Danube Waterway – Key European Transport Axis

Improving infrastructure & framework conditions for Danube - Requirements from an Industry viewpoint

Alexandru Capatu Annual Forum EUSDR Bucharest, 28.-29.10.2013 What is Pro Danube International?

Platform of private companies with strategic economic interest in better framework conditions and higher public investment in the Danube transport & logistics system

Industry & Ports & Barge Wholesale Logistics Terminal Shipyards & Service Operators Suppliers & “Transport Operators Providers (Associations) Others User” (Associations)

Established autumn 2011 by companies & associations Non-profit association based in Vienna Network of currently more than 120 companies More than a lobbying organisation as it initiates and executes projects which improve framework conditions resulting into a higher use of the Danube

2 Danube waterway – Key European transport axis

43 Mio. tons of cargo in 2010

High potentials – Many problems

. Danube serves an economic area of

more than 100 Mio. inhabitants . Connects CE &SEE with growing markets in Black Sea (TR, RUS, UA) . Port of Constanta as a hub for hinterland traffic . River ports could serve as focal points for re-industrialization & regional economic growth . Provides cost-effective logistics for land-locked industries ensuring Source: via donau competitiveness & jobs . Environmentally friendly “green” transport corridor

3 Profit in Euro (%) depending on draft

Draft 2,00 2,30 2,50 2,70 Total revenue ( Euro ) 125.700 157.125 188.550 219.975 Total Costs 140.863 145.891 150.919 155.947 Profit -15.163 11.234 37.631 64.028 Profit % -12,06% 7,15% 19,96% 29,11% Calculation basis: Profit per to -2,53 1,50 4,18 6,10 Pushed convoy of 6 barges during the entire year 2012, 250,000 Constanta - Hungary & return, Diesel €850/ton 200,000

150,000 Total revenue ( Euro ) 100,000 Total Costs Profit 50,000

0 2.00 2.30 2.50 2.70 -50,000 4 Cost and energy efficiency vs. draught

DST - Development Centre for Ship Technology and Transport Systems 5 Severest problem: insufficient waterway maintenance

 Several waterway administrations fail to ensure minimum standards in waterway maintenance (2,5 m fairway depth at LWRL according to recommendations of Danube Commission)  As a consequence: • Reduced efficiency of transport operations, loss of customers, shutdown of barging companies • Risk of total blockage of transport chains (like 25 days in autumn 2011 caused by shallow water hot spots in Bulgaria and Hungary) • Millions of Euros in financial losses for barging & port industry plus high extra costs & supply risks for manufacturing sector together with loss of trust in transport reliability

PDI action on better fairway maintenance: resulted into EC initiative (VP KALLAS & CM HAHN) which produced on 7 June 2012 in Luxembourg a Declaration of Transport Ministers for targeting better waterway maintenance (all Danube states except Hungary endorsed this Declaration)

Despite this declaration and clear international obligations for fairway maintenance, significant lack of short term measures in dredging & riverbed surveying can be registered

Two realities in Danube waterway policy

Political support

Political failure in some states

Fairway depths during period 01.09 - 31.12.2012

Requried gauge for Number of days at Sector Km Standard station Calculation having min. depth depths below 250 of 250 cm cm GERMANY: Depth = Pfelling 2303-2306 Pfelling 390 87 Gauge –140 cm

Vilshofen- Depth = 2249-2261 Hofkirchen 290 77 Hofkirchen Gauge – 40 cm

AUSTRIA:

Kienstock 2013-2015 Kienstock Depth » Gauge 250 53

Depth = Wildungsmauer 1882-1897 Wildungsmauer 230 52 Gauge+20 cm

8 Fairway depths during period 01.09 - 31.12.2012

Requried Number of days Standard Sector Km Calculation gauge for min. at depths station depth 250 cm below 250 cm HUNGARY Szob upstream 1711,3-1710,7 Depth=Gauge+70cm 180 47 Dötös 1701,0-1700,0 Budapest Depth=Gauge+75cm 175 46

Nagymaros upstream 1698,9-1697,8 Depth=Gauge+60cm 190 55

Horany 1667,5-1666,8 Depth=Gauge+70cm 180 47

Ujpesti 1653,0-1651,8 Depth=Gauge+90cm 160 28

Depth=Gauge+110cm 140 11

Budapesta 1638,4-1637,4 Depth=Gauge+120cm 130 4 Depth=Gauge+110cm 140 11 Ercsi 1615,9-1615,1 Dunaujvaros Depth=Gauge+210cm 40 58 Kulcs 1590,7-1590,1 Depth=Gauge+230cm 20 23 Dunaujvaros 1581,5-1580,5 Depth=Gauge+230cm 20 23 Dunaegyhaza 1567,3-1566,4 Dunaföldvar Depth=Gauge+320cm -70 42 Dunaföldvar upstream 1561,0-1560,0 Depth=Gauge+350cm -100 13 Dunaföldvar 1559,8-1559,7 Depth=Gauge+355cm -105 11 Solt 1558,5-1557,5 Depth=Gauge+385cm -135 - Depth=Gauge+315cm -65 42 Solt downstream 1555,8-1554,6 Depth=Gauge+365cm -115 1 Depth=Gauge+355cm -105 11

Fairway depths during period 01.09 - 31.12.2012

Sector Requried Number of days Standard Km Calculation gauge for min. at depths below station depth 250 cm 250 cm BULGARIA / ROMANIA Băloiu 629 Corabia Depth = Gauge + 225 cm 25 21 Liuta-Milka 568 Depth = Gauge + 150 cm 100 68 Belene 563 Depth = Gauge + 120 cm 130 80 Zimnicea Vardin 543 Depth = Gauge + 190 cm 60 30 Gâsca upstream 538 Depth = Gauge + 190 cm 60 30 Batin 528 Depth = Gauge + 210 cm 40 58 Batin downstream 523 Giurgiu Depth = Gauge + 265 cm -15 17 Riahovo (Mishka) 455 Depth = Gauge + 300 cm -50 6 Olteniţa aval (Popina) 420-424 Olteniţa Depth = Gauge +240 cm 10 8 Cernavodă upstream 345-305 Cernavodă Depth = Gauge + 200 cm 50 78

CROATIA/SERBIA: During the investigated period, fairway depths were above 250 cm, but in several other periods, the sectors Apatin (km 1405-1401), Mohovo (km 1310-1308) and Novi Sad (km 1269- 1268, km 1266-1265 and km 1248) caused restrictions

10 Water Depth Situation August 2013

28.8.2013 Km 609.0 Km 608.3 Depth(dm)22 Width(m)>180 77 vessels were stopped 610.0 608.0 22 >180 590.0 589.5 24 140 4 vessels were grounded 591.0 589.0 24 140 586.0 584.0 23 >180 575.0 574.2 21 >180 568.0 567.8 18 60 571.0 567.0 18 60 562.5 562.0 20 100 563.0 560.0 20 100 542.2 541.2 22 >180 544.0 541.0 22 >180 538.0 537.0 22 130 541.0 537.0 22 130 534.5 534.0 23 >180 537.0 534.0 23 >180 524.0 523.0 24 60 528.0 523.0 24 60

11 Draft of Navrom convoys which left Constanta

Date Cargo Destination Draft 23.08.2012 Coal Hungary 1,75 m 04.09.2012 Phosphate Austria 1,80 m Coal Hungary 1,90 m 06.09.2012 Phosphate Austria 1,95 m 07.09.2012 Phosphate Austria 1,95 m Coal Hungary 2,00 m Coal Bulgaria (Russe) 2,35 m Soybean meal Bulgaria (Svistov) 2,00 m

09.09.2012 Coal Hungary 2,15 m 10.09.2012 Coal Hungary 2,15 m 11.09.2012 Coal Bulgaria (Russe) 2,45 m Coal Hungary 2,05 m 22.09.2012 Coal Hungary 2,15 m

Navrom lost more than 150.000€ in revenues when operating these convoys

12 Synthesis Maintenance

• There was a high number of days with a fairway depth below 250cm despite favourable water conditions in the investigated period • This clearly shows significant shortcomings in waterway maintenance on several sections of the Danube • The failure in waterway maintenance results into direct financial losses for the barge operators or reduce significantly their earnings • The transport users become deprived of the cost advantages of barge operations, are effected by delays in the supply and consequently have to pay higher transport costs which reduces their own competitiveness • Without proper maintenance barge operators cannot earn depreciation of modern equipment consequently there is only maintenance investment (hardly any room for innovation except cost advantages of LNG can be exploited) • PDI informed already in April/May the EC Commissioners, EC IWT Coordinator, Danube Commission, EUSDR PA 1A coordinators about the criticalness and intervened directly to the Bulgarian Transport Minister • All the high-level interventions which followed did not lead to a sufficient response by the Bulgarian authorities and to concrete measures yet

13 Low water periods cannot be avoided but…

… safe and cost-efficient transport can be ensured if all Danube States respect the existing international regulations

PROPER FAIRWAY MAINTENANCE AND GUARANTED MINIMUM FAIRWAY DEPTHS OF AT LEAST 2.5 m MUST BE RESTORED IMMEDIATELY

Waterway infrastructure development must be important element of EU programs in financial period 2014-2020

 Danube as new corridor “Strasbourg – Danube” in TEN T successor “CEF – Connecting Europe facility”

 Integration of infrastructure projects into new Operational Programs (Structural Funds)

 New program instruments which facilitate coordinated public – private deployment projects

14 In addition: Need to identify and to fight administrative barriers

Some examples of unnecessary barriers: Romania: excessive formalities and fees for customs and other authorities causing additional costs and extra waiting times, e.g. • Obligation to use T2L document for national cargo transport • Restrictive opening hours of custom offices in several important ports • Tariff scheme of Black-Sea Canal is contra-productive for operators when using additional barges for compensation low water conditions (charging system per ton capacity instead of cargo tons) • Fees and procedures imposed for authority “services” like: traffic supervision & control of safety of navigation, allowance for ship repairs, for authorization/approval/supervision of vessels bunkering, for annual endorsement of operation permit Hungary: restrictions concerning the size of the ship convoy, fees for bigger convoys, excessive waiting times at border control Serbia: unplanned waiting times at border control, waste of time due to bureaucracies by transiting the only non-EU country between Constanta and Rotterdam Bulgaria: problems with custom clearance caused by restrictive opening hours

Further harmonization and reduction of administrative procedures is needed in order to create a real European transport corridor and a free flow of goods and passengers

PDI therefore promotes: “Same River – Same Rules”

15 How to solve the situation? – Recommendations

• Strong co-ordination of EC /co-operation of DG Region and DG Move is required • EUSDR PA1 SCOM failed t o deliver improvements as it doesn´t involve Danube States at a decision making level • Current mandate of EU/IWT coordinator proved to be insufficient, therefore activities turned out to be in-effective: despite many efforts no tangible results but continuous decrease of fairway situation experienced by barging sector • PDI therefore proposes EC led task force involving political level • Short & mid-term action plans for improvement of fairway maintenance have to be elaborated and agreed on a binding level (transnational waterway maintenance strategy including binding implementation roadmap) until March 2014 • This task force can be handled within the framework of the new TEN-T coordinator for the Danube corridor, if: • An ample EU mandate facilitates binding decision-making • Member States working group involves stakeholders from private industry • New coordinator is supported by an expert team with sufficient human resources in order to elaborate and supervise implementation actions

16 Danube Ports: Focal points of transport & regional policies

• Danube ports are key elements for a sustainable and efficient transport system and important centres of economic activities • High potential for regional growth & cross-border initiatives

Danube Ports must be considered as catalysts for re-industrialization and regional growth with Port of Constanta as main logistics hub

•

How to unlock the economic potentials of Danube ports?

• Increased public investment in port & terminal infrastructure including upgrade in road & rail access as part of the future operational program for transport & regional development • Improved/new instruments for public-private co-operation (coordinated project planning and project execution/strong & professional project management structures) • Ports shall become preferred centers for (re-)industrialization (national and foreign direct investments) • Improvement of current port legislation & active & service-oriented public port management & industry site development • (Cross-border) regional development plans and actions • Definition & implementation of state aid schemes for port & terminal investment similar to programs in Western Europe • Back-financing of state aid schemes via Structural Funds in period 2014-2020 in EU member states with Operational Programs; special attention to ports in EU support programs for Serbia, Moldova and Ukraine

Increased leverage of public spending and aligned private investment will stimulate economic growth and create jobs in the Danube region

18 How to modernize the Danube fleet?

• Challenge is to optimize existing fleet with regard to energy-efficiency, emissions, propulsion, safety of navigation and operational costs, but: • “Not everything which is technically feasible is economically viable” • Therefore we need a transition roadmap for new techniques & technologies • Important preparatory step: EC/DG Regio commissioned study „Innovative Danube vessel“ • Comprehensive Innovation Strategy including an Innovation Implementation Roadmap as part of a long-term strategic IWT development policy of the European Union • Danube barge operators need financial support for the modernization of the fleet from national State Aid Schemes & EU programs • LNG as fuel for Danube vessels has an extremely high potential to meet efficiency and environmental objectives (see: LNG Masterplan for Rhine-Main- Danube)

19 20 LNG MASTERPLAN – KEY FIGURES

• Programme: • TEN-T Multi-annual Call 2012

• Timeframe: • 1 January 2013 - 31 December 2015

• Est. investment: approx. 120 mil. EUR

• Budget (eligible costs): 80,5 mil. EUR (out of 69,2 mil. EUR pilot activities)

• EU funding: 40,25 mil. EUR

• Beneficiaries: 33 organisations, majority from private sector

• Special endorsement by several Ministries of Transport and CCNR

• Non-funded partners: 40 public/private organisations

TEN-T Days 2013 Connecting Europe / Tallinn / 16.10.2013 21 LNG MASTERPLAN - OBJECTIVES

• Identify and quantify pioneer markets and customers in the hinterland of inland ports • Analyse costs and savings/benefits of LNG use Regulatory • Transfer know how from maritime into inland navigation sector framework and raise awareness

• Facilitate the creation of a harmonised European regulatory Technical framework considering LNG as fuel and as cargo for inland concepts

navigation Pilot deployment • Deliver technical concepts for new and retrofitted vessels • Elaborate supply chains to reach end-consumer • Execute pilot deployments of vessels and terminals • Develop a comprehensive strategy with a detailed roadmap for the implementation of LNG in line with the EU policies in transport, energy and environment • Prepare wide-scale deployment with the help of CEF & other EU programs

TEN-T Days 2013 Connecting Europe / Tallinn / 16.10.2013 22 MAJOR ACTIVITIES IN DANUBE REGION

LNG Supply & Demand Study (NGVA CZ) LNG Supply & Demand Time: Q3/2014 Study (FHOÖ & Linz AG) Time: Q3/2014 Study for LNG Terminal in Komarno & vessels (Danube LNG)

Studies and preliminary designs for terminal & vessels (fuel & cargo) Retrofitting of 3 vessels for LNG propulsion (NAVROM LNG Supply & Demand Galati) Study (EVN) Depl.: Q2-Q3/2015 Time: Q3/2014

Study for development of LNG terminals on the Romanian maritime Danube (Port LNG gas tanker (Chemgas) Authority APDM) Innovative LNG gas carrier; connecting terminals on Danube Depl.: Q3/2015

Combined LNG/CNG fuelling stations & LNG fueled trucks with LNG trailers (Bulmarket) as part of the logistic chain to the end-customers Depl.: Q3/2015 Small scale LNG terminal in Ruse Study & Design of intermediate (Bulmarket) LNG terminal in the Port of incl. fuelling devices for vessels & Constanta (TTS Group)

trucks; Depl.: Q3/2015

LNG Coastal Carrier (Bernhard Schulte) Multipurpose LNG carrier fuelled by LNG and used for trans-shipment / bunkering LNG Masterplan Kick off meeting / Rotterdam / 06.11.2013 Depl.: Q3/2015

LNG IS FUEL AND ENERGY RESOURCE

LNG SUPPLY CHAINS TO INDUSTRIAL HEARTLANDS OF EUROPE

Rhine/Meuse-Main-Danube- LNG Artery of Europe

Inland navigation functions as pioneer consumer and facilitator Conclusions

• Improvement of current situation requires higher political awareness & strong EC coordination • New TEN –T coordination could provide a valuable framework for coordination but needs high- level policy backup, strong mandate and sufficient human resources on EC level • EU programs need to address the private sector better than currently in order to unlock the human and financial potentials of the region • Administrative barriers for Danube transportation must be reduced with the help of a joint initiative of transport, customs and immigration authorities under EC leadership • Low water periods cannot be avoided but safe and efficient transportation can be ensured if ALL Danube States respect the international obligations • The Danube is NOT a shallow water river, it provides sufficient water depth for cost-effective barging if the fairway is properly maintained and the bottlenecks are eliminated • Dedicated shallow water vessels are less energy efficient and result into higher transport costs • Cost-effective Danube logistics strengthens the competitive position of the manufacturing industry and guarantees economic growth and jobs • LNG will play an important role as fuel and as a cargo

It´s time to act now!

24 Further information

Alexandru Capatu Chairman Pro Danube International Email: [email protected] Mobil: +436643025874

Manfred Seitz General Secretary Pro Danube International Email: [email protected] Mobil: +436764067878