Alexandru Capatu Annual Forum EUSDR Bucharest, 28.-29.10.2013

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

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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

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

Industry & Wholesale

“Transport User”

Logistics Service

Providers

Ports & Terminal

Operators

(Associations)

Barge Operators

(Associations)

Shipyards & Suppliers &

Others

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Danube waterway – Key European transport axis

43 Mio. tons of cargo in 2010

Source: via donau

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 competitiveness & jobs

Environmentally friendly “green” transport corridor

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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%

Profit per to -2,53 1,50 4,18 6,10

Profit in Euro (%) depending on draft

-50,000

0

50,000

100,000

150,000

200,000

250,000

2.00 2.30 2.50 2.70

Total revenue ( Euro )

Total Costs

Profit

Calculation basis: Pushed convoy of 6 barges during the entire year 2012, Constanta - Hungary & return, Diesel €850/ton

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Cost and energy efficiency vs. draught

DST - Development Centre for Ship Technology and Transport Systems

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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

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Two realities in Danube waterway policy

Political failure in some states

Political support

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Sector Km Standard station Calculation Requried gauge for having min. depth

of 250 cm

Number of days at depths below 250

cm

GERMANY:

Pfelling 2303-2306 Pfelling Depth =

Gauge –140 cm 390 87

Vilshofen-Hofkirchen

2249-2261 Hofkirchen Depth =

Gauge – 40 cm 290 77

AUSTRIA:

Kienstock 2013-2015 Kienstock Depth » Gauge 250 53

Wildungsmauer 1882-1897 Wildungsmauer Depth =

Gauge+20 cm 230 52

Fairway depths during period 01.09 - 31.12.2012

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Sector Km Standard station

Calculation Requried

gauge for min. depth 250 cm

Number of days at depths

below 250 cm

HUNGARY

Szob upstream 1711,3-1710,7 Budapest

Depth=Gauge+70cm 180 47 Dötös 1701,0-1700,0 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

Budapesta 1638,4-1637,4 Depth=Gauge+110cm 140 11 Depth=Gauge+120cm 130 4 Depth=Gauge+110cm 140 11

Ercsi 1615,9-1615,1 Dunaujvaros

Dunaföldvar

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 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 -

Solt downstream 1555,8-1554,6 Depth=Gauge+315cm -65 42 Depth=Gauge+365cm -115 1 Depth=Gauge+355cm -105 11

Fairway depths during period 01.09 - 31.12.2012

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Fairway depths during period 01.09 - 31.12.2012

Sector

Km Standard station

Calculation Requried

gauge for min. depth 250 cm

Number of days at depths below

250 cm

BULGARIA / ROMANIA Băloiu 629 Corabia Depth = Gauge + 225 cm 25 21

Liuta-Milka 568

Zimnicea

Depth = Gauge + 150 cm 100 68

Belene 563 Depth = Gauge + 120 cm 130 80

Vardin 543 Depth = Gauge + 190 cm 60 30

Gâsca upstream 538 Depth = Gauge + 190 cm 60 30

Batin 528

Giurgiu

Depth = Gauge + 210 cm 40 58

Batin downstream 523 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

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Water Depth Situation August 2013

77 vessels were stopped

4 vessels were grounded

28.8.2013

Km 609.0 Km 608.3 Depth(dm)22 Width(m)>180

610.0 608.0 22 >180

590.0 589.5 24 140

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

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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

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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

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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

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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”

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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

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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

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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

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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)

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

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LNG MASTERPLAN - OBJECTIVES

• Identify and quantify pioneer markets and customers in the hinterland of inland ports

• Analyse costs and savings/benefits of LNG use

• Transfer know how from maritime into inland navigation sector and raise awareness

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

• 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

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Pilot deployment

Technical concepts

Regulatory framework

MAJOR ACTIVITIES IN DANUBE REGION

LNG Masterplan Kick off meeting / Rotterdam / 06.11.2013

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

Study for development of LNG terminals on the Romanian maritime Danube (Port Authority APDM)

Retrofitting of 3 vessels for LNG propulsion (NAVROM Galati) Depl.: Q2-Q3/2015

LNG Supply & Demand Study (FHOÖ & Linz AG) Time: Q3/2014

LNG Supply & Demand Study (NGVA CZ) Time: Q3/2014

LNG gas tanker (Chemgas) Innovative LNG gas carrier; connecting terminals on Danube Depl.: Q3/2015

Small scale LNG terminal in Ruse (Bulmarket) incl. fuelling devices for vessels & trucks; Depl.: Q3/2015

Study & Design of intermediate LNG terminal in the Port of Constanta (TTS Group)

LNG Supply & Demand Study (EVN) Time: Q3/2014

Study for LNG Terminal in Komarno & vessels (Danube LNG)

Studies and preliminary designs for terminal & vessels (fuel & cargo)

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

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

Inland navigation functions as pioneer consumer and facilitator

LNG SUPPLY CHAINS TO INDUSTRIAL HEARTLANDS OF EUROPE

LNG IS FUEL AND ENERGY RESOURCE

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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!

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Further information

Alexandru Capatu

Chairman Pro Danube International

Email: capatu@prodanube.eu

Mobil: +436643025874

Manfred Seitz

General Secretary

Pro Danube International

Email: seitz@prodanube.eu

Mobil: +436764067878