Freight Transport for Development, a policy toolkit 82

Increasing the Use of Inland Waterways in the

modal share - in China, India and Brazil
This case study shows how best practices can be shared between several developing
countries, in this case with regards to the role of inland waterway transport. The case
study also highlights a number of successful policy measures in the several countries.
Context
China, India and Brazil differ with respect to the strategic vision of their governments on
inland waterway transport (IWT).
In China IWT tonnage has grown annually by 9% and tonne-km by 12% between 2000
and 2006. The main commodities carried by IWT are building materials (34%), metals
and ores (19%) and coal and coke (17%).
Despite growing freight transport volumes in India, IWT represents less than 1% of
the modal share. The Inland Waterways Authority of India (IWAI) attempts to
promote IWT by directing the necessary policies and investments into IWT with a
focus on the main rivers Ganges and Brahmaputra. Despite the efforts to improve
the infrastructure the inland waterway sector in India lacks interest from market
partners, such as shippers. The government therefore faces the task to promote the
market potential of IWT.
Brazil has an extended system of inland waterways, however the cargo is limited to
agriculture. The development of IWT is seen as a prerequisite to remain globally
competitive. In the national plan for logistics and transport the modal split of water
transport (IWW and coastal shipping) is expected to increase from 13% in 2005 to 29% in
2025.
China, India and Brazil are at different stages of developing their IWT policy. However,
concordantly the benefits for an increase in inland waterway transport can be seen in the
improved land-use, more efficient usage of surface modes, greater energy efficiency
(through more efficient vessel utilisation) and pollution prevention.
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Objectives
The strategic vision of the governments in China, Brazil and India differ in relation to the
role of IWW. Furthermore, there are variations in amount of cargo that could be
transported by IWW. The objective is to enhance the knowledge transfer with China
providing best practice examples and the Netherlands playing the role of an
intermediator.
Against this background various aspects are examined, such as infrastructure
development, cargo flows, logistic costs and quality of service.
Achievements/ Results
In China there is a clear policy to further stimulate the share of IWT and to improve the
interface between IWW and other modes especially sea-ports and rail. In China a three-
level civil administration is in charge of the IWT management. At the top level the
Ministry of Transport (MoT) develops sectoral policies and infrastructure planning. On a
next level the River Administration is responsible for the implementation of IWT projects
on the countrys main inland waterway transport link along the Yangtze and Pearl River.
On the third level the provinces themselves implement IWT projects. The strategic
objectives in China include the promotion of an efficient waterway fleet utilisation;
furthermore the extension of the Class III inland waterway system by 65% (in terms of
km), from 8,687 to 14,300 km, and the Class V by 50% (from 24,000 to 36,000 km) by
2020. Programs include a long-term waterway development plan to 2020, a vessel
standardization program and a framework concept for an integrated river information
system.
The Chinese inland waterway sector has seen enormous increases in volumes on the main
rivers such as the Yangzte River. Infrastructure programmes have focused at
developments of new port and upgradings of existing ports, improvements in navigation
channels (including the development of side rivers), and the development of supporting
systems like GPS, VTS, RIS, digital charts, in main river areas (especially along the
Yangtze River).
The Chinese has developed plans and strategies for:
x privatization in inland shipping and port construction and operations
x barge standardization programme: set up a scrapping system including subsidies for
innovating the fleet
x incentives: local government deduct fees for pre- and end haul transport to/from the
inland terminals. Subsidies are possible to set up new shipping routes (in start-up
phase)
x development of an IT platform for terminal operating systems to increase the
efficiency
x develop connecting infrastructures to inland ports
x the tax-system for inland vessels (fixed tax) is changed into a fuel fee-system, which
is considered to be a fair system by the operators
Freight Transport for Development, a policy toolkit 84
Furthermore there is an ongoing cooperation between China and foreign partners, such as
the Netherlands, the European Commission, and projects are being developed with
international financing institutions such as the World Bank and the Asian Developments
Bank. The cooperation with the Netherlands is ongoing for many years and has developed
from basic master planning and infrastructure support, into state of the art projects in the
field of efficiency improvements and increasing the safety and environmental standards.
At present pilot and demonstration projects are ongoing in the field of:
x The technology for (chemical) spills monitoring and emergency response
x Ship design and building technology
x E-navigation
x Internationally recognized safety/green certificates
x Human resources development in the field of the transport of dangerous cargoes
x Waste management in inland shipping
The modal share increase for IWW in China and high volumes of freight transported on
the waterways demonstrate the effectiveness of the Chinese IWT policy strategy. The
achievements which were realized through the national plans and foreign co-operation
programs may serve as an example to improve the level of IWT in Brazil and India.
The Brazilian MoT is currently setting up a strategic waterway plan (Plano Hidrovirio
Estratgico). This represents a first step in designing a national strategy for IWT in
Brazil. Brazil has numerous waterways but limited commercial use of the waterways. The
truck sector dominates the transport scene, but more and more the federal and state
governments realise that alternatives are needed, especially bu making more use of the
countries waterways. The strategic waterway plan is a first attempt to tackle the issue on
the national scale, and to bring the waterway sector policy and plans more in line with the
other modes of transport, that have already been included in detail in the National Plan
for Transport and Logistics. On the state level, initiatives are taken by the state
government to stimulate the use of the waterways for transport. A good example is the
state of Rio Grande do Sul, which has developed a master plan for inland waterways
transport, followed by demonstration and pilot projects. A first result is the first regular
container service in Brazil between the seaport of Rio Grande and the Port Alegre. Also
in other areas there is cargo potential, but a modal transfer needs support from
government bodies. An important development in Brazil is the construction of ship locks
when dams are built. This addresses the frequent problem that infrastructure projects
prioritize the construction of dams for hydro energy without integrating ship locks, and
thus blocking the development of inland shipping. An important pilot project is nearly
finalised in the Tocantins area in the north of the country, where a lock complex is
integrated in the dam, opening new possibilities for inland waterway transport. However,
a stimulating policy from the government is needed to attract shippers and operators.
In India the Central Government for many years has neglected the inland waterway
system, and the necessary funds for improving the waterways were not available. Several
years ago a special agency was set up for waterway transport (Inland Waterway Authority
of India) under the Ministry of Shipping with the aim to develop a number of national
waterways and bring them to specific design standards. This includes the main waterways
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such as the Ganges and the Brahmaputra. The development plan is laid down in the
National Plan for Ports and Waterways. However funds needed to implement all plans are
not made available through the Central Planning Commission. Inland waterways
Authority of India follows the strategy of setting up pilot projects together with
companies, and by giving incentives. The private sector however is cautious of investing
in the sector, because of the many uncertainties. At present the major demo project under
development is the Haldia-Farakka Coal Transport project. This project includes a major
shipper, large flows of coal, and wills erve as a good business case to demonstrate the
potential of IWT among shippers. Indian business partners are responsible for detailing
the logistic concepts and implementing the several chain elements such as vessels, the
transhipment facilities, and adequate staff. Government agencies and bodies are
responsible for providing the proper framework such as the navigation conditions,
subsidy schemes, and training facilities. Dutch experiences and expertise provide inputs
to the logistic concept, technical designs leading to innovative solutions with higher
output and/or lower cost.
The Netherlands acted as intermediary, e.g. organized round tables, provided expert
support, submitted best cases examples. The Dutch input has the aim to improve the
business case by looking specifically at the port handling system, the inland terminals, the
vessel design, and the vessel traffic management system. The Dutch project is expected to
be finalised in early 2011.
The innovative solutions included development of green waterways, development of
dedicated barges, proposals on incentive schemes.
Lessons learnt
The Chinese Ministry of Transport recognizes the IWT as a promising mode for freight
transport and has adopted a clear strategy to exploit this potential. This strategy also
foresees numerous support programs and incentives . Countries such as India and Brazil
can learn from this approach by establishing similar mechanisms to create the awareness
for IWT, and to lower the entrance barriers. The lesson for India consists especially in
recognizing and promoting the economic viability of IWT, whereas Brazil can remove
barriers to the use of IWT by balancing its environmental policy and investments into the
technical facilities. In the transfer of knowledge and expertise the Netherlands plays an
advisory role by sharing the experience from the long-standing co-operation with China.
Incentives that have been developed for the Chinese inland shipping sector include
subsidy schemes for new services, lower fees for pre- and end-haul transport to and from
inland ports, a scrapping/subsidy scheme to replace old vessels by new vessels according
the barge standardisation programme, and by providing ICT support systems for better
vessel management leading to increases in efficiency through higher utilisation, and a
smooteher inspection system where the inspection regime for quality ships will be
lower.
Freight Transport for Development, a policy toolkit 86
IWT is considered to offer many advantages, both on the societal level as on the
commercial level. Advantages on the societal level can be found in the field of lower
energy use, lower emission standards, higher safety levels, safer transport of dangerous
cargoes, and lowering the increase of truck transport thereby creating a positive effect on
road congestion. These advantages are acknowledged worldwide and proven in many
studies and reports, and for that reason this mode of transport is a priority mode in several
countries and on the international level, e.c. in the European Union.
Commercial viability of waterways is proven by the huge amount of goods transported on
the waterways in countries like the Netherlands, Germany, China, and the USA. Not only
for bulk transport, but also higher value goods packed in containers are more and more
transported on the waterways because of the economic benefits.
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