9, above) also reflect the difference in character of the corridors. They also reflect the geographical boundaries within which IWT alone can compete with the other modes of transport without further regulatory consideration: this is the area of the West and the Rhine corridors Volumes The IWT sector on the continent is concentrated in the Rhine corridor between Germany and the Netherlands, and in the waterway network of the lowland countries. The transported volume in the Rhine corridor (domestic and international combined) has shown a more or less steady value since the 1970s. The total quantity has changed by around 250 million tonnes per year 15, with a 7% increase in total 16. Transport performance (t-km) due to the growing distances has risen by 34%. The IWT figures for the Danube are less clear. In 1999, the domestic traffic of the riparian countries was 6.8 million tonnes and the international traffic was 17.2 million tonnes, a total of 24 million tonnes, that is, less than a tenth of the performance along the Rhine corridor. Data collection regarding the Danube is rather inconsistent, therefore it not so easy to identify similar trends. The economic conditions have changed fundamentally in the region, so much so that long-term conclusions drawn from the data are no longer relevant (for details see Chapter 4.2.4). 15 Due to the method of statistical data collection in the different sections there are elements that may overlap, but the above number omits that element. 16 Pine, 2004, p.236

18 MAKK - Hungarian Environmental Economics Centre Fleet, personnel Fleets can be described according to several criteria, as can ships as well 17. All corridors have their own typical ship characteristics suited to the specific set of conditions (like natural and economic circumstances). The numbers reflect these facts and conclusions can be drawn from analysing these numbers. Interoperability is the core issue in network connection and we can evaluate its problems and effects along these guidelines. At the end of 2000 there were 2,650 dry cargo and 300 tanker barges registered in the Danube corridor 18 (including a considerable, but not precisely defined group not actually in operation). In the Rhine corridor, the respective figures are 6, and 1,000, respectively. The differences in distribution of ship types reveal the fundamental differences in the past economic conditions that formed the fleet, placing medium-term constraints on adaptation to new demands. Meanwhile, this demonstrates that the fleet is not a fixed property but an adaptable instrument. The typical Rhine ship is self-propelled (80 to 85% of all cargo ships); pushed barges are frequent on the lower flows, with up to six barges with a 16,000-tonne capacity. These are designed with a 2.8- metre draught, although there are some vessels with a deeper draught. On the Danube, the proportion of non self-propelled vessels fell from 90% to 75% by There are only 200 self-propelled vessels with an average capacity of 900 tonnes and a metre draught, 59 of which are Europe-style ships (that have the equipment to navigate on the Rhine as well), while on the Rhine there are 1,619 such vessels. The average capacity of the pushed barges (Danube-Europe II/b style) is between 1,350 and 1,500 tonnes. The Danube fleet is more mixed and lacks such typical units. Under the former Comecon structure, the pushed units were better suited to transportation needs. They allowed for better methods that the big companies transport organisation could use. In contrast to the Rhine, where the one-ship, one-owner structure of self-owned ships prevails, the self-propelled fleet is common. The size of the company determines its adaptation possibilities the larger the company, the better it can adapt if needed. The Danube fleet did not undergo the kind of restructuring phase that took place in the EU, and as a result of the economic transformation and the current insecure market/regulation environment, the fleet is outdated. Employment numbers and trends have been affected by the administrative restructuring of the sector following liberalisation. A rough estimation of the whole sector has been made. The distribution of workforce among the major waterway systems shows the same dominance of the Rhine system. There are an estimated 35,000 persons working in the sector, of which 23,000 (66%) are assigned to the Rhine corridor, 5,000 (14%) to the Danube corridor, and 7,000 (20%) to the remaining two 20. On workforce The number of nautical personnel in the IWT sector has been estimated at a total of 35,000 persons, of whom 5,000 belongs to the Danube corridor (the majority, 23,000 persons, are in the Rhine corridor) 21. In recent years a clear trend stands out on the Western European waterways, especially on 17 Area of navigation, purpose, installed machinery, propulsion, floating regime, hull configuration 18 Pine, 2004, p ,500 self-propelled units with an average 1,000 tdw; 1,100 pushed barges with an average 2,000 tdw. Tankers 1,500 tdw., Pine, 2004, p Pine, 2004, p Pine,

19 DCPszocio the Rhine: a growing number of seamen are being employed from the East. In the meantime in the Accession countries, the workforce comes from one step further east. In Western Europe the profession is becoming less and less attractive due to unfavourable working conditions (e.g. incompatibility with family life) and the small, or non-existent, wage differences compared to similar-skill professions. There are no comprehensive data on the sector as a whole on a European level, but the available research results (collected by the Pine study) reveal a consensus on this trend. The other, simultaneous process is the ageing of the workforce. Due to aging and low recruitment there is a tendency towards decreasing numbers of domestic nautical personnel. The annual shortfall is 60 persons in Germany. The balance is made up by nautical personnel migrating in from Eastern Member States. To cut costs, firms employ Eastern crew members with lower wages and make short-term contracts without social benefits. Costs of maintaining an appropriate crew largely differ region by region. In the accession countries (SK, HU, PL) this cost element is 3 to 4 times lower than in Germany, Belgium and the Netherlands, and labour costs in Romania are 10 to 12 times lower (see Annex, Table 32). This situation has the following structural results: The migration of Western European workforce to other sectors. This is mainly due to high qualifications required by navigation but less attractive working conditions that are not compensated for in wages. This is feasible, since a supply of workforce from the East is provided. Higher fluctuation: migrant workers return home when the economic conditions improve in their home country Social drawbacks that cause bigger problems for the immigrant crew, who are concerned about salary, not social benefits; In the medium term the lack of qualified crew puts pressure on the industry for low-labourintensive solutions; Fewer and fewer native speakers participate in the operations, which can increase the risk of problems due to miscommunication on board and between ships Decreasing level of river-specific knowledge pressure for standardisation Ports The different inland port types range from private industrial ports and wet transhipment sites 22 to ports of international importance, known as E-ports. There are 334 E-ports in the enlarged EU and candidate countries, 293 of them located along the four main interconnected waterway systems. More than half of these ports (150) are along the Rhine and West corridor, and 45 along the Danube. The E-port density (average distance between units) of the four corridors is 50 to 55 km (Pine, 2004, p.173), with extremes of 20 km in the Rhine system and 90 km in the South East corridor. (This value is an underestimate as the calculation includes currently non-used tributaries without such ports. Recalculated for the Danube line the result is 60 to 70 km.) The South East corridor has far fewer industrial wet transhipment sites than the other corridors. The values do not reflect the different access to the IVT service provided by these facilities. 22 Sites next to the waterway with their own transhipment facilities. 19

20 MAKK - Hungarian Environmental Economics Centre The port indicators reveal decreasing service quality and efficiency as we go downstream. Because at least three service-level groups of ports can be distinguished the corridor average has little explanatory value. However, it reflects the lower service quality compared to the other waterway systems. The ports on the lower flow of the river that are suitable for river sea vessels are underutilised. They indicate the low level of economic activity of the Black Sea area. Before the transformation period of the recent accession countries, river sea vessels travelled to the ports on the middle flow of the Danube as well. The deep sea port of Constanta in Romania has the potential for being a key element of a future IW transportation system. Although current transport volumes are minor, in the future it could serve the Danube-based industrial centres. Special RoRo (roll-on, roll-off) terminals are located in the Bulgarian section. The summary of the Pine study on ports emphasises that in the accession countries unfortunately several factors still hinder the possibility of expanding services and the increase of transhipment efficiency. These are: 23 Shortage of storage capacities for high-value goods (warehouses) and special storage facilities like silos (for grain or other granulate- or powder-form goods), tanks (liquids of any kind) or refrigerated storages (perishable goods) Obsolete and worn-out facilities, equipment and small mechanisation Weak infrastructure links to major rail and road routes (quality of access to other networks) and/or harbour area/zone surrounded by urban structures restricting further expansion of facilities/services Inflexible management with insufficient organisational know-how and non-motivated manpower 4.2 The goods on board There are two main sources of information about details of the goods flow of inland waterway transport on the Danube. The first is the Eurostat database on transport, and the other sources are the statistics of the Danube Commission. Unfortunately there are major difficulties in integrating these two sources of information, as the structure of the data differs. Moreover, the transformation resulting from liberalisation and the opening up of the centralised economies along the middle and lower flow generated changes to which the method of data collection was not able to adapt. A comparison of the databases reveals that the Eurostat database is not able to cover all the transport flows of the lower section of the Danube. In the meantime the Danube Commission statistics lack information on the upper flow, especially from Germany. We will therefore examine the characteristics of the upper and middle sections using the Eurostat database and supplement it with information drawn from the DC source. The tables illustrate the situation. According to the Eurostat, the overall volume of international transport is between 12 and 15 million tonnes per year, while based on the DC data the figure is around 20 million tonnes. The UN transport statistics show the same, that is, around 20 million tonnes annual international traffic. The majority of the difference comes from the traffic on the low river section through Ukraine, Bulgaria, Romania and Serbia-Montenegro. It seems that the overall traffic, including domestic transport as well, reaches 24 to 25 million tonnes annually. The table below shows the distribution of traffic between the major regions, but it underestimates the traffic through the low-flow countries (the difference being around 3 million tonnes). The bulk of the 23 Pine, 2004, p

21 DCPszocio traffic is to be found in the upper-middle flow countries and within the lower-danube section (Germany Hungary and Serbia-Montenegro Ukraine). The volumes of traffic between regions (middle Danube Rhine; low Danube middle Danube) are smaller but are of the same order. If we take into account the DC data on the low-flow countries we find that 80% of the traffic is to be found among the Danube countries and 20% between the middle section and the Rhine countries. (Cargo that relates to non-danubian ports constitutes 10 to 15% of the traffic, according to the DC statistics.) Table 10 International trade by IWT, in thousands of tonnes Regions unload 1 2, , ,166 5, ,186 7, ,372 2,734 5,107 Load 1,167 10,101 3,920 15, Rhine countries, 2- D, At, Sk, Hu, 3- SM, Bg, Ro, Ua In 1,000 t, 2002 Source: Eurostat Transport statistics The Danube IW traffic Table 11 Goods transport on the Danube in 2000; in 1,000 tonnes and % NST/R GOODS CATEGORY LOAD SHARE UNLOAD SHARE AVERAGE SHARE 0, 1 Agriculture/Foodstuff 1, , Solid Mineral Fuels 1, , Petroleum Products 1, , Ores and Metal Waste 10, , Metal Products 3, , Minerals, Building Mat Fertilisers Chemicals Machinery, Manuf., Misc Total 19, , Sources: Danube Commission 2002 The table is compiled using the country statistics, which explains why the load and unload columns have double values. Their sum is not meaningful, but the averages reflect the main trends, and the difference in the balance of the various goods gives information on the direction of goods flow. This shows that the most important segment of transport is the classic IWT segment of ores and metal waste. There are four other segments of equal importance: petrol products, metal products, solid mineral fuels, and agriculture-related trade (agriculture, foodstuffs, fertilisers). The next list shows the share of this traffic for the different countries. Country by country IWT characteristics: Ukraine has a huge load surplus in terms of Danube IW transport. This is due to the transportation of iron ore, solid fuel and metal goods. The load of cereals is also high, but there are unload volumes as well, which amount to half of the loaded volume. The important ports are Ismail and Reni. Romania has an unload surplus due to mineral and solid fuel supply. Cereals with inflow surplus represent another 10% of the volume, while other goods have a minor share. 21