22 Dec Inland shipping benefits from extreme summer

It sounds completely illogical, but inland navigation was one of the sectors that benefited from the extreme summer of 2018. ABN AMRO reports this in its theme report ‘Winners and losers of the extreme summer of 2018’.
The summer of 2018 was the hottest in more than three hundred years. It was also one of the driest summers since the beginning of the last century. This took its toll in various sectors, while other industries actually benefited. For example, the water level was very low due to the drought. Inland vessels could therefore transport less volume in one go and therefore demand higher prices, which gave the turnover an extra boost.

The warm weather also worked out well for the sale of garden products. In the do-it-yourself sector, sales of these products increased by more than 12 percent in the third quarter. Parasols, garden furniture and sprinklers were sold as hot cakes in July. Supermarkets also did good business and recorded a sharp increase in sales of fresh and ready-to-use convenience products with high margins, such as fresh soups, salads, baguettes and barbecue packages.

The extremely hot summer has made entrepreneurs think in all ‘weather-sensitive’ branches. “These entrepreneurs are faced with the question of how they can limit risks or whether they can capitalize on opportunities. The answers are different for each sector, but come down to making new investment choices “, says Loek Caris, Sector Economist Themes of ABN AMRO. “In addition, there is a danger that an investment will yield too little in a ‘normal’ summer. The climate scenarios of the KNMI only provide clarity in 2021 about the chances of new extreme summers. Every investment will therefore have to be carefully examined. ”

Below the part of the report about the inland navigation sector. At the bottom of this article you will find the complete report.

Inland shipping has suffered from the very low water levels on the major rivers since the end of the summer. The main river that is navigated is the Rhine. It runs from the Rijnmond area via Lobith to the industrially important Ruhr area and further upstream to Koblenz, Mannheim and Basel. The water level in the Rhine near the Dutch-German border at Lobith fell in October to values ​​up to 6.5 meters, where 8.5 meters is the norm. The low water level also continued throughout November. Only on 6 December Rijkswaterstaat issued a ‘green code’ for the water level in the Rhine.

The water is too low for this year. The result is that skippers who want to sail ‘up’ (towards Basel, for example with containers, fuels and coal) or ‘down’ (to Rotterdam, for example with sand and gravel) can load their ships less heavily because they will otherwise walk ground. The largest ships could take up to 80% less cargo per turn, they did not want to run aground in the least deep part between Koblenz and Mannheim.

This means that the prices for east-west transport and vice versa have increased considerably. According to Statistics Netherlands, turnover in inland navigation as a whole rose by 18% in the third quarter (j-o-y) .11 In the past few months, navigation on the Rhine has been particularly lucrative because more sailing times had to be made because of the low loading factor. This attracted skippers on the Rhine who normally remain ‘down’ in the Amsterdam-Rotterdam region. This in turn put a bottom under the prices in the Amsterdam-Rotterdam region.

At the end of November, Shell announced that it was no longer able to supplement its fuel depot in Arnhem, which forced it to dry dozens of unmanned filling stations in the east of the Netherlands. German petrol stations had been in trouble before. If abundant rainfall is not forthcoming in the coming months, the higher transport prices can continue until spring when melting water from the Alps becomes available again.

All in all, inland shipping prices were clearly higher in the third quarter of 2018 than in the second quarter, while the transported volumes clearly declined in the same period. Given the continuing precipitation deficit, it is expected that this situation will continue in the fourth quarter. Incidentally, inland skippers who work with fixed price contracts do not benefit from the higher prices.

The inland navigation sector is now considering what to do for the long term. The sector has been working on scaling up in recent years. Now it appears that smaller (often older) ships with less draft this summer were strongly in favor.