River transport takes the ground
Cargo owners and shipping companies raise alarm – if financing of inland water ways is not provided urgently and in full, and implementation of projects on creation of certain hydrosystems is not started, freight transportation by inland water ways may stop and the budget can be short of billions of rubles per year. This will threaten supply of resources to some regions of Russia.
Russia’s Unified Deepwater System
Russia’s Unified Deepwater System is actually neither unified nor deepwater today. This conclusion was made in early August at the meeting of the Transport Committee of the Russian Union of Industrialists and Entrepreneurs headed by Vladimir Yakunin. Rescheduling in construction of some hydrosystems threatens supply of resources to some regions of Russia.
According to Vladimir Lisin, Deputy Head of the Committee, Chairman of NLMK BoD (also controls UCL Holding), transportation by Russia’s UDS in 2014-15, fall by 8-10% per year, time of voyages increased from 20% to 45%, while their loading dropped by 20-25%. This situation should be attributed to low financing of IWW infrastructure and low water level. To improve this situation, large scale investments into infrastructure and “debottlenecking” are required. Only the state can afford such investments.
As of today, there are three bottlenecks at Russia’s UDS (Lower Don (South), Gorodets (Center) and Svir (North-West)), which actually divide it into separate parts. Construction of three hydrosystems is required to liquidate those gaps: Bagaevsky, Nizhegorodsky and Nizhnesvirsky accordingly.
The activities under the federal targeted programme “Development of Russia’s Transport System in 2010-2020” are either postponed or insufficient. The FTP does not cover the project on construction of Bagayevsky hydrosystem, without which navigation to the south will not be impossible due to low water level.
According to Victor Vovk, Deputy Head of Rosmorrechflot, the depth has decreased from 3.6 m to 2.8 m and the situation is getting even worse. He says RUB 1.5 bln is needed to start designing of the system and this should be done in 2016. Even in this case, the problem of low water at Lower Don will not be solved before 2022-23.
Designing of hydrosystem in Gorodets (included into the FTP) is in the process. The construction is to begin in 2017. Yet, Rosmorrechflot thinks that RUB 1 bln allocated for this purpose can be curtailed.
As for Nizhnesvirsky system, its designing is nearing completion but the priority of Nizhegorodsky or Nizhnesvirsky facilities is still under discussion.
The meeting participants also marked the necessity to apply the new norms for financing of inland water ways starting from 2016. According to RF Transport Minister Maxim Sokolov, financing of inland water ways under new maintenance norms was supposed to reach 100% by 2018. The experts say that insufficient financing for two years will aggravate the situation at IWW and will lead to the loss of personnel and, therefore, to the long-term problems which will be difficult to handle even with 100-pct financing.
It is clear that asking RF Government for money is unpromising amid the current crisis situation. However, the state’s direct losses caused by the deplorable state of IWW will total several billions of rubles in 2015.
Besides, curtailing of the river industry will bring a negative multiplicative effect in shipbuilding and other related industries. Cargoes will partly shift to ecologically destructive road transport which will lead to increased wear of highways, environmental degradation and more congestions. As for railways, they have their own problems and bottlenecks. Rail transport cannot handle all the cargo flows from inland water ways.
Over the 3-yer period, cargo turnover at inland water ways has reduce by 20 bln t-km which is equivalent to 1 mln voyages of 20 mln t trucks.
Passenger transportation by rivers has reduced by 4.9% in 2014 and by 6.2% in 2015, year-on-year.
Those losses mean financial risks for ship owners and cargo owners, less reason of investing into new river fleet (even with the state support), outflow of personnel. The situation nears “the point of no return” where the industry will have to be created from the scratch.
Meanwhile, well developed countries put the priority on water transport allowing for reduction of environmental damage, unloading of highways and saving on ground infrastructure. In EU countries, tax privileges and encouraging programmes are applied in the river industry. For example, the MarcoPolo programme provides financial support to the transport industry in order to shift road freight to other more sustainable transport modes, like shipping, rail or inland waterways (up to 20 bln t-km). The NAIADES programme is focused on the development of inland water transport.
According to Vladimir Yakunin, the industry experts should provide detailed calculations on budget losses in case of IWW industry liquidation to demonstrate the results of the state’s here-and-now economizing on river transport.