Missed opportunities for Danube countries

By bne IntelliNews June 2, 2014

Clare Nuttall in Bucharest -


Countries along the Danube, which runs from Germany to Romania’s Black Sea coast, have a potential cheap alternative to sea transport. However, poor maintenance and a lack of investment in infrastructure mean that cargo transport on the Danube is falling and industries are forced to turn to other types of transport.

Just 60 kilometres from Bucharest, on the Romanian-Bulgarian border, the industrial town of Giurgiu is one of the country’s main inland river ports. The town’s Free Zone seeks to take advantage of its location on one of Europe’s main waterways, the Danube, to draw in investors.

On the other side of the river from Giurgiu’s container terminal, are the chimney stacks and apartment blocks of the much larger town of Ruse, Bulgaria’s fifth largest city. This is the site of one of Bulgaria’s first industrial zones, specialising in light industry, chemicals, machine building – and of course shipbuilding. Its location on the Danube – and since 1954 at one end of the bridge connecting Bulgaria to Romania – has helped to seal its position as one of Bulgaria’s main industrial cities.

Manufacturers in these and other towns along the Danube’s route through Bulgaria and Romania have the potential to ship goods to and from Central Europe as well as downstream to the Black Sea, and from there on to Central Asia and the Middle East. The Rhine-Main-Danube canal also creates a trans-European river corridor from the North Sea via the Rhine and Danube to the Black Sea.

Unfortunately, in most countries along the Danube, the river transport fleets are in poor condition, and there are numerous technical bottlenecks; during severe droughts, parts of the river are impossible to navigate. “The Danube waterway serves as a backbone for the Danube region and its economy. Competitive transport services on the Danube highly depend on the provision of minimum fairway parameters,” says Karin De Schepper of director Inland Navigation Europe, which was set up to promote waterway transport. “As large parts of the Danube are free-flowing, efforts to eliminate infrastructure bottlenecks not only require structural river engineering measures but also – and of even higher importance – effective and continuous waterway maintenance.”

Along with the section on the Bulgarian-Romanian border, other problem areas include the Hungarian section and between Straubing and Vilshofen in Germany. However, maintenance is an issue for much of the river’s 2,860km length.

Lack of funds

Resolving this problem would benefit both Southeast Europe economies and the countries they trade with, but progress is slow, despite efforts from the European Commission, whose Danube Strategy aims to see the Danube used more effectively as part of a wider European river transport network. It is targeting a 20% increase in cargo transport on the Danube 2010 and 2020. Brussels is encouraging greater use of the Rhine-Main-Danube corridor as an alternative to the much longer sea route around Europe.

The problem is that without similar enthusiasm from member states, many governments do not allocate the funds needed to carry out minimum dredging to keep their fairway open, resulting in disruptions to shippers. In some cases these are so severe that companies have switched to costlier but more reliable road and rail alternatives. As a result, cargo transportation volumes have dropped from around 43m tonnes in 2010 to just 40m tonnes in 2013. “There is a strong commitment and strong political will from Brussels, but some of the Danube states do not share this awareness of the river’s strategic importance, and do not dedicate sufficient budget for maintenance,” says Manfred Seitz, secretary general of business network Pro Danube International.

This was highlighted at a meeting of transport ministers from the Danube countries in Luxembourg in June 2012, when Hungary declined to sign a joint declaration on improving navigability. Since then there have been few concrete improvements. Nor have the Danube countries fully taken advantage of European funding - to date most of the projects funded by the EU are still at the feasibility study or pilot stage.

This is a missed opportunity, especially for the landlocked countries along the Danube, which include Austria, Hungary and Serbia. Lacking access to the cheapest transport mode - sea transport - better river transport could help reduce logistics costs and increase the competitiveness of industries in the region. “If we do not make use of the Daunbe’s potential for cost-effective logistics, then the region’s industries are at a disadvantage against competitors with access to sea transportation. This is not only a matter of transport policy. Those governments that do not carry out proper maintenance do a lot of harm to their national industries, reducing potential for economic growth and job creation,” says Seitz.

Water is typically used for bulky goods that are not time sensitive; due to additional concerns about reliability, only low-value goods are currently transported on the Danube. It is used for example, for shipping grain, steel, some chemicals and more recently goods for the alternative fuel and recycling industries. “There are rising volumes from new markets like biomass and high and heavy,” says De Schepper, adding however, “but to improve the use of Danube navigation, reliable and predictable fairway conditions need to be ensured throughout the year.”

International transportation company Rhenus Logistics, for example, uses the Danube in combination with other transport modes, using the river to ship goods such as agri-products, fertilisers and steel. The company’s managing director for the Danube countries, Patrick Schäffer, tells bne that the “Rhine-Main-Danube corridor is the most important traffic artery” within Europe. However, he points out that while the company would like to transport more cargo on the Danube, “what is urgently needed is an improvement of the main infrastructure bottlenecks along the Danube corridor.”

Port infrastructure needed

For barging services to improve, more investments into port infrastructure are also needed. This is one of the areas the EU hopes to tackle through its Danube Strategy. De Schepper notes that with better maintained fairways, private sector investment into infrastructure could be forthcoming. “[I]ndustry is ready to co-invest if authorities invest in reliable navigation conditions,” he says.

This reflects the large volume of cargo being transported in both directions from the Southeast Europe region – both to Western Europe and southeast to the Black Sea region and beyond. Until the Ukrainian crisis, the latter was expanding quickly, but with the conflict still unfolding it is difficult to predict what the eventual impact on trade flows will be. The crisis has had “direct negative effects on the economies of Ukraine and Russia and potentially wider implications for the region as a whole,” says the May 14 economic outlook from the European Bank for Reconstruction and Development (EBRD).

However, Seitz points out that even if overall cargo flows to the Black Sea region drop, there is still potential to increase the proportion of that flow that is carried by river. “There is a lot of cargo being transported by rail or road that could be shifted to the Danube is there were reliable barging services.”

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