Market Insight INLAND NAVIGATION IN EUROPE fall 2016
LIABILITY DISCLAIMER Use of the knowledge, information or data contained in this document is at the user s own risk. The Central Commission for the Navigation of the Rhine and its secretariat and the European Commission shall in no way be liable for use of the knowledge, information or data contained in this document or any ensuing consequences. The facts presented in the study and opinions expressed are those of the authors and do not necessarily also represent the position of the Central Commission for the Navigation of the Rhine or the European Commission and its agencies on the subject in question. This notice does not constitute a formal commitment on the part of the organizations referred to. October 2016
Table of contents 01 02 03 04 economic context (P.3) Economic situation in Eurozone and Rhine countries (p.4) Economic situation in Danube countries (p.6) Demand for inland waterways transport (P.9) Transport performance in European Union by country (p.10) Transport performance in European Union by transport type (p.12) Demand for transport in main IWT countries - Rhine countries (p.14) Demand for transport in main IWT countries - Danube countries (p.16) Dry bulk, liquid bulk and container transport (p.18) operating conditions (P.23) Turnover development in Europe (p.24) Freight rates and fuel price (p.26) outlook (P.29) Focus on chemical industry (p.30) Forecast model and results (p.32) World trade outlook and transport trends (p.34)
2 CCNR Market Insight - Fall 2016 economic context
CCNR Market Insight - Fall 2016 economic context 3 01 economic context
4 CCNR Market Insight - Fall 2016 economic context ECONOMIC SITUATION IN EUROZONE AND RHINE countries Rate of change in real gross domestic product in the eurozone (in %) 2012 2013 2014 2015 2016 (e) 2017 (e) Eurozone -0.9-0.3 1.0 1.6 1.6 1.7 Source: OECD Economic Outlook (June 2016) (e: expectations) Rate of change in real gross domestic product in the Rhine countries (in %) 2012 2013 2014 2015 2016 (e) 2017 (e) Germany 0.6 0.4 1.6 1.4 1.6 1.7 Belgium 0.2 0.0 1.3 1.4 1.2 1.5 France 0.2 0.6 0.6 1.2 1.4 1.5 Netherlands -1.1-0.4 1.0 2.0 1.7 2.1 Switzerland 1.1 1.8 1.9 0.9 1.2 1.7 Luxembourg -0.8 4.4 4.1 4.9 3.7 3.8 Source: OECD Economic Outlook (June 2016) (e: expectations)
CCNR Market Insight - Fall 2016 economic context 5-1.6% Decrease in world trade during the first five months of 2016 OECD June 2016 forecasts are lower than OECD November 2015 forecasts for Rhine countries. New forecasts for Germany, Belgium, France, the Netherlands and the eurozone are on average 0.2 percentage points lower than those of November 2015. On the other hand, the June 2016 forecasts for Switzerland and Luxembourg are respectively 0.1 and 0.9 percentage points higher. According to the IMF, a decline in world trade and a drop in industrial output explain this downward revision in GDP forecasts. Slowdown in China is impacting world trade and industrial output in Europe and the United States.
6 CCNR Market Insight - Fall 2016 economic context ECONOMIC SITUATION IN DANUBE COUNTRIES Rate of change in real gross domestic product in the Danube countries (in %) 2012 2013 2014 2015 2016 (e) 2017 (e) Austria 0.7 0.3 0.5 0.8 1.3 1.6 Hungary -1.7 2.0 3.6 3.0 1.6 3.1 Slovakia 1.5 1.4 2.5 3.6 3.1 3.2 Romania 0.6 3.5 3.0 3.7 4.2 3.6 Bulgaria 0.2 1.3 1.5 3.0 2.3 2.3 Croatia -2.2-1.1-0.4 1.6 1.9 2.1 Sources: OECD Economic Outlook (June 2016) and IMF World Economic Outlook (April 2016) (e: expectations) + 0.4% Average growth rate of industrial production in the manufacturing sector in Rhine countries for the period 2005-2015 + 3.1% Average growth rate of industrial production in the manufacturing sector in Danube countries for the period 2005-2015
CCNR Market Insight - Fall 2016 economic context 7 Monthly growth rate of industrial output in the manufacturing sector: comparison of 2015 and 2016 7% 6% 5% 4% 3% 2% 1% 0% jan-16 feb-16 mar-16 apr-16 may-16 Source: CCNR calculation based on Eurostat data Danube countries Rhine countries Expected economic growth is higher for Danube countries than for Rhine countries. Expected GDP growth in Rhine countries in 2016 is between 1.2% and 1.7%. Expected GDP growth in Danube countries in 2016 is between 1.3% and 4.2%. Catch-up phenomenon has propelled Danube countries for several years. Their increasing industrial output derives in part from relocations of Chinese activities and direct investments in a number of eastern and south-eastern European countries.
8 CCNR Market Insight - Fall 2016 economic context
CCNR Market Insight - Fall 2016 economic context 9 02 Demand for inland waterways transport
10 CCNR Market Insight - Fall 2016 Demand for inland waterways transport TRANSPORT PERFORMANCE IN EUROPEAN UNION BY COUNTRY Transport performance in IWT in the national territory of each country in the European Union Share of the country s tkm in total transport performance of the EU Netherlands Belgium 33.0% Poland 0.1% 37.6% France 5.8% 7.2% 0.2% Germany Czech Republik 0.02% Slovakia 0.5% Austria Hungary 1.2% 1.2% 8.9% Croatia Romania 0.6% 3.8% Bulgaria Luxembourg >30% >1% <1%
CCNR Market Insight - Fall 2016 Demand for inland waterways transport 11 60000 Transport performance (in mio. tkm) 50000 40000 30000 20000 10000 0 Germany Netherlands Romania Belgium France Bulgaria Austria Hungary Slovakia Luxemburg Poland Croatia Czech Republic 2005 2015 Source: Eurostat and CCNR calculations. Share of Germany and Netherlands in European Union IWT transport performance in 2015: 71%. Danube countries have increased their share in EU inland navigation from 9% to 16% over the last 10 years. Slight upward trend in European IWT: between 2005 and 2015, the overall IWT transport performance in the EU increased by around 7%.
12 CCNR Market Insight - Fall 2016 Demand for inland waterways transport TRANSPORT PERFORMANCE IN EUROPEAN UNION BY TRANSPORT TYPE Inland shipping transport performance in the EU (quarterly data - m tkm) 40000 35000 30000 25000 20000 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Dry and liquid bulk Source: Eurostat Containers
CCNR Market Insight - Fall 2016 Demand for inland waterways transport 13 4500 4000 3500 3000 2500 2000 1500 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Share of container transport within the EU has increased slowly but steadily, reaching 10.3% in 2015 in inland navigation transport performance. The proportion is even higher in some countries: 14.7% in Belgium, 13.7% in the Netherlands, 11% in Germany. In all Danube countries, however, container transport still plays a minor role, due to bottlenecks in the transport infrastructure, a lower demographic and industrial density and the lack of a mainport for container handling.
14 CCNR Market Insight - Fall 2016 Demand for inland waterways transport DEMAND FOR TRANSPORT IN MAIN IWT COUNTRIES RHINE COUNTRIES Inland shipping transport performance in Germany and the Netherlands (M TKM) 20000 15000 10000 5000 Source: Eurostat and CBS Inland shipping transport performance in Belgium and France 3000 2500 2000 1500 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Germany Netherlands (M TKM) Source: Eurostat France Belgium
CCNR Market Insight - Fall 2016 Demand for inland waterways transport 15 Rate of change in inland shipping transport performance (Q1 2016 compared with Q1 2015) 0 Germany Nertherlands Belgium France -2-4 -6-8 -10-8% -1% -3% -6% Source: Eurostat and CBS Transport performance in Rhine countries was higher during the first quarter of 2016 than during the last quarter of 2015 (mainly because of rebound following period of low water levels), but transport performance has not yet reached the performance level observed during the first quarter of 2015; recovery is ongoing. Decrease between Q1 2015 and Q1 2016 is mainly explained by decrease in transport of steel industry related products (iron ore, coal, metals). Despite a decrease for the overall transport performance, some segments have experienced growth during the first quarter of 2016 (compared with Q1 2015): mineral oil and chemical products in Germany and the Netherlands, building materials in France. Sand, gravel and construction material transport increased by 13% during the first quarter of 2016 in France. Chemical products transport increased by 14% during the first quarter of 2016 in the Netherlands.
16 CCNR Market Insight - Fall 2016 Demand for inland waterways transport DEMAND FOR TRANSPORT IN MAIN IWT COUNTRIES DANUBE COUNTRIES Inland shipping transport performance in Bulgaria and Romania (M TKM) 5000 4000 3000 2000 1000 0 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Source: Eurostat Romania Bulgaria Inland shipping transport performance in Austria and Hungary (M TKM) 800 700 600 500 400 300 Source: Eurostat Hungary Austria
CCNR Market Insight - Fall 2016 Demand for inland waterways transport 17 Rate of change in inland shipping transport performance (Q1 2016 compared with Q1 2015) 15 10 5 0-5 -10-15 -20-25 -30 Romania -21% Bulgaria Austria Hungary -27% 12% 0% Source: Eurostat Both the Upper Danube (Austria) and the Lower Danube (Romania and Bulgaria) experienced different results during the first quarter of 2016.The Lower and Middle Danube have been strongly impacted by bad harvest results in 2015. Grain transport on the Lower Danube was divided by 5 during the first quarter of 2016 (compared to first quarter of 2015). 12% transport performance increase in Austria was strongly driven by an increase in transportation of iron ores and metals.
18 CCNR Market Insight - Fall 2016 Demand for inland waterways transport DRY BULK, LIQUID BULK AND CONTAINER TRANSPORT Quarterly evolution of transport performance for dry bulk, liquid bulk and containers in the Netherlands (IN M tkm) 8000 7000 6000 5000 4000 3000 2000 1000 2015 Q1 2015 2015 2015 2016 Q1 2016 Source: CBS Dry bulk Liquid bulk Containers
CCNR Market Insight - Fall 2016 Demand for inland waterways transport 19 Quarterly evolution of the transport performance for dry bulk, liquid bulk and containers in germany (IN M tkm) 10000 8000 6000 4000 2000 0 2015 Q1 2015 2015 2015 2016 Q1 Source: destatis Germany and the Netherlands account for 86% of European liquid bulk transport performance, and for 66% of dry bulk transport performance. For Germany, the Netherlands, and the Rhine in general, the liquid cargo segment has recovered more quickly from the losses in autumn 2015 than the dry cargo segment. The dry cargo segment experienced severe losses in autumn 2015, which were not fully compensated for at the beginning of 2016 in Germany and on the traditional Rhine. Container transport was also heavily impacted by the low water period, and was starting to recover at the beginning of 2016.
20 CCNR Market Insight - Fall 2016 Demand for inland waterways transport Detailed rates of growth in transport performance by segment in the Netherlands and Germany (Q1 2016 compared with 2015) Germany Netherlands Dry Cargo Liquid Cargo Containers Total 30 27% 25 18% 20% 20 16% 15 12% 10% 8% 10 5% 5 0
CCNR Market Insight - Fall 2016 Demand for inland waterways transport 21 Detailed rates of growth in transport performance by segment in the Netherlands and Germany (Q1 2016 compared with Q1 2015) 6 Dry Cargo Liquid Cargo Containers Total 4 2 0-2 6% 3% 0% -1% -4-6 -4% -8-10 -10% -9% -8% Source: CCNR / Destatis / CBS Germany Netherlands All goods segments have witnessed growth in the first quarter of 2016, when compared to the immediate past (fourth quarter of 2015). In Germany, growth between Q1 2016 and 2015 was stronger than in the Netherlands, reflecting mainly catch-up effects, as losses of cargo on German waterways were considerable in autumn 2015. Total transport performance during the first quarter of 2016 has not yet reached 2015 first-quarter levels in Netherlands and Germany (except for the liquid cargo segment), but in the Netherlands it regained this level during the second quarter.
22 CCNR Market Insight - Fall 2016 economic context
CCNR Market Insight - Fall 2016 economic context 23 03 operating conditions
24 ccnr Market Insight - Fall 2016 operating conditions TURNOVER DEVELOPMENT IN EUROPE Turnover development in the Netherlands (mainly a cargo-transport country) Index: 2010 = 100 130 120 110 100 90 80 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Source: CBS and CCNR estimation 0riginal series Seasonally adjusted Turnover growth in first quarter 2016 compared with first quarter 2015 was + 0.5%
CCNR Market Insight - Fall 2016 operating conditions 25 Turnover development in Austria (mainly a passenger-transport country) Index: 2010 = 100 160 130 100 70 40 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Source: Statistics Austria and CCNR estimation Original series Seasonally adjusted Due to low water levels and the subsequent raise of freight levels, turnover increased by almost 9% in the second half of 2015 in the Netherlands. IWT turnover evolution in the Danube countries is heavily impacted by the fact that they are mainly passenger transport countries. Immense seasonal variations are to be observed: high activity in summer and autumn, and almost no activity in winter.
26 ccnr Market Insight - Fall 2016 operating conditions FREIGHT RATES AND fuel PRICE Development of freight rates in tanker shipping (Index: 2010 = 100) 400 350 300 250 200 150 100 50 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Source: CCNR calculation based on data from PJK International In the second half of 2015, the low water levels led to a sharp increase in transport prices. In the first half of 2016, freight rates returned to levels which can be regarded as typical or average for the time period 2012-2015.
CCNR Market Insight - Fall 2016 operating conditions 27 Development of fuel prices in the inland shipping sector (Q1/2010-Q1/2016) 90 80 70 60 50 40 30 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 Source: CBRB 21% fuel price decrease in 2015 The IWT cost situation will continue to be influenced by rather low oil prices in 2016 and 2017 because of a growing surplus of oil supply and a brake on demand for oil.
28 CCNR Market Insight - Fall 2016 economic context
CCNR Market Insight - Fall 2016 economic context 29 04 outlook
30 CCNR Market Insight - Fall 2016 outlook FOCUS ON CHEMICAL INDUSTRY Rate of change in chemical production in Germany and rate of change in demand for transport of chemicals on the Rhine (year-on-year change) 40 30 20 10 0-10 -20-30 -40-50 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 Source: CCNR and destatis Chemical production Transport of chemicals
CCNR Market Insight - Fall 2016 outlook 31 3 rd The German chemical industry is the third largest chemical industry in the world, after the USA (ranked 2 nd ) AND China (ranked 1 st ). 17% of the transport generated by the German chemical industry is carried by river, 23% by rail, and 60% by road. Strong correlation between chemical production in Germany and the transport of chemicals on the Rhine.
32 CCNR Market Insight - Fall 2016 outlook FORECAST MODEL AND RESULTS Transports of chemicals on the Rhine and econometric forecasting model 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 Models Results Growth of chemical transport between 3.8% and 4.1% in 2016 (compared to 2015), and between 0 and 2.5% in 2017 (compared to 2016). Catch-up effects associated to low water levels in 2015 explain higher growth rates in 2016.
CCNR Market Insight - Fall 2016 outlook 33 Demand for transport Forecasting model (in 1000 t.) 6000 5500 5000 4500 4000 3500 3000 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 Source: CCNR Macroeconomic and natural indicators explaining expected growth in 2016 and 2017 Recovery in world trade Slight increase in chemical production
34 CCNR Market Insight - Fall 2016 outlook WORLD TRADE OUTLOOK AND TRANSPORT TRENDS RWI/ISL Container Throughput Index 130 125 120 115 110 105 100 95 2012 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2013 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2014 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2015 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2016 Jan Fev Mar Apr May June July 90 Source: RWI and ISL calculation based on data from 81 ports; July 2016: flash estimate Original Seasonally and working day adjusted Trend-Cycle-Component The container throughput index is based on data from 81 world container ports covering approximately 60% of worldwide container handling. The throughput index is a reliable early indicator of the development of international merchandise trade and has been increasing in 2016.
CCNR Market Insight - Fall 2016 outlook 35 Trends in demand for transport in 2016/2017 Agricultural products Main driver(s) Harvest results Trends in demand for transport in 2016/2017 Decrease Iron ores Steel production Decrease Metals Steel production Decrease Coal Weather & Energy policy Decrease Containers World trade Increase Mineral oil products Oil prices Increase Chemicals Chemical production Increase Source: CCNR based on Eurostat, WTO, IEA, RWI, ISL, VCI, Stahl Online Changes in trends compared with 2016 Annual Market Observation (issued in June 2016). Outlook for iron ores, metals and coal has changed from stable to decreasing; this is due to the worsening position of business activity in the steel industry. Outlook for agriculture products has changed from increasing to decreasing; this is due not to lower demand but to bad harvest results. Outlook for containers, mineral oil products and chemicals has remained on an upward trend.
The Market Insight of European inland navigation is a common project of the CCNR and the European Commission CONTRIBUTORS CCNR Hans VAN DER WERF (Secretary General) Guillaume LEGEAY (Project leader) Norbert KRIEDEL (Economist) Clémentine HURBOURQUE (Editorial coordination) Angelika ESPENHAHN (Translation coordination) Contact: n.kriedel@ccr-zkr.org IN PARTNERSHIP WITH Danube Commission Moselle Commission Sava Commission EBU ESO IVR DESIGN BY PRESS-AGRUM Nicolas LAURENT (coordination) Lucie GANGLOFF (design) www.press-agrum.com TRANSLATION Christophe HENER (ccnr - French) Bettina ACHHAMMER (ccnr - German) Pauline de ZINGER (Extern - Dutch) Howard GLEAVE (Extern - English) Imprint: October 2016 Published by the Central Commission for the Navigation of the Rhine 2, place de la République 67082 STRASBOURG cedex www.ccr-zkr.org ISSN 2519-1101