Professional Documents
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This lecture
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The sector
Policy document EU, PINE: Prospects of Inland Navigation within the Enlarged Europe. A study that gives an overview of the inland waterway transport sector in four corridors (next slide):
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The sector
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The sector
Infrastructure Rhine and Danube form backbone system. Waterway network quite dense in Netherlands and parts of Belgium, Germany. Load capacity on a certain route determined by draught and bridge clearance. Weakest stretch determines load capacity for the whole route!
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The sector
Characteristics and performance: In the former European Union (EU-15) inland waterway transport accounted for:
440 million tons per year, 3,5% market share 125 billion ton-kilometres, 6,5% market share
Gravity lies in countries Netherlands, Belgium, Germany: 113 billion ton-kilometres, 90%. Modal share (ton-kms) in The Netherlands, 40%, Germany, 14%, Belgium, 12%.
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Employment and training In recent years a decline of national personnel. In West Europe a wave of East European staff. Problems: language/ communication, knowledge of foreign waterways unsafe situations. Also: nowadays not only nautical skills required. Additional qualifications like financial/ management/ ICT skills.
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The sector
Self propelled vessels: dry bulk, wet bulk Push barges: dry bulk
Vessels have a very long lifetime (+- 45 years). Advantage: long pay back period for the investment. Disadvantage: hinders fleet innovation behind of rail and road.
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Information and communication Currently integration of ICT within IWT sector by means of RIS e.g. RIS = River Information Services:
Obstructions in waterway, water levels. Estimation arrival time: for ports terminals Route planning, calculation time schedules, document exchange with waterway authority.
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The sector
3 segments:
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The sector
Dry bulk
Ore and coal: thick flows (on Rhine), large ships (push barges), Dutch seaports German hinterland (Ruhr area). Sand & gravel: strong relation with construction sector (and construction locations), on smaller waterways, domestic oriented + upper and lower Rhine area. Many suppliers, for some segments many customers, free entrance, leaving market difficult, some heterogeneity (ship size), transparency in spot market, in contract market less transparency.
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Market form:
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The sector
Wet bulk
Chemical industry + refineries, crude oil, oil products, sea port oriented. Relatively few suppliers, few customers, free entrance, leaving market difficult, some heterogeneity, mainly long term contracts > not transparent.
Market form:
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The sector
Containers
Sea port oriented, often pre-and-end-haul by road, clients mainly deep-sea liners who organize total chain, mainly on Rhine and between Rotterdam - Antwerp. Many suppliers and customers, free entrance, leaving market difficult, relatively homogenous, mainly long term contracts (year).
Market form:
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Current issues
Port competition Climate change Increase in ship size Double hull obligation
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Hamburg-Le Havre range: connections via road, rail and inland shipping
Antwerp: strong position via road Rotterdam: strong position via inland shipping Hamburg: strong position via rail
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Stimulation of inland water transport 40% of containers should be transported to hinterland by inland shipping (government regulation)
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Climate change
Global:
In 20th century average temperature worldwide + 0,7oC Cause: use of carbon fuel Winters: warmer and wetter Summers: warmer and dryer
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Large fluctuations of water levels: change in monthly discharge of Rhine river at different climate scenarios.
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Problems
One-way traffic Alternative routes Delays Lower load factors Other transport modes What does this mean for the competitive position of inland waterways?
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As a result of low water levels, a ship can transport less cargo, so for transporting the same amount of cargo more ships are needed.
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Extra costs
Inland waterway transport enterprises have to leave tonnes behind so they want a higher tariff per ton transported. Result: costs for transporting of one ton of cargo by barge increase:
Normal water: 1000 ton * 5 = 5000 Low water: 333 ton * 15 * 3 ships = 15000
For transporting the same number of tonnes a shipper pays 3 times the price in case of low water levels.
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Extra costs
Relation between water levels and gas oil freight rate in Rhine shipping Source: EU, CCR (2011)
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Economic theory
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Short term
Increase load factor (when possible) Use capacity more hours per day Use capacity more days per year Increase speed Increase speed of loading/unloading
Long term
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Concluding
Supply in de market is reduced. Higher transport prices: P by 20% for example. Demand is quite inelastic: Qby 3% for example. About same quantity transported at higher prices extra costs for the economy. Binnenvaart vaart wel bij lage waterstand (CBS) Inland shipping fares well with low water levels
Turnover in 2nd quarter of 2011 20% compared to 2010 due to low water levels.
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Current trend: new ships are all big (> 1500 ton). Inland ships < 1500 tons are becoming scarce. Reasons:
Economies of scale. Larger living area. New small ships have capital costs, existing small ships are relatively (compared to new ships) old, no capital costs hard to compete.
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Consequences:
Less navigation on small waterways: in future less maintenance? IWT dependent firms leave? Low water levels vs. large ship.
Case: building material sector Large ships cannot reach firms transshipment on small ships necessary extra transport costs.
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decrease with size (economies of scale/density) Increase with size (diseconomies of size)
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Cost proportional to capacity2/3 Costs increase with an elasticity of 2/3 with respect to its size 10% increase in ship size leads to a 6.7% increase in costs
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1/3 power law: H=h*S*1/3 Fuel cost, operating cost, capital cost Cost of factor i per day: Ci=pi*qi*Sei where ei is the elasticity of factor cost with respect to size Total cost per ton in port: iCi/H= 2*ipi*qi*Sei/(h*S*1/3) = ipi*qi*S(ei-1/3)/h (dis)economies of ship size S if (ei-1/3) (>) <0 efuel cost: 0.6 1; eoperating cost: 0.3 - 0.6; ecapital cost: 0.6 - 0.7 diseconomies of scale in handling
Time costs
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ship size
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Given ship size, transport costs are linear with distance Handling cost/ton increases with ship size
transport cost/ton tapers with distance: envelope of ship specific cost lines
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distance
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distance
ship size
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Optimal size low for short distance and high for large distance Reason: Weight of haulage costs are low for short distance Explanation: haulage costs are product of haulage costs per ton and kilometers When trips get longer larger ships are necessary
E.g. feeder services vs. trunk services Low frequency on long distance routes
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positive mark up on short distance haulage cost per ton, short distance haulage cost per ton, short distance
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ship size