Executive summary
The PLATINA3 project
The Horizon 2020 PLATINA3 project provides a platform for the implementation of the NAIADES III Action Plan. PLATINA3 is structured around four fields (Market, Fleet, Jobs & Skills, Infrastructure) of which Work Package 1 (WP 1) deals with various aspects of the inland navigation market, such as 1) increased modal shift and decarbonisation; 2) R&D actions to promote optimal market uptake conditions; 3) synchromodal logistic chains; 4) reducing economic and financial barriers to modal shift; and 5) policy and regulatory actions encouraging the use of IWT.
This report presents the conclusions from PLATINA3’s Task 1.1 which assesses the needs for further technological, logistical and marketing and communication innovations to support modal shift, in view of attracting higher volumes and supporting decarbonisation, on the basis of identified new and growing markets. This deliverable builds upon existing studies and analyses, as well as the outcomes of the 3rd PLATINA3 Stage Event (10-11 February 2022) where experts made presentations on this topic and a draft deliverable was showcased.
Scope of the report and definitions
The scope of the report is limited to analysing the obstacles and opportunities for modal shift to IWT overall but mainly in selected new and growing markets. Marketing and communication as additional tools to strengthen modal shift are also explored. Although an important sub-market for IWT, this report does not cover passenger transport and focuses on freight transport activities only. Given the scope of other tasks in PLATINA3 Work Package 1, this report does not address the economic and financial barriers to modal shift (covered by task 1.4 of the PLATINA3 project) nor the purely regulatory actions encouraging the use of IWT (covered by task 1.5 of the PLATINA3 project). Loading units and transhipment as well as synchromodal logistics are included to some extent in this report given the synergies between them in selected new and growing markets. That being said, these two aspects are covered more broadly by Tasks 1.2 and 1.3 respectively.
Modal shift refers to relative changes in the market shares of different modes of transportation in relation to each other for specific cargo flows. A modal shift usually occurs when one mode gains a comparative advantage in a similar market over another. These shifts respond both to macro- and microeconomic factors.
The term “new and growing markets” describes, on the one hand, market segments where IWT is either not yet present or in an early stage of development and could be considered in coming years as a suitable transport solution. On the other, it refers to existing markets with strong potential for further growth. New and growing markets can determine future products transported by inland vessels, but they often imply new types of logistics, vessels, and areas of operation.
Current state of play and policy context
In June 2021, the European Commission launched the NAIADES-III Action Plan[1], which sets an “Inland Navigation Action Plan 2021-2027” aligned with the Multi-Annual Financial Framework to meet the objectives of the EGD and SSMS. One of NAIADES-III’s two core objectives is shifting more freight to inland waterways from other transport modes (modal shift), thereby contributing to reducing GHG emissions and limit road congestion. Underpinning this ambition is one of eight NAIADES-III policy flagships dedicated to updating the EU’s legal framework for intermodal transport to stimulate IWT modal share growth in the short and medium term. This flagship aims to boost modal shift to more sustainable and low-carbon transport modes such as IWT by establishing a level-playing field across transport modes when it comes to environmental performance. In this context, the PLATINA3 project provides the knowledge base for the implementation of the NAIADES III Action Plan.
On 17 October 2018, the Ministers of the five Member States of the CCNR (Belgium, Germany, France, the Netherlands, Switzerland) adopted the Mannheim declaration. Recalling the sector’s high potential for development and innovation, they vowed to reinforce the role of inland navigation by promoting faster and more efficient inland vessel cargo handling in seaports and tighter integration of IWT into digital and multimodal logistic chains.
Inland navigation is today at a crossroads, facing economic as well as environmental challenges that threaten to fundamentally alter its position in the European transportation market. On the one hand, unpredictable water levels and the energy transition imperative; on the other, a slowdown in global trade, the structural decline of fossil-based cargo, and the COVID-19 crisis. At the same time, inland waterway transport (IWT) is expected to play an important role on the path towards sustainable transport in 2050, as foreseen in the European Green Deal (EGD). In fact, the EGD aims to cut 90% of emissions from transport by 2050 to reach climate neutrality and shift a substantial portion of the freight transported by road (currently accounting for circa 76% of EU inland freight) to inland navigation (circa 6%) and rail (circa 18%), namely through measures to increase the handling capacity of inland waterways and better integrate IWT into multimodal logistics chains. More specifically, the European Commission’s (EC) Sustainable and Smart Mobility Strategy establishes the following milestones: “transport by inland waterways and short sea shipping will increase by 25% by 2030 and by 50% by 2050 compared to 2015”.
New and growing markets for IWT
The 3rd PLATINA3 Stage Event (10-11 February 2022) featured discussions on new and growing markets which might trigger modal shift towards IWT.[2] The following options were discussed:
- Urban logistics
- Waste / biomass transport;
- Circular economy / new materials;
- New energies, including hydrogen and other alternative fuels;
- New trade routes, connections to TEN-T corridors, core and comprehensive networks;
- Container transport.
These new and growing markets are needed to respond to a decrease or saturation of existing markets (e.g. transportation of coal, ore, oil products). On the demand side, several commodity segments have reached saturation, the energy transition changes product composition, and world trade is experiencing structural slowdown. On the supply side, more difficult navigation conditions are expected to intensify due to climate change while low water events stress the need to diversify operations towards urban logistics where water levels fluctuations are much less severe.
Results of the analysis and recommendations
IWT offers clear opportunities for modal shift in urban settings and shows the viability of IWT under specific circumstances, despite the competitive pressure from road transport. An advantage of inland navigation is that it can transport such goods in different forms (pallets, barrels, containers, bulk, etc.), is able to scale easily while benefitting from alternative and renewable energy solutions. Demographic growth, in combination with saturated and sensitive road infrastructure, vibrations, accidents, noise emissions and other negative externalities provoked by road transport in cities, are all important factors which offer potential for IWT in modern urban environments. Therefore, the current increased focus on urban mobility, including via newly established expert groups, could be a crucial opportunity for IWT to seize.
New transport flows resulting from circular economy activities are certainly an opportunity for IWT, particularly in an urban setting. IWT could serve as an ideal transport solution to spearhead the development of circular economies while enabling more efficient waste management, valorisation, and storage in urban environments.
It is expected that new transport opportunities for inland navigation will also emerge in the wake of the energy transition (e.g. biofuels, hydrogen carriers, project cargo, such as wind turbine blades and components and other infrastructure and hardware needed for energy transition). In particular, inland waterway transport can be used to distribute alternative fuels and energy sources such as biofuels, other hydrogen carriers and e-fuels, albeit requiring possible adaptations depending on the fuel distributed. Should larger volumes of such fuels be imported overseas from other continents via seagoing vessels, IWT will appear as a logical follow-up to transport them to the hinterland of European seaports (e.g. Rotterdam, Antwerp, Amsterdam, Constanta, Hamburg, Le Havre, Marseille).
For instance, there is growing interest at European level for hydrogen as a clean energy source. Its applications are manifold (industry, transport sector, power generation) and demand has been steadily growing since 1975. While it is today overwhelmingly produced from fossil fuels, hydrogen can be produced from renewables (i.e. electrolysis using green energy from wind, water or solar), meaning there is significant potential for emissions reduction from a life cycle point of view.
At European and national level, public policy is pushing for the development of hydrogen, with the adoption of hydrogen strategies. As hydrogen can be transported via maritime vessels, inland vessels, and pipelines, it is a promising cargo for IWT, especially if combined with new, innovative tanker designs, LOHC technology, and integrated into regional and global value chains through ports.
Biomass can be used to produce biofuels, heat, and electricity, and its use is on an upward trend. This versatility is undoubtedly an important factor boosting its attractiveness. The advantages of IWT for the transport of biomass are manifold: reliability, overall safety, and high carrying capacity. Transport of biomass via IWT has already been proven successful as shown by several examples for instance, in the Port of Mannheim or Straubing. In addition, unlike wind turbines, for which ports and waterways might need to adapt their infrastructure, biomass/biofuel cargo handling in inland ports does not need adaptations or special handling equipment. Furthermore, electricity and heat produced from biomass are unaffected by weather fluctuations, an important aspect compared to the fluctuations of wind and solar energy.
Uncertainty remains regarding the energy transition trajectory of our societies, an uncertainty that affects all renewable energies. Despite the need for clarity about the future shape of energy supply, technological development is characterised by uncertainties, path dependencies and by the interplay of technology and commercial successes and failures. This technological uncertainty can lead to a specific form of inertia: why invest in new production processes for alternative technologies when uncertainty is high regarding their future use and demand? This will inevitably impact the IWT sector and its micro-economic decisions to specialize or not in biomass/biofuel/e-fuel transport. Beyond these aspects, which are inherent to the energy transition and the development of new technologies, whether or not such expected new markets will develop is also strongly dependent on the regulatory and political sphere.
This report shows, firstly, that new markets exist, some with higher potential than others. Secondly, it is not a given that inland navigation will penetrate such new markets. In most cases, adaptations will be necessary in terms of logistics, vessel technology, vessel design and vessel size. Commercial, logistical and technological challenges will arise and will be affected, inter alia, by the degree of intermodal competition.
Increasing the usage of all communication and marketing possibilities will enable IWT operators to influence and inform other economic actors on the importance and advantages of IWT, namely reliability, economic efficiency, efficient use of available infrastructure capacity and sustainability. In other words, electronic communications and marketing inform and demonstrate to the wider economic operators the benefits of using IWT as a permanent business option. Efforts in favour of such communication and marketing innovations should be promoted.
Despite these promising avenues for growth, several obstacles remain to be overcome in order to enhance modal shift to inland navigation. These include tackling congestion at seaports and seaport-hinterland transport inefficiencies, combating low/high water events to ensure IWT’s reliability over the long term, developing additional financing opportunities and improving communication about them as well as about the pertinent regulatory framework, and build awareness of IWT’s potential as a promising modal choice for any European shipper.
Furthermore, the expected rapid development of battery electric trucks, as estimated by TNO[3] in October 2022, puts pressure on the speed of the energy transition in IWT. There is a risk that the inland fleet does not adapt to climate neutrality and low air pollutant emission performance as swiftly as the road or rail fleet if the regulatory framework remains the same and if the financial supports is not increased. The competition from road and rail might prove difficult to counteract. Consequently, without strong and rapid interventions in the IWT sector, inland navigation’s environmental advantage will be quickly eroded compared thus deteriorating the rationale for a modal shift from road to IWT as envisaged in the European Green Deal.
[1] European Commission, “NAIADES III action plan”, June 2021, NAIADES III action plan (europa.eu).
[2] Presentations made by: Daan Schalk “New market opportunities and strategies”; Geer van Overloop “River Drones: innovation as a driving force for modal shift”; Heinrich Kerstgens “Decarbonisation of logistics and modal shift towards inland waterway transport”; Norbert Kriedel “New market opportunities in inland navigation transport”; and Thierry Vanelslander “How to increase IWT market share?”.
[3] New Mobility News, “TNO study: Battery-electric truck most cost-effective option from 2030”, https://newmobility.news/2022/10/13/tno-study-battery-electric-truck-most-cost-effective-option-from-2030/.