Agricultural products are a traditional market segment in inland shipping, but one with a positive long term trend outlook. In this sector, Inland Shipping is used for transporting grain and other harvest products to agribusiness companies and to seaports.
A positive driver for this segment is the increasing role of biomass in the energy sector, for the generation of electricity and heat. Besides agricultural products are also used for the production of biofuel, and inland shipping is a preferred mode of transport for delivering the raw materials (an important example is the production of bioethanol at the river Meuse near Liege, and the increasing demand for agricultural products delivered by inland shipping (Navigation, Ports & Intermodalité, Article « Port de Liège – Le retour de la croissance » of March, 8th 2017).
In Western Europe, the four most important maritime ports for agricultural products are the ports of Rotterdam, Hamburg, Rouen and Amsterdam with a total volume of agricultural products transshipped in 2016 ranging from 10 million tonnes in Rotterdam to 6 million tonnes in Amsterdam. From Rouen, around 7 to 8 million tonnes of grain are exported each year, mostly to North Africa, Asia, and America. Around 1/4 of these volumes arrive in the port of Rouen per inland vessel.
In Eastern Europe, the port of Constanza plays a similar role. Agricultural products arrive per inland vessel from the Middle Danube region, and the grain is exported to destinations in Southern Europe, Northern Africa and Asia.
Agricultural products constitute a high share of total transport in the Danube area, reaching more than 40 % in Bulgaria, 38 % in Romania and 36 % in Croatia. Important western European countries for agricultural products are Luxemburg (47 %) and France (28 %), where grain is transported especially on the Rhine, Moselle, Seine, and canals in Northern France.
Share of agricultural products within the total inland shipping transport performance (% based on TKM)
Source : Eurostat
Forecast Model and Results
Volumes of agricultural products transported on the traditional Rhine and forecast model (in 1 000 tonnes)
Source : CCNR
Transport of agricultural products on the Rhine is positively correlated with the agricultural production in France and Germany and the water levels on the Rhine.
The transport of agricultural products in Western Europe is expected to increase in 2017 and 2018, due to a recovery of harvest volumes compared to the very weak harvest season 2016.
According to information from the French Ministry of Agriculture, the 2017 grain harvest results in France are expected to be 23 % higher than in 2016.
The forecast takes into account a 22 % growth of the agricultural production in France until the end of 2018, while the production level in Germany is assumed to remain at the level of 2016. Within the estimated forecast model, the agricultural production in France has a stronger influence on the transport demand than the production level in Germany.
World trade outlook and transport trends
RWI/ISL container throughput index
Source : Computations of RWI and ISL based on data from 82 ports; July 2017: flash estimate
The RWI/ISL Container throughput index is based on data from 81 world container ports covering 60 % of worldwide container handling.
This index is an early indicator for world trade and maritime container shipping.
Recent index data point to an increasing container traffic and world trade in 2017 which should also trigger an increase in IWT container traffic in 2017.
Trends in demand for transport in 2018 in Rhine countries
Trends in demand for transport in 2018 vs 2017
Weather & energy policy, partly steel production
Sand, soil and building materials
Mineral oil products
Oil prices & refinery output
Source: CCNR analysis based on macroeconomic and sectorial data
The only two differences with previous Market Insight reports concern agricultural products and the steel segment; information about the positive harvest results in 2017 in France point to a recovery compared to the bad harvest of 2016. In the Danube region, however, harvest results for 2017 will probably be weaker than in 2016.
For the steel segment, data about production evolution in Germany and Austria are positive, which should also lead to a slight increase in transport.
The consumption of coal is declining further. In Germany, the use of coal went down by 6.7 % in the first half year 2017. Hereby, coal in the energy sector decreased by 9 %, and coal in the steel industry decreased only slightly. The present trends are supposed to continue. The outlook for coal remains on a decreasing trend.
The upward movement in the building industry is continuing, as new figures confirm, and the transport of sands, stones & building materials will be promoted further by this development.
The world trade indicator (RWI/ISL index) followed an increasing curve in recent months highlighting a growth in maritime container traffic. This lays the basis for a continuation of further growth for container transport on inland waterways.
Oil prices weakened slightly in the first half of 2017. Prices are expected to remain within a range of 50-60 US-$ per barrel also in 2018. Transport demand is expected to remain stable in 2018, with a positive short term trend offsetting a negative long term trend.
It is expected that chemical production will remain stable overall in 2018, or grow only very modestly. Therefore, the outlook for chemical transport is stable as well, with the possibility of a slight increase.