Inland navigation: Determining factors of modality choice

Preface First of all, I want to thank the Erasmus University Rotterdam for offering the practical master Urban, Port and Transport Economics. After my HBO study, I was looking for a challenging master that has a more macro perspective on logistics and transport economy. In this master I have learned a lot about the fields of transport economics, urban economics and port economics. When I was considering interesting thesis subjects, I contacted several governments in search of interesting internships. Zeeland Seaports responded positively on my request, by offering me an interesting thesis opportunity. In the first place, I like to thank David Moolenburgh for inviting me to Zeeland Seaports and discussing the various thesis opportunities. After deciding on the topic, I started my internship under the supervision of Tom Bogaert. He provided me with data and contact information, which is the basis for my thesis. This is why I want to thank Tom Bogaert for the time he spend on supervising my research. During my research I have contacted over 40 persons to cooperate with my survey. I would like to thank all the companies that have responded on my survey. Without the help of these logistical managers, inland shippers, representatives of the inland shippers association and employees of Zeeland Seaports it would have been impossible to write this thesis. Finally, I want to thank Michiel Nijdam, who is my thesis supervisor from the Erasmus University. Together we discussed several times about the progress and contents of my research. I would like to thank Michiel Nijdam for the time he spend on supervising my research and the quick response on my questions. Steven Meerburg 5 Summary In the strategic masterplan of Zeeland Seaports (ZSP), the ambition to increase the transported volume per inland navigation from 28.7 million tons in 2008 to 40 million tons in 2020 is presented. This growth must be realized by a combination of autonomous growth of the ports of ZSP and a modal shift. The autonomous growth that can lead to an increased volume per inland navigation is especially dependent on the upgrade of the Seine – Scheldt inland waterway connection, the developments in the Scaldia port, the Axelse vlakte and the containerization. The Seine – Scheldt inland waterway connection will result in approximately one million tons transported by inland navigation in 2020. It is uncertain what the impact of the developments in the Scaldia port will be. The impact of the Axelse vlakte is still unknown. Containerization will lead to maximal 240.000 TEU transported from the Scaldia container terminal in 2020. It is uncertain whether the other two initiatives, that potentially result in an additional 1.5 million TEU transported by inland navigation, will become operational. Next to the autonomous growth, also a modal shift can contribute to the aspired volume transported by inland navigation from and to the ports of ZSP in 2020. In such a modal shift, cargo that is currently transported per truck is shifted to the transport mode inland navigation. In order to stimulate such a modal shift, ZSP needs to gain insight in the factors that affect modality choice of companies located in the ports of ZSP. From literature is derived which factors influence modality choice most. Before inland navigation becomes an interesting modality to transport with, several basic conditions need to be present in a port. These are; a minimal required distance of transport, the right product characteristics and the efficiency of the port. The products that need to be transported do also have to meet several characteristics, for example large volumes and long keeping time. Also, the delivery time must not be to short, since inland navigation is not the fastest transport mode. Furthermore, both the shipper and the consignee need to be located at, or nearby a significant waterway. Efficiency affects the price and quality of the transport from and to a port. To learn what the impact of certain factors on modality choice is, four ‘determining factors’ are set up. These determining factors are supported by seventeen port indicators, that influence the quality of the parent factors. Below, an overview of the determining factors and underlying port indicators is presented. Determining factors Port indicators Reliability Locks, nautical safety, infrastructure and superstructure Port efficiency (Costs;) transport costs, port tariffs, (speed;) transport speed of the modality, accessibility, infrastructure, superstructure, (other efficiency factors;) waiting quays and other facilities. Product characteristics Volume, weight, value and perishability of the product Perception / Image Promotion In order to encourage a modal shift, ZSP needs to understand the impact of each of the factors influencing the modality choice. This can help ZSP to adapt their policy so that investments become more cost effective and the aspired model shift can be attained. To discover the importance of the individual factors, a hierarchy is required, where weights are allocated to the determining factors and their underlying port indicators. The best method to do this is, is using the Analytical Hierarchy Process (AHP), where pair wise comparisons are used to distribute weights over the factors that affect modality choice. A survey is distributed over three respondent groups, making use of the pair wise comparisons. The first respondent group exists out of companies located in the ports of ZSP that organize their own transport. Group two exists out of companies located in the ports of ZSP that do not organize their transport themselves. The last group exists out of inland shippers, that are active in the ports of ZSP and the association of shipping companies, named Schuttevaer. The results of the first group, clearly pinpoint ‘port efficiency’ as most important factor, influencing the modality choice. Especially the transport costs and speed are important. Also reliability of the transport service is of influence. Within this factor, the nautical safety is considered as the factor that influences the reliability of the transport mode most. For the second group, product characteristics are the most important. In this respondent group there are several companies that transport products in large volumes and low value. Products with these characteristics are often transported with inland navigation, since this is the most competitive mode where scale advantages can be achieved. Also, the determining factor port efficiency receives a high weight in this second group. In particular the costs and speed of transport are considered as important. The third group has another view on this subject. They designate reliability as most important factor. This is explainable since this group attaches much value to the strengths of their modality. Whenever their transport service becomes less reliable, the most attractive property of this mode becomes problematic. Next to reliability, also the speed of the transport mode and product characteristics receive high weights. 6 There are thus different opinions within the three respondent groups. For ZSP, the first group is the most important, since managers from this group do actually make the modality choice decision. Group one is thus decisive in the conclusions. The companies in group two are less important since it is often the customer of the company that organizes the transport. Besides, the average value of all the three groups is strongly similar to the preferences of the first group. In can thus be concluded that port efficiency influences modality choice most. Within this factor, costs and speed of the transport receive the highest weight. Also the nautical safety, as reliability aspect, receives a high score. The factors that ZSP can affect (directly or indirectly) are; the locks, nautical safety, infrastructure, accessibility, port tariffs, waiting quays, other facilities and promotion. The factors that have been pinpointed as most important, namely the transport costs and speed, can not be influenced by ZSP. The other cost factor, port tariffs, has very low impact. From the factors influencing speed, accessibility receives the highest weight. Since ‘accessibility’ can be influenced by ZSP, this factor should receive the most attention, when a modal shift is pursued. Next to keeping the ports of ZSP accessible, also the (already sufficient) level reliability must be maintained. The most important factor that influences reliability is the nautical safety. Also this factor needs to be maintained and improved, in order to stimulate a modal shift. Other factors that ZSP can influence do not have a large impact on the modality choice decision of companies located in the ports of ZSP. This does not mean that these factors deserve no attention. Especially the capacity of locks and waiting quays needs to be monitored, so that no bottlenecks arise in the future. If bottlenecks are prevented, the attractiveness of the transport modes is not affected, so that the image can only improve.