Market Insight INLAND NAVIGATION IN EUROPE
PUBLISHED IN Winter 2016/2017 Market Insight Published in Inland navigation in Europe Winter 2016/2017 Table of contents
Summary (P.4)
economic context (P.7) 01 Economic context in Europe (p.8) Industrial activity and inland navigation (p.10) Inland navigation-related sectors (p.12)
FReight traffic on inland waterways and in ports (P.15) 02 Transport performance in Europe (p.16-18) Transport performance in main European IWT countries (p.20) Dry bulk, liquid bulk and container transport (p.22) Transshipment in European ports (p.24-26)
operating conditions (P.29) 03 Turnover development in Europe (p.30) Freight rates and fuel price (p.32) Freight rates and water conditions (p.34)
outlook (P.35) 04 Focus on steel industry (p.38) Forecast model and results (p.40) World trade outlook and transport trends (p.42) CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 4 economic context economic context 5
of traffic of the first half of 2015, whereas liquid bulk, boosted by Summary more dynamic industries and low oil prices, has already achieved a better result than in 2015. While two-thirds of the transport of iron During the first half of 2016, inland navigation in Europe mirrored the ore and metals is still concentrated on the Rhine, the Moselle and the general context of European economic growth, boosted in part by Saar, the market in this region is currently stagnating as a result of intra-EU trade but affected nevertheless by the overall slowing down intense global competition in the iron and steel sector. The country of the global economy. Economic growth is expected to remain bordering the Rhine with the highest growth rate in the first half of between 1 and 2% in the euro area in 2017. 2016 compared with the first half of 2015 is the Netherlands; this is mainly due to the transport of containers and bulk liquids.
The countries bordering the Rhine are maintaining their key role in European inland navigation; they represent 84% of Europe’s There are structural changes to expect in the long term, in order to riverborne transport, compared with 15% for the countries bordering deal with the steadily increasing proportion of container transport the Danube. in inland navigation in Europe and the need to anticipate the consequences of Europe’s new energy policies, particularly with regard to the transport of coal and oil products. The performance of inland waterway transport (IWT) in Europe, traditionally correlated to industrial growth in Europe, suddenly became detached from it in the second half of 2015 as a result of an With the return to normal of water conditions, the price of transport exceptional period of low water conditions. This particularly affected services fell in the first half of 2016, reaching a level lower than that for demand in Germany. After the period of low water conditions at the first half of 2015. Despite an increase in traffic in the Netherlands, the end of 2015, traffic on the Rhine took an upward turn during the turnover in the sector fell during the first half of 2016. first half of 2016, almost reaching the level of traffic achieved in the first half of 2015. Notwithstanding, the first half of 2016 saw a 2.1% Inland ports saw varying degrees of activity in the first half of 2016. drop in traffic on the Rhine compared with the same period in 2015. Whereas traffic in many Rhine and Danube ports was less than in the Traffic on the Danube, on the other hand, experienced a difficult first first half of 2015, the most important inland port in terms of volume half-year in 2016, with a drop in traffic compared with 2015 of as of goods – Duisburg – saw an increase of almost 3% of its waterborne much as 31% on the middle section of the Danube, mainly because traffic. of poor harvests and a corresponding decrease in the transport of cereals and agricultural products. However, the transport of other goods – including metals and oil products – on the Danube increased substantially.
The volume of traffic on the Rhine is increasing at different speeds in the main market segments (dry bulk, liquid bulk, containers). Container traffic has experienced an upswing after the period of low water conditions, recording an increase of 20% since the end of 2015 and reaching a record level in the second quarter of 2016, at more than 4 billion TKM in Europe. Dry bulk transport increased during the first half of 2016, but is having difficulty in resuming the level CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 6 economic context economic context 7 01 economic context CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 8 economic context economic context 9
Economic context in Europe Exports of the European Union to outside (Extra-EU-28) and 2,4 inside (Intra-EU-28) the EU (index 2010=100)
Quarterly GDP growth outlook in the Euro zone 130 (yearly rate in %) 2,2 120
2,0 110
100 1,8
90
1,6 80
70 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1 1,4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2
Q2 2013 2014 2015 2016 2005 2006 2007 2008 2009 2010 2011 2012 Intra-EU-28 Source: Eurostat 1,2 Extra-EU-28
1,0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2016 2016 2016 2017 2017 2017 2017 Exports of the European Union to China and the USA (index 2010=100) Source: OECD – Economic outlook n°99 140
120 • European GDP growth expectations for 2016 and 2017 remain low, between 1.5% and 2%. 100 • OECD expectations for 2017 have been lowered from 1.7% to 1.5% for Germany and from 1.5% to 1.3% for France. The expected 80 growth in the Euro zone has been lowered from 1.7% to 1.4%.
60 • The world economy is faced with a slowdown of world trade, especially between Europe and China / USA. Structural changes 40 in the Chinese economy – the shift from an export-oriented Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2
towards a consumption-based economy – explain part of the Q2 2016 current slowdown in world trade. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Eurostat USA • Intra-EU trade is progressing more steadily, but cannot fully China compensate the loss due to momentum in world trade related to weak global demand. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 10 economic context economic context 11
Industrial activity and Inland navigation • The growing intra-EU trade reflects a similar upward trend as industrial activity.
• The EU has experienced industrial production growth during seven quarters in a row. Index of Industrial production and Goods transport on inland waterways in the EU • However, this slight upward trend has not yet been reflected in goods transport on inland waterways, especially due to natural 45000 120 conditions that impacted IWT during the last semester of 2015.
42500 110
40000 100 37500 90 in 2015 35000 80 low water periods 32500 70 brought losses of cargO 30000 60 decoupling inland 27500 50 waterway transport from 25000 40 industrial production. Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Q2 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012
Source: Eurostat EU IWT Performance (Mio TKM) EU Industrial Activity (Index 2010 = 100) +3.8% Industrial production growth in THE EU over the last two years CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 12 economic context economic context 13
INland navigation-related Evolution of building permits for residential homes in the EU (Index 2013=100) sectors 250
refinery output in the EU and CRUDE oil price 200 160
115 140 110 150 120 105 100 100 100 80 95 60 90 50 40 85
20 80 0 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 0 75 Apr Apr Apr Feb Feb Feb Oct Oct Oct July July July Apr Feb Aug Aug Oct Mar Mar Dec Dec Aug Mar Nov Nov July Aug Mar Dec May May May Nov Sept Sept Sept May June June June Sept June 2014 Jan 2014 2015 Jan 2015 2016 Jan 2016
2013 Jan 2013 EU-28 Source: Eurostat Netherlands Germany Source: Eurostat and US Energy Crude Oil Price WTI Information Administration (USD per barrel - Index 01/2013 = 100) Austria Romania Refinery Output in the EU France (Index 01/2013 = 100)
• Oil prices are still very low, in spite of a slight upward tendency in 2016. • Despite rising industrial activity, economic conditions of particular dry cargo segments are stagnating. • The low oil prices tend to have a positive effect on the refinery output, the economic situation in general, and the outlook of transport demand • Example of the construction sector: since the burst of the housing in the liquid cargo segment. bubble in 2006/2007, this sector has been characterised by a long period of stagnation. Only since 2015 can a small pickup be noticed in main European countries. Building permits have increased by +9% between Q2 2015 and Q2 2016 in the EU.
• The business cycle of the steel industry also has an important impact on IWT volumes (this is analysed in detail in the chapter “Outlook”). CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 14 economic context economic context 15 02 FReight traffic on inland waterways and in ports CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 16 FReight traffic on inland waterways and in ports FReight traffic on inland waterways and in ports 17
Comparison of transport performance per country TRANSPORT PERFORMANCE in Europe between Q2 2015 and Q2 2016 (mio TKM) 15000 2015 Transport performance in IWT on the national territory 2016 of each country in Europe for Q2 2016 12000
Share of the countries’ TKM in total transport performance in Europe 9000
Netherlands 6000 0.001% Lithuania Belgium 3000
Poland 34% 0.1% 0 37% France Serbia Poland Austria Croatia Bulgaria Belgium Romania 7% Hungary Slovakia Germany Lithuania Luxembourg Switzerland Czech Republic Netherlands
0.2% Republic Czech 0.03% Slovakia Source: CCNR, National Statistics Offices, Eurostat. France Germany 0.6% Austria Hungary 5% • In Europe, Rhine countries account for 84% of goods transport on 1.3% 0.03% 1.1% Switzerland 9% inland waterways, whereas Danube countries represent 15%.
Romania 0.04% • 96.1 million tons of goods were transported on the traditional 0.7% Rhine during the 1st semester 2016 (Q1+Q2). This represents a Serbia 3.7% decrease of 2.1% compared to the same period in 2015. Bulgaria Croatia • The Rhine traffic has not yet fully recovered from the low water Luxembourg period and the resulting sharp decline in traffic at the end of2015.
• Compared with 2015, the decrease was greater during the 1st quarter than during the 2nd: -3.2% for Q1 2015-2016 vs -1.1% for Q2 2015-2016. This indicates that IWT traffic is on its way back to >30% 2015 levels on the Rhine.
• The Danube traffic underwent a significant decline during the >1% 1st semester of 2016 (Q1+Q2 2016), notably with a decrease of <1% -31% for the Middle Danube, in particular on account of the sharp decrease for cereal and agricultural products transport decrease Source: National statitics offices, Eurostat, CCNR. (due to bad harvest in 2015). For the definition of ‘Europe’: see the methodology at the end of the report CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 18 FReight traffic on inland waterways and in ports FReight traffic on inland waterways and in ports 19
TRANSPORT PERFORMANCE in Europe Container transport performance in EUROPE (quarterly data - mio tkm) DRY CARGO transport performance in EUROPE 5000 (quarterly data - MIO tkm) 30000
4500 27500
25000 4000
22500
3500 20000
17500 3000 2015-1 2015-2 2015-3 2015-4 2016-1 2016-2 15000 2015-1 2015-2 2015-3 2015-4 2016-1 2016-2 Source: National Statistics Offices, CCNR
Source: National Statistics Offices, CCNR
• Container transport reached a record level during Q2 2016 reaching LIQUID CARGO transport performance in EUROPE almost 4.3 billion TKM in Europe (+7% compared to Q1 2016 and (quarterly data - MIO tkm) +4.3% compared to Q2 2015). 9000 • Dry cargo is slowly on its way back to the Q1 2015 level.
8000 • In Q2 2016, liquid cargo transport slowly decreased compared to Q1 2016 (-6%), but remained higher than 2015 transport performance levels.
7000 • Taking all segments together, transport performance in Q2 2016 increased by 2.3% compared to Q1 2016 and by decreased by 2.9% compared to Q2 2015. 6000 +20% 5000 between q4 2015 and Q2 2016 Container transport 2015-1 2015-2 2015-3 2015-4 2016-1 2016-2 experienced a strong increase recovering from Source: National Statistics Offices, CCNR the low water period of end 2015. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 20 FReight traffic on inland waterways and in ports FReight traffic on inland waterways and in ports 21
Transport performance in main • The evolution in the two countries with the highest IWT volumes European IWT countries nd 16000 shows that the low water period in the 2 half of 2015 had a more negative effect on transport demand in Germany than in Inland shipping transport performance in MAIN EUROPEAN the Netherlands. This is due to the fact that navigation conditions IWT COUNTRIES (MIO TKM) on rivers in Germany (especially on the Elbe and the German 14000 stretch of the Danube) were impacted more seriously by the low 16000 water conditions in autumn 2015. Complete recovery in Germany has not yet been achieved. 12000 • In France, a slight upward trend for certain goods (agricultural 14000 products, foodstuff, fertilizers, metal products) is offset by negative tendencies for other products (coal, iron ores, oil 10000 products, sands, soil & building materials). This results in a rather stable evolution for the overall transport performance in France. 12000 Still considering the important weight of agricultural products in French inland navigation, bad harvests in 2016 are expected to 8000 have a negative impact after the summer. 10000 • The evolution in the Danube countries was rather negative 6000 during the 1st half of 2016 for the Upper Danube (Austria), as well as the Middle Danube (Croatia, Hungary, Serbia) and 8000 Lower Danube (Bulgaria, Romania)- mainly due to a reduction in movement of agricultural products and foodstuff. This 4000 decline does not reflect long-term trends since it was the direct 6000 consequence of bad harvest results in 2015.
2000 • Also on the German stretch of the Danube and on the Rhine- Main-Danube canal, severe reductions of cargo were registered. 4000
0 2015-1 2015-2 2015-3 2015-4 2016-1 2016-2 2000
Germany France Source:0 Eurostat and Netherlands Bulgaria +2.4% 2015-1 2015-2 2015-3 2015-4 2016-1 2016-2 National Statistics Offices Romania Austria q2 Vs Q1 2016 in THE netherlands, Belgium Hungary the upward trend registered since end 2015 is still ONgoing. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 22 FReight traffic on inland waterways and in ports FReight traffic on inland waterways and in ports 23
Dry Bulk, Liquid Bulk and Rate of change in inland shipping transport performance In Rhine countries (Q2 2016 vs Q2 2015 in%)
container transport 50
Rate of change in inland shipping transport performance In 40 DANUBE countries (Q2 2016 vs Q2 2015 in%) 30 Dry bulk 50 20 Liquid bulk Containers 40 10 Total
30 0
Dry bulk 20 -10 Liquid bulk 10 Total -20 0 -30 Germany Netherlands France Belgium -10
-20 Source: Eurostat
-30 Romania Bulgaria Austria Hungary
Source: Eurostat • Container transport has renewed with a positive trend in both Germany and the Netherlands, while undergoing a severe decrease in France.
• Dry cargo is the overall dominant market segment in the Danube • Liquid cargo transports are performing well in the Netherlands, region. It is marked by high volatility, which is due to the major whereas they lost momentum in Germany. For Germany, these importance of agricultural products, while container transport is still volumes are decreasing in the long run due to a falling consumer very limited. demand for heating oil and gasoline. In the Netherlands, however, these transports are fostered by rising trade • Despite decreasing transport performance in the dry cargo movements of oil products and inter-refinery movements. segment due to bad harvests in the Danube region, some other dry cargo segments like metals and iron ores have experienced • Dry cargo segment is the weakest segment in all countries, transport increase in parts of the Danube. reflecting saturation tendencies in certain industries.
• The strong increase in liquid cargo transport in Hungary is due to • In France, the situation is explained by different trends according the transport increase in mineral oil products. The still relatively low to goods segments. In Q2 2016, mineral oil products and iron ores volumes explain the important rate of change. accounted for losses of 20-30% with respect to Q2 2015, while agricultural products respectively gained 2%, foodstuff 20%, • Container transport on the Danube remains very low, representing metals 3%, and fertilisers 14%. 0.5% of total transport performance during Q2 2016, while it represents 13.5% in the Rhine countries. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 24 FReight traffic on inland waterways and in ports FReight traffic on inland waterways and in ports 25
TRANsSHIPMENTS in European • The goods traffic in Rotterdam and Hamburg decreased Ports between the 1st half of 2015 and 2016. • The dry bulk segment was particularly impacted in the port of Global traffic in European ports in 2016 Rotterdam with a decrease of 3.9% between the 1st half of 2015 and 2016. • The liquid bulk also experienced a decrease (-1.1%) but remains at historically high levels, helped by low fuel prices. • Antwerp was able to increase its maritime traffic by almost 4% between the 1st half of 2015 and 2016, relying strongly on container traffic increase. • The biggest European inland port, Duisburg, counted an increase of almost 3% in its IWT traffic over the same period. Rotterdam Hamburg • In parallel to the decrease in the main maritime port for the Rhine Antwerp hinterland (Rotterdam), the major Rhine ports saw a decrease in st st Duisburg transshipment between the 1 semester 2015 and the 1 semester Neuss Liege 2016 (average rate of decrease was 4% for the biggest eight Cologne Mannheim Rhine ports). Ludwigshafen
Karlsruhe • The port of Neuss-Düsseldorf was the positive “outlier” with an Paris Regensburg Bratislava Strasbourg increase in traffic of 8%. Linz Vienna Mulhouse Budapest Basel • The major Danube ports witnessed a decrease in their traffic as well. Galati
Constanta
INcrEase in goodS traffic in the 1st half of 2016
>200 mio t >100 mio t for 1 of the 3 major maritime ports >20 mio t >5 mio t >3 mio t >1 mio t and 2 OF the 3 major inland ports <1 mio t In Europe positive rate of change in global traffic between 1st half year 2015 and 1st half year 2016 negative rate of change in global traffic between 1st half year 2015 and 1st half year 2016 >30% Source: CCNR, Danube Commission and ports mentioned
>200 >100 >20 >5 >3 >1 <1 CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 26 FReight traffic on inland waterways and in ports FReight traffic on inland waterways and in ports 27
TRANsSHIPMENTS in European +2.9% container Ports transshipment increase in Duisburg st IWT container traffic IN European inland ports in the 1 half st of 2015 and 2016 (in 1000 TEU) betWeen 1 semester 2015 st 260 & 1 Semester 2016 240 220 200 180 160 140 • Container handling in inland ports is part of multimodal logistics 120 chains, and represents a growth segment especially along 100 the Rhine, with its dense industrial areas requiring container 80 transport possibilities. 60 • Ports offering multimodal container terminals help to further 40 integrate IWT in logistical chains, by connecting it with high 20 added-value products (machines, computers, equipment, etc.). 0 Duisburg Germersheim Mannheim Wörth Strasbourg Cologne Emmerich Mainz Basel • Major container ports on the Rhine experienced contrasted evolution during the 1st half of 2016 compared to the 1st half of 2015 Semester 1 Source: CCNR, Destatis and ports mentioned 2016 Semester 1 2015, with, for example, an increase in containers transshipment in the ports of Duisburg, Germersheim, Mainz and Basel. • The development potential of container traffic has still to be st Maritime CONTAINER TRAFFIC IN EUROPEAN SEA-PORTS IN the 1 half exploited in the Danube area. of 2015 and 2016 (in MIO TEU) • Maritime ports experienced the same evolution for container 8 transshipment as for total goods transshipment (increase in 7 Antwerp and decrease in Rotterdam and Hamburg between 1st 6 semesters of 2015 and 2016). 5 • Although the maritime container traffic in Rotterdam declined 4 slightly (-2.3 %) in the 1st half of 2016, IWT container traffic in 3 the Netherlands and in Germany benefited from the growing 2 container traffic in the port ofA ntwerp. In Antwerp, the maritime 1 container traffic in the st1 half 2016 was higher by 4.2 % than in the 0 Rotterdam Antwerp Hamburg 2015 Semester 1 1st half year 2015, which resulted in a growing hinterland container 2016 Semester 1 Source: CCNR and ports mentioned transport from Antwerp to the Netherlands and Germany. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 28 economic context economic context 29 03 operating conditions CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 30 operating conditions operating conditions 31
TURNOVER DEVELOPMENT Turnover development in Austria Index: 2010 = 100 IN EUROPE 160
Turnover development in the Netherlands 140 Index: 2010 = 100
120 130
100 120
80
110 60
100 40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1 Q2 Q3 Q2
Q2 90 2010 2011 2012 2013 2014 2015 2016
80 Source: Statistics Austria and CCNR calculation 0riginal series Seasonally adjusted Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1 Q2 Q3 Q2
Q2 2010 2011 2012 2013 2014 2015 2016
• During Q2 2016, water conditions enabled a high degree of loading and led to shrinking freight rates and turnovers. Source: CBS and CCNR calculation 0riginal series Seasonally adjusted • This evolution remains aligned with usual seasonal evolution. • In Austria, where passenger transport is greater than goods transport, the high volatility of passenger shipping has a strong TurnoveR IN the Netherlands influence on turnover. in Q2 2016 SHRANK by 6% • After a trough in Q1 2016, turnover recovered slightly in Q2 2016, compared to Q2 2015 -6% despite still being 3% lower than in Q2 2015. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 32 operating conditions operating conditions 33
FREIGHT RATES AND fuel PRICE Development of Inland navigation Freight Rates in the Netherlands (2015 = 100) Development of Fuel Prices in the IWT sector (in eur/100l.) 150 90 120 80
90 70
60 60
50 30 40 0 30 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1 Q2 Q3 Q2 Q3
Q2 Source: CBS 2010 2011 2012 2013 2014 2015 2016
Source: CBRB • In Q2 2016, freight rates in goods transport in the Netherlands were slightly below the level of Q2 2015. • Taking only tanker freight rates into account, we also observed a decrease during the Q2 2016 (-3.5% compared to Q2 2015). • Following the declining oil price, fuel prices did reach a trough in Q2 2016. • On the Danube, freight rates are correlated to transport running costs. As these costs are essentially composed of fuel cost • In Q3 2016, fuel prices showed some signs of recovery, as oil (between 50 and 60%), low fuel prices during the 1st semester of prices picked up slightly. 2016 have triggered a decrease in inland navigation freight rates. • The OPEC countries’ agreement at the end of 2016 might lead to a further upward trend in fuel prices during 2017. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 34 operating conditions operating conditions 35
FREIGHT RATES AND Water conditions
Possible Loading degrees at Kaub/Middle Rhine for vessels with a draught of 2.5 and 3 meters, compared with freight rates Index*
100 600 NETHERLANDS 500 80 GERMANY Rotterdam 400 60 300 Lower Rhine 40 Duisburg 200 Cologne 20 Bonn 100 BELGIUM 75,0
0 0 Kaub 2011 2012 2013 2014 2015 2016 Middle Rhine
Freight rate index Source: CCNR and PJK International. 3 meter * Freight rates in tanker shipping 2.5 meter Mannheim
• Freight rates were much weaker during the 1st half of 2016 than in FRANCE Strasbourg autumn 2015, when low water levels increased prices sharply. Upper Rhine • Apart from supply/demand ratios, freight rates are strongly influenced by the natural conditions (water levels).
• Water levels and transport prices (freight rates) are negatively Basel correlated. • In the 1st half of 2016, the water levels along the Upper, Middle and Lower Rhine were rather favourable towards a high loading SWITZERLAND degree of vessels. However, this put a brake on freight rates. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 36 economic context economic context 37 04 outlook CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 38 outlook outlook 39
Focus on Steel industry 2/3 of all iron ore and metal transport The transport of steel, steel products, iron ore and coal is strongly correlated with IWT. In Europe, the greatest transport volumes in on European inland waterways ARE this segment can be found in the Rhine area. The steel industry in OBSERVED ALONG Germany, France and Luxembourg is connected with the Rhine, the Moselle and the Saar rivers. THE Rhine, Moselle and Saar. Due to high international competition, steel production and iron ore transport are stagnating in Europe. West European Waterways and StEEl production
German and French steel production and Transport of iron ore on the river Rhine *
3200
2700
2200 n 1000t i 1700
1200 GERMAN STEEL PRODUCTION 1800 2300 2800 3300 3800 4300 in 1000 t s transport s transport e
3000 Iron or Iron
2500
2000
1500 FRENCH STEEL PRODUCTION 600 800 1000 1200 1400 1600 1800 in 1000t Blast furnace steelwork Electric steel plant Source: World Steel Association and destatis / * monthly data from 1/2000 until 9/2016 Source: CCNR CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 40 outlook outlook 41
FORECAST MODEL AND RESULTS
Iron ores volume transported on the Rhine in 1000t and forecast model
9000
8000
7000
6000
5000
4000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1 Q2 Q3 Q4 Q2 Q3 Q2 Q3
Q2 Q2 Q3
Q2 2017 2010 2011 2013 2014 2015 2016 2012 2009 2004 2006 2007 2008 2005
Source: CCNR
Iron ore Transport
Forecasting model
• Iron ore transport on the Rhine is expected to stagnate in 2017, • The main reason why Western European steel production is in parallel with an expected stagnation of steel production in expected to pursue its stagnation trend in 2017 is the sharp Western Europe. global competition in this sector, especially from countries like China and India. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 42 outlook outlook 43
WORLD TRADE OUTLOOK Trends in demand for transport in 2017 AND TRANSPORT TRENDS Main driver(s) Trends in demand Agricultural products Harvest results Decrease RWI/ISL Container Throughput Index Iron ores Steel production Stagnation 125 Metals Steel production Stagnation
120 Weather & Energy policy, Coal Decrease partly steel production
115 Containers World trade Increase
Sand, soil & 110 building materials Construction activity Stagnation
105 Mineral oil products Oil prices Stagnation
Chemicals Chemical production Increase 100 Source: CCNR 95 • Bad harvests in 2016 in Western Europe will keep having an Feb Apr Apr Apr Feb Feb Oct Oct July July July Aug Aug Mar Mar Mar Aug Dec Dec Nov Nov May May May Sept Sept Sept June June June impact on IWT at the end of 2016 and beginning of 2017. On the other hand, contrary to 2015, the Danube region has experienced 2014 Jan 2014 2015 Jan 2015 2016 Jan 2016 good harvest results in 2016 that should have a positive impact on Original Seasonally and Working Day adjusted agriculture products IWT transport on the Danube. Trend-Cycle-Component • The outlook for the steel segment has changed from a decreasing to Source: RWI and ISL calculation based on data from 81 ports a stagnant tendency, due to the new outlook of steel production in Germany forcasting a stabilisation in the steel industry.
• The RWI/ISL Container throughput index is based on data from • The outlook on coal transport is still weak due to the ongoing 81 world container ports covering 60% of worldwide container growth of renewable energies. AGEB is indeed expecting a handling. This index is an early indicator for world trade and decrease in coal use within the German energy sector (-4.4% for maritime container shipping. the first 9 months of 2016 compared to 2015). • The outlook for the liquid cargo sector is more uncertain. The • For the 2nd half of 2016, the trend-cycle-component of the index is still on an upward trend, giving credit to the positive outlook transport of mineral oil products might be less favourably affected for the container transport. by low oil prices and high profit margins in the refinery sector because of the recent OPEC countries agreement. CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 44 outlook outlook 45
GLOSSARY National STATISTICS OFFICES & Institutes
AGEB: AG Energiebilanzen e.V. / Working Group on Energy Balances (Germany) Acronym Original Name English Name Country CBRB : Vereniging Centraal Bureau voor de Rijn- en Binnenvaart / Central Bureau Statistik Bundesanstalt Statistik Österreich Statistics Austria Austria for Inland Barging (Netherlands) Algemene Directie Statistiek / Direction Statbel Statistics Belgium Belgium Danube countries: Austria, Bulgaria, Croatia, Hungary, Romania, Serbia, Slovakia générale Statistique/ Generaldirektion Statistik
NSI Национален статистически институт National Statistical Institute Bulgaria EU: European Union DZS Državni Zavod za Statistiku Central Bureau of Statistics of Croatia Croatia Europe: European inland navigation in this report includes two countries not belonging to the European Union, Switzerland and Serbia MDCR Ministerstvo dopravy České republiky Ministry of Transport of the Czech Republic Czech Republic
FTA Liikennevirasto Finnish Transport Agency Finland Freight rate: Price at which a cargo is delivered from one point to another VNF V oies Navigables de France Navigable Waterways of France France GDP: Gross Domestic Product destatis Statistisches Bundesamt Federal Statistical Office of Germany Germany IWT: Inland Waterways Transport KSH / HCSO Központi Statisztikai Hivatal Hungarian Central Statistical Office Hungary
Loading degree: percentage of maximum vessel loading MIT Ministero delle Infrastrutture e dei Trasporti Ministry of Transport and Infrastructure Italy
MIO: Million AIPo Agenzia Interregionale per il fiume Po Interregional Agency of the Po River Italy
OECD: Organisation for Economic Co-operation and Development OPS Oficialiosios Statistikos Portalas Statistics Lithuania (Official Statistics Portal) Lithuania Institut national de la statistique et des études National Institute of Statistics and Economic Q1: First Quarter STATEC Luxembourg économiques du Grand-Duché de Luxembourg Studies of the Grand Duchy of Luxembourg
Rhine countries: Belgium, France, Germany, Luxemburg, Netherlands, CBS Centraal Bureau voor de Statistiek Statistics Netherlands Netherlands Switzerland GUS Główny Urząd Statystyczny Central Statistical Office of Poland Poland RWI/ISL Container Throughput Index: Index of worldwide container throughput in ports РЗС Републички завод за статистику Statistical Office of the Republic of Serbia Republic of Serbia
INSSE Institutul National de Statistica National Institute of Statistics Romania TKM: Ton-Kilometer (unit for transport performance which represents volume of
goods transported multiplied by transport distance) Slovstat Štatistický úrad Slovenskej republiky Statistical Office of the Slovak Republic Slovak Republic
TEU: twenty-foot equivalent unit - unit of cargo capacity Trafa Trafikanalys Transport Analysis Sweden
Turnover: Sales volume net of sales taxes DfT Department for Transport Department for Transport United Kingdom
WTI: West Texas Intermediate (grade of crude oil used as benchmark in oil pricing) CCNR Market Insight - WINTER 2016/2017 CCNR Market Insight - WINTER 2016/2017 46 outlook outlook 47
OTHER SOURCES CREDITS
Original Name English Name Country
EUROSTAT EUROSTAT EU The Market Insight of European Inland Navigation is a common project of the CCNR and the European Commission OECD OECD World World Steel Association World Steel Association World CONTRIBUTORS
AG Energiebilanzen Working Group on Energy Statistics Germany CCNR Centraal Bureau voor de Rijn- en Binnenvaart Central Bureau for Inland Barging Netherlands Guillaume LEGEAY (Project leader) Federation Francaise de l’Acier French Steel Association France Norbert KRIEDEL (Economist) Wirtschaftsverband Stahl German Steel Association Germany Clémentine HURBOURQUE (Editorial coordination) Institut für Seeverkehrswirtschaft und Logistik Institute of Shipping Economics and Logistics Germany Angelika ESPENHAHN (Translation coordination) Rheinisch-Westfälisches Institut für Wirtschaftsforschung RWI - Leibniz-Institute for Economic Research Germany Joseph DÜCK (Intern) US. Energy Information Administration US. Energy Information Administration USA Contact: [email protected] PJK International PJK International Netherlands IN PARTNERSHIP WITH Methodology Danube Commission Moselle Commission Freight traffic on inland waterways and in ports Sava Commission Europe as defined in chapter 2 takes into account all European countries EBU providing quarterly data on inland waterway transport. All these countries are listed on the Transport Performance in Europe map (page 16). ESO When discrepancies on total transport performance are observed between IVR Eurostat and National Statistics data, the information is notified to Eurostat, and National Statistics Office data are taken into account. TRANSLATION When available, NST product classification is used in order to split transport Christophe HENER performance into following transport segments: dry cargo, liquid cargo, (French) containers. Bettina ACHHAMMER (German) When available, general cargo is included in dry cargo. Pauline de ZINGER (Dutch) Hungary and Bulgaria transport performance split by segment is based Jane SWIFT (English proofreading) on Hungary and Bulgaria quarterly transport volume split provided by the National Statistics Offices.
Outlook Explanatory variables for the iron ore transport forecast model are German steel production, French steel production, weighted by indicators for the market share of inland shipping within the steel sector. The forecast model result is based on the following formula: log(Iron ores transport) = 0.24 * log(Steel production in France) + 0.73 * log(Steel production in Germany) LIABILITY DISCLAIMER
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