Andrii Isaiev: The Volume of Cargo Transportation on River Dnipro is Increasing. Is It Developing?

Andrii Isaiev 24 July 2018 15:37

According to data from the River Information Service, the volume of cargo transportation on River Dnipro increased by 14.1% in the first half of 2018, compared with the corresponding period of 2017. Considering the fact that the river navigation season began a week behind schedule this year, which means that the navigation period was shorter by one week (6%) compared with 2017, then the picture seems completely rosy.

The volume of transportation of petroleum products increased. The volume of transportation of grain and ferrous metals reduced, which can be attributed almost entirely to the shorter navigation period. In addition, river vessels performed 5,785 trips in the first half of 2018, which is 10% more than the number of trips they performed in the first half of 2017.

However, it is not that simple. A look at the structure of transportation shows that the situation is not that optimistic:

Firstly, more than 1,000 containers were transported on River Dnipro in the first half of 2017, compared with zero this year.

Secondly, cargoes that fall under the category "Construction Materials and other Goods" accounted for most of the increase in the volume of cargo transportation this year. Sand deposited in River Dnipro accounted for most of the cargoes in this category.

As a result, the share of high-margin cargoes reduced this year and sand accounted for more than half of the cargo transport volume. Considering the fact that containers have been switched from rivers to other modes of transport, an alarming picture emerges – this growth is mainly due to cargoes that are “native” to rivers, i.e. cargoes that can only be transported by river. At the same time, new cargoes are practically not being attracted from regions adjacent to River Dnipro.

A number of projects for comprehensive study of the current state of Ukraine’s inland waterways, their cargo capacity, and the prospects for their development were completed in 2017 with the support of the Dutch embassy and international financial organizations. CFTS Consulting was part of a team of international experts that studied their current cargo potential and prepared forecasts for their development.

Based on this study, it can be argued that River Dnipro has a significant cargo potential – about 30 million tons of cargo per year with potential for further growth. However, this potential will not be realized without comprehensive state support for inland waterways in the legal, public, and economic areas. Steps that do not require direct, nonrefundable government spending are often needed. For example, these include incentive programs for the domestic shipbuilding industry, a program aimed at popularizing water transport, increasing the attractiveness of the Ukrainian River Register to ship-owners, and other measures that are described in detail in a report prepared based on the study.

One of the important points of this program is adoption of the long-awaited Law on Inland Water Transport. The EIB has said that one of the necessary conditions for investment in reconstruction of river infrastructure is adoption of this law, which will identify sources of funds for financing rivers.

Therefore, the increase in the river transport volume in the first half of 2018 is very good. However, it would be a big – if not critical – mistake to expect river transport in Ukraine to continue developing by itself. The risk exists that sand will account for all the cargo transported by river by 2030 if we miss the opportunity to take the clear steps that have already been prescribed following the increase of the river transport volume.