Inland Water Transport (IWT) has been a viable transport solution in European corridors for a long time, framing itself as an alternative to road and rail transport with high capacity and low costs. But the impact of COVID-19 has been felt hard within the sector and raised some important questions about the industry, its vulnerabilities and need for change.
These questions are perhaps more pertinent in the Netherlands, where the Dutch market makes up almost 10% of the total IWT market. At Royal HaskoningDHV, through our own insights and recently conducted research among 25 Dutch inland shippers on the state of the industry in the wake of COVID-19, we have observed a number of impacts and potential shifts.
Crisis and uncertainty
There is no doubt that the industry is currently in a moment of crisis the short-term impact of which has been severe and felt in a range of sectors. During the early months of the pandemic for example, the IWT sector lost around €120 m a month. Yet, all the IWT shippers we interviewed as part of our research indicated that the crisis would not have a major or lasting impact. This appears to be down to the continued demand for the kinds of goods – agricultural products have remained fairly stable for example – that are often transported via inland water ways.
But even this apparent buoyancy is tempered by the uncertainty of lockdown and the approaches taken by various countries to implement and lift it. Where some countries remain in some form of lockdown, others have enforced fewer restrictions.
Causes for hope – hints of change
The buoyancy may also stem from the ways in which the industry has succeeded in finding temporary solutions and mitigating some of the negative effects of COVID-19. Some shippers in the food industry for instance have focused on slowing down harvesting and ripening processes – or utilising cold storage.
At the same time, and out of necessity, some shippers have accelerated changes or advancements in through new ways of working and diversifying their approaches. In fact, many have already made a move to more direct sales online, leveraging the Netherlands’ strong IT infrastructure to achieve this. Meanwhile, on board vessels, the digitalisation of some processes as a result of COVID-19 has helped in maintaining social distancing on the ships; one of the most challenging obstacles to overcome.
The case for energy transition and standardisation
Our research also suggests that there is a need for IWT to accelerate its energy transition plans.
While IWT vessels will have been built for energy efficiency at the time of their construction, advances in energy technology and efficiency improvement, have left some vessels lagging behind. IWT is still often viewed nevertheless as “greener” than other forms of transport – trucks are replaced every 2-3 years on average versus every 20-30 years for vessels – and therefore one route to facilitating faster implementation of green technology.
This is an area we know well at Royal HaskoningDHV, having supported the development of the first hydrogen-powered vessel; a step which could signal the future direction of the industry. In IWT however, – we would be talking about testing three separate systems with the desire to settle on one that could be standardised across the sector. While the IWT sector has been relatively slow in adopting more sustainable approaches, standardisation will be crucial in expediting this process and, more importantly, encouraging buy-in.
Even though many shippers will have temporarily stopped investing in sustainable clean technologies during the current crisis, the crisis itself has also provided the impetus for others to invest in clean technologies, with a view to reaping the benefits in the future.
Sailing towards the future…
All the shippers we spoke to as part of the report that was published, are aware that the IWT sector will need to make considerable efforts to deliver more sustainable solutions. They understand that the sector is losing ground, and this will only have been exacerbated by the COVID-19 pandemic. With many shippers focusing on survival, now may not be the right time to talk sustainability.
Only time will tell how these developments will unfold, but understanding the need is a crucial first step to moving forward.
You can read more about our findings in our full report which is available to view now. If you are interested in discussing the report or finding out how we can help your business, contact us today.