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Why is river transport the cheapest, but its share in traffic is steadily falling?

 
Tags: Logistics | Transport | Alternatives | Russian Railways | Ecology | Analytics | USA | Germany | River transport | Volga | Ship building | Coal | Oil | Potassium
 

We look at the example of the great russian river Volga and try to understand whether something can be done.

At all times, rivers are unique natural arteries, as if specially created for transport. On the river, it was possible to take away many times more cargo than a horse-drawn cart could handle. Until the middle of the 20th century, when an extensive network of roads and railways was formed, this was, of course, the main mode of transport in the European part of Russia.

Stalin's industrialization, which changed the economic and geographical map of Russia, was mainly based on the rivers. During this period the largest canals were built with fantastic labor costs (including prison labor). There are Volgodon, Belomorkanal, Moscow Canal, the Volgobalt (reconstructed). All together they connected together into a single transport system the Baltic, Black, Caspian and White Seas. The largest production facilities were located on the banks of the rivers, including giant car factories in Nizhny Novgorod and Togliatti. The ordinary before revolution cities such as Volgograd, Perm, Ufa (to some extent Nizhny Novgorod and Samara) grew to millionaires and the largest centers of the new industrial economy during very short period of time . And, on the contrary, important cities of former Russian Empire such as Tula, Orel, Kursk, Orenburg grew at a much lower rate, because they were deprived of their proximity to a large navigable river.

River transport is the cheapest form of transport, while allowing the transportation of large and non-standard cargo, which is sometimes difficult to deliver somehow differently

Therefore, rivers are an indispensable companion of large industrial enterprises. Water transportation can significantly reduce both capital costs for the construction of the enterprise (transportation of large volumes of bulky construction materials by the river), and favorably affect the cost of production. As a result, such enterprises are more competitive - both in a planned economy and in market realities.

Unified deep-sea system of Russia

Unified deep-river system of Russia

However, today the share of river transport workers in the total volume of freight traffic is an insignificant few percent. In recent years, we have heard a lot about the bankruptcy and financial problems of domestic river shipping, shipbuilding and ship repair enterprises, and very little about laying new ships and laying new routes. Rumors of causes are usually called large-scale changes in the economy (the winding up of large industrial enterprises and the transition to a post-industrial economy), as well as growing competition from other modes of transport, which are often faster and more convenient.

Does this mean that the death of freight shipping on the Volga and its tributaries is an objective economic reality, an irreversible consequence of scientific and technological progress, like the victory of vehicles over horse-drawn carts at one time? Or how did this happen with river transport of passengers - the river could not compete with road transport in terms of speed and width and convenience of the route network. Is it necessary to continue to artificially support an animal that is already unable to survive, or is it easier to shoot it so that it does not suffer? Here and below, we are talking primarily about the Volga and the rivers of the European part of Russia, but taking into account the trends that occur in river shipping around the world (the decline in river freight transportation has been observed in recent decades on the Rhine, the Yangtze, and the Mississippi).

How is the low cost of water transport achieved?

Those who talk about the natural death of river freight, it is important to remember that the cost advantage of river transport has not gone away. To make it clearer, let’s explain how it is achieved.

One of the main benefits is economies of scale. The capacity of a modern motor ship of the Volga-Don type is 5,000 tons; small vessels of the Oksky type start at 1,750 tons. A typical large truck for long-distance road transport (Eurotruck) takes away only 20 tons. Due to the economies of scale, the price of a vehicle per one ton of cargo carried on the river is one of the lowest.

This is clearly seen from the table below (the calculations are very approximate, but they demonstrate the order of numbers well):

Ship "Volgo-Don" Eurotruck (tractor + trailer) Locomotive + convoy of 77 wagons
Payload, tons 5,000 20 70 * 77 = 5,390
Cost, rubles 1,000,000,000 8,000,000 350,000,000 (200 million for the locomotive + 2 million for the car)
Per ton, RUB. 200,000 400,000 65,000 < / td>
Service life 30-40 years 1,000,000 km or about 5 years 20 years old

The only general-purpose transport that can compete with river transport in this indicator is the railway.

However, river have another important advantage over railway - the fact that there are no infrastructure costs.

River arteries are provided to people by nature - there is no need to spend money on paving roads or laying rails, as well as the construction of numerous bridge crossings, tunnels and multi-level junctions. There are no major costs for the regular repair of roads and the routing of many kilometers of the railway. Yes, dredging and other land works are sometimes required, but their cost is not comparable with the cost of supporting infrastructure repairs from competitors. However, this is not even the most important thing.

The largest cost component of any new rail or road project is land costs. The land usually belongs to someone and to pave the way in this place, you need to buy it from the owner. The larger the trunk, the more land needs to be redeemed. Actually, this is one of the reasons why the wealthy United States of America still does not have (and does not plan to have) high-speed rail lines - the cost of buying land for space construction is huge. It is much easier to continue to invest and develop aviation. For the same reason, the high-speed railway Moscow - Kazan did not happen in Russia, which was much talked about - the price tag for its construction was called in the region of 1 trillion rubles or more. A automobile road along the same route, which was planned to be carried out mainly “through forests and fields”, bypassing large cities, stretched out for more than 500 billion. For comparison, the largest project in the field of river transport - the Nizhny Novgorod low-pressure hub - costs “only” about 50 billion .

In comparison with the above, other “little things” are a little lost. A cargo ship serves the transportation of 5,000 thousand tons of cargo in a small team, 250 trucks will be required to transport similar cargo by road - each of them must have at least one driver. By the same logic, fuel is also saved - fuel consumption per tonometer is cheaper due to the use of more powerful engines, and the specificity of river traffic allows you to go all the way at a constant speed - without acceleration and braking typical of roads. However, we make a reservation that in this part, riverboats are much ahead of only automobile transport, but not railways, in which the costs for personnel and energy are generally comparable.

It is clear that river transport has well-known shortcomings. First of all, it is seasonality, slow speed of deliveries and the inability to ensure deliveries “from porch to porch” due to the limited river network. But in the economy there are not a few industries for which the speed of delivery is not so important as the cost of transportation. These are minerals, building materials, petroleum products, timber, part of agricultural products and much more. For example, grain producers often store their products in elevators until the next harvest, waiting for a favorable pricing environment. The transportation of such goods can be adjusted to navigation, or use different modes of transport in winter and summer. Finally, you can develop multimodal transportation by embedding the river in the supply chain.

Too narrow network width and seasonality are not the biggest problems

River transport opponents often speak that the rivers were successful when there was no alternative. Today, a river flowing along a centuries-old route does not provide sufficient flexibility in supplies. Not every city stands on the banks of a deep river and has a port, and even if it exists, the distance along the river can be several times greater than by land. Usually, all this is supplemented by the assertion that the largest Russian rivers flow from north to south (or vice versa), and the country itself stretches from west to east. Transportation from Siberia to the European part of the country is purely technically impossible - the Volga, Ob and Yenisei basins are not connected by channels. It’s hard to argue with all this, but there is a lot of situation when river transport is acceptable.

Yes, it is obvious that there is no way to compete with Transib in transportation to the Urals, but economically Russia today, like many centuries ago, is primarily the territory to the West of the Ural Mountains. Volga and Don through a system of channels connect 5 seas and 2 oceans. On the banks of these rivers are the largest Russian millionaires and industrial centers - Rostov-on-Don, Volgograd, Samara, Kazan, Nizhny Novgorod, on their shipping tributaries - Ufa and Perm. This system also includes Moscow and St. Petersburg, the two largest Russian cities. Oil producing centers of Volga and Cherepovets with its Severstal metallurgical plants have access to the river too.

And we should not forget that in international freight transport the water (sea) transport still holds the palm. All Russian rivers are directly connected with the largest ports - which means that in export / import deliveries, the path through the territory of Russia along the river, railway or highway practically coincides. In addition, in some cases, the river may make it possible to carry cargo without additional transshipment at the port.

The river will never acceptable to small commercial cargoes of small and medium-sized businesses; local transportation of consumer goods is a market niche for motor vehicles. River transport works in completely different segment - trunk deliveries of industrial goods, including export and import. In this segment, it can compete and the share of goods that is transported along the Volga and its tributaries clearly does not correspond to the available potential.

Seasonal business should not be too scary. Navigation on the Volga and Don can reach up to 250 days a year, and this is most of the year. In addition, a number of other industries (construction, agriculture) also have a pronounced summer seasonality. Do not forget that repair work on the railway is also carried out mainly in the summer, which means that excess transportation capacity in the summer should not arise. In addition, during the winter, river-sea vessels are by no means required to dock. They may well work in the Black or Baltic Sea, transporting goods there. It is clear that they will lose to purely marine vessels in terms of carrying capacity, but at least they will recapture their costs - pay salaries to staff, reduce the payback period on investments in the vessel itself.

As a result, seasonality and insufficient network width are serious limiting factors, but the main problems of river transport are other.

Great shallow waters of a great river

As we wrote above, the key competitive advantage of water cargo transportation is the volume of the vessel itself and the related economies of scale. The draft of the most modern dry cargo vessels of the “river-sea” type, capable of transporting goods of 5 thousand tons in size, is about 3.5 meters, and the guaranteed depth of the navigable river should be 4 meters. However, there are two areas where guaranteed depths are maintained once a day, and sometimes less often. The first of them is a 54 kilometer stretch between Gorodets and Nizhny Novgorod on the Volga. The second - between the Kochetkovsky hydroelectric complex and the city of Aksai - on the Don. Both zones are strategically important. The first limits the transportation of goods from / to the Lower Volga and Kama in the direction of Moscow, St. Petersburg and for export / import through the ports of the Baltic Sea. The second is export and import cargo passing through the ports of the Azov and Black Seas. As a rule, shipping companies are forced to either reduce the tonnage of dry cargo during transportation at these sections, or wait in the “traffic jam” for the appearance of the necessary depths, or even load cargo onto vehicles and pass the problem section “on the lung”.

The problem with the Gorodets-Nizhniy Novgorod zone arose due to fact that Cheboksary reservoir doesn't work at full capacity. The construction of reservoir was carried out in the 1980s, was it never brought to its design capacity. In other words, the right amount of water was not poured there. Large volumes of residential territory would be flooded in case of work reservoir at designed capacity. It would require a large-scale relocation of people, which Russia has not seen since the Stalin era and the flooding of Mologa city. The project was discussed for a very long time and it was finally canceled in the early 2010s.

Diagram of the Nizhny Novgorod hydraulic unit

Scheme of the Nizhny Novgorod hydraulic unit

Instead of it, is planned to build the Nizhny Novgorod hydraulic unit. He must solve the problem of shallow depths below Gorodets. The project is supported at the highest level and not to say that it is very expensive, but the clash of interests of various lobbyists still does not allow to begin construction. A similar situation is with the Bagaevsky hydroelectric complex, which should solve the problem of shipping on the Don river.

However, construction of these two hydraulic units, can provide survival of river transport, but not prosperity. After the construction of two hydropower facilities, the Unified Deepwater System of the European part of Russia will retain several more bottlenecks:

  • Volgo-Don Canal
  • Gateways of the Vytegra Stairs
  • St. Petersburg bridges (taking into account the construction of the Ring Road, increasing the night interval for bridge building will not be a problem)
  • With the commissioning of all these projects, the problem of low water on the Volga should cease to be critical, and the cargo base should gradually begin to grow. But in order to make the river a truly competitive transport channel, investments in infrastructure alone are not enough - this is evidenced by the experience of the European Union, where the program for the revival of river transport, based mainly on eliminating bottlenecks on rivers and canals, gave only a partial effect.

    Rivermen lose the fight even for their goods

    From the reports of the Volga Shipping Company you can clearly see what today is the cargo base of the river fleet:

    Volga cargo turnover structure

    Cargo turnover structure on the Volga

    Almost 50% of all domestic transport falls to crushed stone, another 15% to gravel and gravel-sand mixture. Building materials are mainly transported from the quarries of Karelia down the Volga. Another 25% of domestic cargo comes from salt transported from fields in Solikamsk. The main export cargoes are agricultural grain and sulfur. Note that the Volga Shipping Company is not the only carrier, but the largest, and in general its transportation structure is representative of the entire industry.

    Transportation of building materials along the Volga

    Transportation of building materials along the Volga

    Today riverboats actually serve builders, including their direct competitor - road builders

    This is facilitated by several circumstances. To carry goods like sand, gravel and gravel in cars over long distances is too expensive, and the railroad does not like the tariff for transportation. In addition to the proximity of waterways to the main places of production and consumption, the seasonality factor also plays - seasonality in the construction sector coincides with the navigation period.

    But if for the Volga basin construction cargoes are the basis of survival and the economy, then in transportations along the Rhine they occupy only fourth place. In transportation along the rivers of the Rhine basin the leader is solid fuel (primarily coal) with a share of only 17%, the second place is taken by petrochemicals with a share of 15%, and the third is metal ores (13%). Another 11% of cargo turnover is transported by chemical products. The rest is the transportation of containers, metals, agricultural products and animal feed. Why in Russia these cargoes practically do not carry on the river?

    Coal is absent in the domestic cargo flow partly for objective reasons. The main Russian coal deposits are located in the Kuzbass and in the Republic of Sakha, they are not tied to the Volga basin in any way. Domestic coal consumption in Russia for the needs of the electric power industry is not large (approximately 15%, mostly in specific regions, such as the Krasnoyarsk, deprived of gas), most of the coal mined is exported. For comparison, in the same Europe, the share of coal in the energy sector is about 25%, and in China - even 40%. This is largely due to the availability of other cheap and environmentally friendly sources of energy - gas (thanks to the bowels of Siberia) and hydropower (a legacy of Stalin's industrialization). Russia has much less reason to use low-ecological cheap coal, so coal is transported on the Rhine in larger volumes than on the Volga. But this does not mean at all that water transport cannot be used for export transportation of coal. The fundamental problem of the Russian coal industry is that the main places of extraction are removed from the sea coast (in contrast to the main competitors - Indonesia and Australia). For a mineral whose shipping cost is about 1/3 of the cost of the product - this is an important problem. Kuzbass coal is transported mainly along the Trans-Siberian Railway, with about 65% of production being exported through Pacific ports, the rest through the Baltic.

    Understanding the importance of cheap supply in the cost of coal, the Russian government maintains coal transportation tariffs as low as possible. In terms of cargo turnover, coal is today the main cargo of Russian railways. But at the same time, the railway carry it with a loss . Russian railways regularly try to lobby for an increase in tariffs for coal transportation, including periodically scaring by large-scale layoffs of employees.

    Cheaper cost of coal transportation (and making them profitable) can be achieved through multimodal transportation. Moreover, the Russian Railways itselves offer this option - they can transport coal from the Syberia till Volga. One of the potential transshipment points is the city of Kambarka in the Republic of Udmurtia, standing on the banks of the Kama River. But it has not yet reached the practical implementation of these initiatives and the construction of infrastructure.

    The second example of appropriate cargo for river transport is fuel products. It is problematic to claim transportation of crude oil, although it is extracted quite a lot in the fields in the Lower and Middle Volga basin. Most of the crude oil produced is transported, including for export, through the pipeline - nobody can compete in price with the pipeline.

    But the river can quite claim to transport oil products, first of all the most massive ones - diesel fuel, gasoline, fuel oil, aviation kerosene (and even now they transport a little such cargo). For example, the Moscow oil refinery plant today does not provide all the fuel needs of the capital, and the missing products can be transported along the river.

    One of the main potential shippers is the Samara cluster of Rosneft refineries (Kuibyshevsky, Novokuybyshevsky and Syzran refineries). There is already work in this direction - Rosneft gave BashVolgotanker (a subsidiary of the Volga Shipping Company) a large contract for the transportation of light petroleum products to the port of Kavkaz (export via the Black Sea). According to the published information , the cost of transportation will be 10% lower than when using railway transport. And although there is a suspicion that the proposed tariff is at the cost level without profit margin, this is an important for river industry. Large contract that allow at least loading the fleet and earn money for its update.

    But the Samara refinery cluster is not the only one that could potentially use the river. Lukoil (Volgograd, Perm and Kstovo), Rosneft (mentioned 3 in the Samara region + Saratov + Bashkir oil refineries), Gazpromneft (Astrakhan), Tatneft (Nizhnekamsk) and several others (Yaroslavl , Novoshakhtinsk) oil refineries plants are on the banks of Volga basin rivers or near them. Many of them have historically involved water transport in their logistics cycle and ready returning to this option. However, the regular shortage of water on the Volga and the many years of bankruptcy risk of Volgotanker forced oil companies to seek more stable and reliable mechanisms for their products logistics. Oil supplies are one of the most obvious resources for the river plant to increase its cargo base and improve its financial situation, but without solving the problems of shallow water, this cannot be done.

    Another potential supplier of cargo for the fleet is potash deposits in the Perm and Berezniki areas. By its characteristics, potash fertilizers are a typical cargo of water transport, and the Perm region is one of the largest producers of this fertilizer in the world. The railway line in this direction is essentially a dead end, which means that both river and railway transport will face the problem of reverse loading. Attempts to organize transportation along Kama were taken, but nevertheless Uralkali (biggest potash producer of region) returned to the option of transporting potassium by railway. Allegedly, the problem in the low water on Kama is the river, unlike the Volga, it is navigable only 5 months a year.

    But this hardly sounds like a decisive argument - if it is cheaper to carry along the Kama River 5 months a year, then it’s better to do so, and the rest of the time - use rail. In past potash producers have tried transport cargo on its own fleet - fleet was idle during winter month. Attracting an external contractor can solve this problem - in the winter months, the fleet will simply be involved on other routes.

    Environmental factor is poorly taken into account in tariffs

    A hundred years ago, European rivers were in full swing - they were used for both passenger and freight traffic. But by the end of the twentieth century, local transport life there also moved to bridges, cars and railways. It became clear that in the conditions when initial investments in the infrastructure of rail and road transport have already been made, riverboats everywhere lose economic competition.

    But at the same time as the river traffic fell, the picturesque valleys of Europe were filled with multi-ton trucks - noisy, stinking with exhaust gas and forming traffic jams. This effect was not taken into account in tariffs in any way, so entrepreneurs chose even less environmentally friendly, but more convenient transportation options. Having realized this, in 2001 the European Commission adopted a number of measures aimed at resuming freight traffic along rivers - primarily aimed at getting rid of places with low throughput and at increasing cooperation between countries connected by river routes.

    There are a number of environmental reasons why society is interested in the revival of water transport

    The following graph clearly shows energy consumption per ton-kilometer for the main types of inland transport. All calculations were carried out on the example of Germany, they can not always be directly transferred to Russia, but they show the big picture:

    Energy consumption by different modes of transport

    Energy consumption by different modes of transport

    Riverboats consume the least energy per tonne-kilometer. A direct consequence is the low specific fuel consumption and CO2 emissions into the atmosphere - river transport is one of the most environmentally friendly modes of transportation.

    However, it is important to make a reservation. Conclusions on the ecological footprint of rail and river transport differ among researchers. Rail freight services are mainly carried out by electric locomotives (ships usually use diesel engines), so much depends on the primary source used to generate electricity. In Russia, these are predominantly hydroelectric power plants and gas generation; in Europe, this can be coal or any other fuel sources. And although there may be a discrepancy with respect to rail transport, the competitive advantage of riverboats over road transport is usually not disputed. Do not forget that river transport is one of the safest modes of transport. Automobile transport bear higher potential security risk for a pedestrian and drivers.

    In economic terms, road transport creates much greater negative externalities for society than its competitors. But only recently, these effects began to be taken into account in the taxation of road transport.

    The introduction of the Platon heavy truck collection system in 2015 was extremely negatively received in Russian society. The whole of 2015 was acquainted with the mass protests of truckers. The negative tone of media publications was caused primarily by the lack of transparency in choosing a contractor who was to implement the system and receive state money. But implementation of Platon have leaded to more fair competitiveness between different transport modes.

    A significant share of budget expenditures at any level is the cost of automobile road maintaining. This is not fair situation - trucks led to accelerated depreciation of the automobile roads, the restoration of which is financed often from a common budget (not from specific funds). Additionally, trucks create other negative externalities discussed above.

    River transport suffers and loses everywhere, including because its environmental benefits are not properly incorporated into the tariff - not through subsidies to the river itself, not through taxation of more successful competitors with harmful externalities. A fair and differentiated environmental policy in relation to business entities, depending on the harm they bring, is another basis for the revival of water transport. Using Platon it’s quite easy raise truck fares during the navigation period along those directions that duplicate rivers.

    Winter navigation cannot be extended

    Seasonality is an important deterrent. At the same time, the duration of navigation in different on different river zones:

    Land Duration of navigation, days per year
    Moscow Channel 200
    Volga 240
    Don 240
    Kama 180-200

    On Siberian rivers, the navigation period is even shorter - 110-185 days on the Yenisei and 90-150 days on the Ob.

    Providing year-round navigation on the Volga and its tributaries is hardly a feasible task, even with a very strong desire.

    The icebreaker river fleet in the USSR was built at shipyards in Finland in an extremely limited quantity. Today, only one river icebreaker operates on the rivers of Russia - in the port of Dudinka, where the Yenisei flows into the Arctic Ocean. Its purpose is to guide vessels from the ocean to the port of Dudinka where the depths no longer allow the use of more powerful ocean icebreakers. To the south, upstream, the river icebreaker goes only for emergency and rescue purposes - to rescue ships that could not complete their navigation before the onset of ice. Icebreakers in Russian ports in the Caspian, Baltic, White and Azov Seas are concentrated on the pilotage of ships to the port too. For emergency rescue operations, ice-breaking river transport operates in Canada and on the Hudson River in New York.

    River icebreaker Abraham Zavenyagin on the Yenisei

    River icebreaker Avraamy Zavenyagin on the Yenisei

    The only one the famous idea to organize a year-round movement on the freezing river. Mississippi - the most important river artery in the United States, it connects a significant part of the central regions of the country with the Gulf of Mexico. The river plays a big role in this area. The upper reaches of the river are inaccessible for transportation from about mid-December to early March - this is slightly less than on the Volga. The project of organizing year-round navigation in this area was proposed in the 60-70s, against the backdrop of the decline in rail traffic. But even then, things didn’t go further than the project - the costs of ice protection and the potential risks of a collision between ships and ice covered all the savings on river transport.

    A similar example is the Northern Sea Route in Russia. Transportation across the Arctic Ocean is presented as an alternative to the Suez Canal (travel time from Asia to Europe is shorter here). In addition, Russia needs this route to export huge reserves of natural resources (Yamag-LNG project, Taimyr oil and coal). But even in this situation, most experts see the expediency of a year-round route on this route only west of Taimyr towards Europe, and continuous navigation east of Taimyr can hardly pay for itself. But here we are talking about many times more cargo flows than on any of the rivers of the Volga basin. Therefore, talking about year-round navigation on the Volga is basically a meaningless undertaking. It is much more important to look for ways to even out shipping dates in separate sections of the Volga basis, as this is another bottleneck. As already mentioned, we are talking about the Moscow channel and Kama.

    On the whole, the rumors about the death of river transport turned out to be greatly exaggerated - with proper management, he certainly won’t be able to win over the railroad, but at least he can increase his share in the transport balance and get out of the permanent crisis

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