An investigation to explore how inland waterways could be used as a more sustainable freight transportation method in the UK

Transcription

1 The University Of Manchester Manchester Business School BSc (Hons) International Management An investigation to explore how inland waterways could be used as a more sustainable freight transportation method in the UK Name: Adam Gardiner Supervisor: Dr. Paul Dewick 1 st May

2 Declaration of originality This dissertation is my own original work and has not been submitted for any assessment or award at University of Manchester or any other University Adam Gardiner 2

3 Abstract With the everincreasing impacts and effects of climate change appearing in the commercial sphere, it has led all industries to analyse their own impact on the environment and question their own sustainability. An industry, which currently contributes to this, is freight transportation. In the UK most freight is transported by road. This is a highly unsustainable form of transportation, so alternatives must be found. Much literature has analysed rail opportunities, but the UK also has an infrastructure of inland waterways that lay dormant. Therefore, the overall aim of the investigation is to explore how the use of inland waterways in the UK could be used as a more sustainable option for freight. The investigation uses a technological innovation system framework to investigate how inland waterways can diffuse into the market. By using the functions from this framework, interviews were conducted with industry stakeholders to further understand the issue. The key findings of the investigation were that the knowledge of inland waterways as well as the communications associated with them is very poor. This is further restricted by a lack of resources for the market, coupled with no clear future direction and resistance from other modes of transport. However, it was found that there is an increase in entrepreneurial activity and potential market for UK inland waterways. These findings led the investigation to make two key recommendations. Firstly, the commercial opportunities of the waterways need to be clarified and promoted. Secondly, the role of ports is integral to further development. The investigation recommends that ports become network coordinating actors. By doing so they could increase the communication in the network, which in turn would increase the knowledge base of inland waterways, which would also help stimulate entrepreneurial activity. 3

4 Table of Contents 1. Introduction Literature Review Introduction Summary of innovation systems Sectorial Innovation System (SSI) Socio Technical System (ST) Technological Innovation Systems (TIS) Critical evaluation of the three frameworks Function Analysis Analysis of the application of TIS to sustainable technology Summary Research Methodology Methodological Stance Data Type and Collection Methods Sample Selection Interview Questions Summary Results and Analysis Function 1 (Knowledge Development) Function 2 (Entrepreneurial activity) Function 3 (Knowledge diffusion through the network) Function 4 (Market formation) Function 5 (Guidance of the search) Function 6 (Resource mobilisation) Function 7 (Creation of legitimacy) Summary Conclusion References Appendix Appendix A Appendix B

5 Figures Figure Figure Figure Figure Figure Figure Figure Figure

6 1. Introduction The movement of freight in the UK is something that has been going on for hundreds of years. It has supplied industries, moved materials and delivered goods between Cornwall and Scotland and everywhere in between. However, the UK like all other countries is facing increasing impacts from climate change, requiring every single industry to examine what can be done to reduce their impact. Globally transport contributes 14% of all CO 2 emissions, with freight contributing to this. This is represented in figure 1 below, which shows a breakdown of these emissions (IPCC, 2014). Figure 1 Source: IPCC, (2014) Considering this in more detail, two thirds of all UK freight is via road, with 468,900 heavy goods vehicles registered, travelling a total of 15.7 billion miles per year (DFT, 2015). This staggering volume of traffic moves everything from raw materials to fast moving consumer goods. Almost all these vehicles are running on fuels, which produce harmful emissions in the form of CO 2 amongst others, which are major contributors to climate change (UNEP, 2015). This is 6

7 incredibly concerning when considering transport accounts for a fifth of all UK emissions and of this, 30% comes from freight (FTA, 2015). Freight transport is clearly a high contributor to emissions and to make it more sustainable, alternatives need to be considered. It is widely regarded that out of the three main freight options of road, rail and water, road is the most inefficient in terms of pollutants per ton of goods shipped (OECD, 2015). This is further illustrated in figure 2 (FTA, 2014), which shows that road produces nearly three times more KG CO 2 e per tonne km than inland waterways. Figure 2 Source: FTA (2014) The traditional alternative in the UK to road is rail as it offers comparable delivery times with the added benefit of being more sustainable. However in most cases freight is delivered to the UK by water and then requires transporting to another mode of transportation such as rail, which creates inefficiency and difficulties in terms of intermodal transfers. It is therefore necessary to consider different methods of transportation that can reduce these pollutants and offer new opportunities for freight transportation. For many technologies, ideas for innovation can come from the past as well as 7

8 the future. In a bygone era before rail and road, goods were transported via canal boats pulled by horses. For many years waterways were the only way to transport freight efficiently. Industrial cities such as Manchester and Birmingham had canals running through the very centre of them. However, with the development of rail and road, the canals became less popular, less efficient and gradually declined to near insignificance in terms of freight transportation. In spite of this there are a small collection of port authorities, logistics providers and companies who are looking at the use of inland waterways again. One clear benefit of waterways its sustainability due to the volume that can be carried and the direct, uncongested routes it can access. Added to this, is the fact that in many cases the waterways and affiliated infrastructure is already in place. An example of this is the Manchester Shipping Canal, which although has never been inactive, faced a large period of time where there was scarce activity, although this is beginning to change. Currently the body of literature on the future of inland waterways is limited. Various stakeholders exist who promote the issue but it is necessary to further investigate and look at how inland waterways could be used more, in a more effective manner. Due to this, the study has set out an overall project aim and contributing objectives that will be considered throughout. The aim is: Ø To explore how the use of inland waterways could be used to make freight transportation in the UK more sustainable And the objectives to achieve this aim are: Evaluate alternative system approaches to understand sustainable transitions 8

9 Apply an appropriate innovation framework to analyse the factors facilitating and hindering the use of inland waterways Evaluate the research to highlight key factors impacting freight transportation on inland waterways It is clear that for this change in freight transportation, there needs to be some form of transition. To further understand this transition and its implicating factors, a theoretical framework needs to be applied to the study. The framework needs to consider a macro view of factors. A suitable lens for this is a systems approach. The broadest definition of a system is from Boulding, a system is any structure that exhibits order and pattern (Boulding, 1985: 9). Considering this application to the study a suitable innovation system will be needed. Lundvall s (1992) definition of innovation systems is widely regarded as one of the most accurate descriptions, he describes; a system of innovation is constituted by elements and relationships which interact in the production, diffusions and use of new, and economically useful knowledge (Lundvall, 1992: 2). By considering this definition it justifies the use of an innovation system to further analyse inland waterways. A systems approach will be used to interview eight industry stakeholders involved in inland waterways. These individuals include representatives from companies who have the potential to transport their freight by water. It also includes representatives from ports as well as individuals from logistic and shipping companies and representatives from waterway freight groups, logistic consultants and European policy makers. The research resulted in various key findings, in addition it generated recommendations for the future. These findings included the fact that the knowledge of actors and communication between actors is very limited. It also highlighted that although there is an increase in entrepreneurial activity as well as signs for growth of a potential market, there is a lack of clear guidance for the future of the industry. Coupled with this are a lack of financial resources and the 9

10 difficulty from a commercial perspective to make inland waterways as attractive as road and rail. These main barriers subsequently led to two recommendations. Firstly, the commercial opportunities available on waterways need to be made clear to all stakeholders. This could be done by identifying which waterways can be used and how much each of these routes would cost to operate. Secondly, the research highlighted that the role of ports is integral to developing key failings. By taking up a centrally coordinated effort, ports could develop a communication network, whilst growing the knowledge base and have enough influence and funding to encourage entrepreneurial activity and establish a prosperous market. It is important to highlight that although every effort was ensured in gathering accurate and relevant interviews, the limitations of time and other resources must be considered when understanding the findings. Adding to this point, the research is hoped to be a useful resource in further investigating the use of inland waterways as a more sustainable form of freight in the UK. But the topic clearly needs further research involving a larger sample and a further investigation and understanding of the barriers faced. The study is organised into five chapters. The first chapter is this chapter, the introduction, which looks to introduce the topic and contextualise the study. The second chapter is the literature review, which analyses various innovation systems and then justifies the selection of one system. Literature surrounding the application of this system to sustainable technology is then analysed. Following this, chapter three looks at the research methodology. In the chapter research perspectives are considered and building upon this the methodology is created. The fourth chapter will then seek to analyse the data collected as well as looking to apply the findings to the system selected in the literature review chapter. The final chapter is the conclusion; this will look at summarising the study, exploring the success of the aims and objectives, as well as making recommendations for the future. 10

11 2. Literature Review 2.1. Introduction To analyse the use of inland waterways as a freight transportation method, it is integral to consider a theoretical approach to analyse how the innovation can succeed. A systems level approach will be chosen to understand the wider picture of innovation with stakeholders and technology. There are various systems level frameworks that could be used. It is important to evaluate these options to ensure the appropriate framework is found. Various literature has analysed and critiqued these frameworks, comparing their usage. This literature will help in the decision making process as well as acting as justification for the selection. The frameworks that will be considered are: Sectorial Innovation Systems, Multilevel framework and Technological Innovation Systems. Literature will be used to briefly outline the origins and core concepts of each idea as well as comparative studies of the three systems. A system level approach is appropriate for such a study as it considers the wider macro sphere. In a study looking at waterways, this is clearly relevant. There are three main components from a system level approach, Actors, Networks and Institutions. Various frameworks studied in this piece rely on these components and the relationships and connections of these (Coenen & Lopez, 2010) Summary of innovation systems Sectorial Innovation System (SSI) A widely accepted definition of sectorial innovation systems is a set of new and established products for specific uses and the set of agents carrying out market and nonmarket interactions for the creation, production and sale of those products (Malerba, 2002: 247). Building upon this, the elements of a sectoral system are; Products, Agents, Knowledge and Learning Processes, Key Links and dynamic complementarities, Mechanisms of interactions, Process of Competition 11

12 and selection and Institutions. All of these elements aid in the diffusion of innovation through the system. By further analysing and understanding each element, it is possible to explore the framework further. Products can literally be thought of as an item that is made or created for sale. Agents can be considered in two subsections, Firms and Non Firms. Examples of Nonfirm organisations include Universities, Financial institutions and Central Government. Knowledge and learning processes is the knowledge base of the innovation process. These vary greatly across sectors and largely impact the organisations in each sector as well as the behaviour of firms and agents in the sector. Key links and dynamic complementarities are made up of both the static and dynamic links that span across the sector. Some as mentioned are static such as inputoutput links. Whilst others are dynamic that consider interdependencies and feedbacks at the demand and production level. A mechanism of interactions is the interaction of agents at both market and nonmarket level. Institutions can be thought of as standards and regulations. The processes of competition, is related to the selection of products, and the operations of competition (Malerba, 2002). With these elements the framework enables a multidimensional, dynamic view of a sector. The model looks at how products in a sector are created, produced and sold by the agents. The agents carry out market and nonmarket interactions, which are shaped by institutions (Malerba, 2002). The framework however, focuses on how the role of innovation is to ensure competitive advantage, and financial prosperity, rather than an analysis of the innovation process. Innovation is primarily seen as a means for firms and industries to achieve competitiveness (Coenen & Lopez, 2010: 1150). The boundaries of the system as highlighted in Coenen and Lopez s review are very specific enabling the analysis of multiple technologies and it also enables wide geographical boundary analysis. This means that specific analysis of industries such as the Automobile industry is possible. However Coenen and Lopez do acknowledge that by being so specific in its boundaries the framework makes it 12

13 difficult to analyse emerging, new technologies (Coenen and Lopez, 2010), which is an important factor to consider for the study Socio Technical System (ST) The concept of the Socio Technical System, also known as the Multi Level Theory, is one, which looks at the diffusion of niches of technology into wider society. Since its proposal it has been applied to all forms of technology from scientific to cultural. Much literature stems from Geels (2002). Geels used previous ideas of multilevel diffusion to create a threetiered model that helped to explain how niche innovations are helped to market. The idea relies on the fact that there are regimes that incubate the innovations, thus allowing them protection from certain market forces (Schot, 1998). Such institutions that do this include the military and space exploration, as explained by Geels. Both of which offer protection for innovation of these niches, as often they are initially very expensive and inefficient to trial in the open market (Geels, 2002). Figure 3, shown on the next page, was introduced by Geels (2002); it has three distinct levels, Landscape, Patchwork of Regimes and Niches (Novelty). The model proposes that the landscape represents the current scientific technological developments of the industry, shaping the current trend of trajectories. The Patchwork of regimes looks at external factors, which shape the direction of the trajectories. The niches look at providing radical innovations that will potentially shape the interconnected levels above it. 13

14 Figure 3 Source: Geels (2002) It is proposed that the success of the innovation at the niche level is incredibly dependent upon its uptake and acceptance by the wider landscape. Often many innovations are proposed at this lower level, but far fewer succeed in becoming a part of the Patchwork of regimes (Geels, 2002). Therefore, the integral factor for the emergence of technological transitions is the relationship between the three levels. Changes at the landscape level can largely shape the direction of the industry and what innovations are likely to succeed. Changes at a novelty level are often more difficult to become part of the regime. The suggestion by Geels is that there is a cumulativeniche, where many innovations come together to make a main change. In the literature, an example is given relating to the emergence of steam ships becoming a regime, largely replacing sail ships. (Geels, 2002) 14

15 2.23. Technological Innovation Systems (TIS) An early definition of a technological innovation system (TIS) is a dynamic network of agents interacting in a specific economic/industrial area under a particular institutional infrastructure and involved in the generation, diffusion, and utilization of technology (Carlsson and Stankiewicz, 1991: 93). The model, shown below in figure 4 (Bergek et al, 2014), analyses the innovation process and the failings in this process. The first main stage is highlighting the core structural components of the system. These are then used to analyse the seven key functional areas that are required in the system to work (Hekkert, 2007). By using this framework, it is possible to highlight key failings in the system to target improvements and changes. Integral to the model as highlighted by Carlsson and Stankiewicz (1991), is that the central features of technological systems are economic competence clustering of resources and institutional infrastructure (Carlsson and Stankiewicz, 1991: 93). This means that the model analyses how innovation can prosper financially, taking advantage of business opportunities, as well as considering how resources are grouped along with how infrastructure aids innovation. Figure 4 Source: Bergek et al (2008) 15

16 2.3. Critical evaluation of the three frameworks After understanding briefly the different systems and how they work, it is important to make a decision on which is suitable to use in the research into inland waterways. Importantly, all of those selected have attributes, which make them appropriate for the study, it is then important to look at literature which helps compare the systems and how they benefit the research into sustainable innovations. Coenen and Lopez (2010) looked to compare the three systems approaches and understand their compatibility for innovation and technological change for sustainable and competitive economies. The authors compared the systems on six criteria; system boundaries, actors and networks, institutions, knowledge, dynamics and policy approach. By looking at these mainstays of system approaches, it allows for a comparison between three different systems. It is concluded that the SSI framework works well when the firms and institutions are relatively stable. Building upon this the framework from an actor, networks and institution level, the SSI framework succeeds at allowing for a connection to analyse at the micro, firm level. In terms of knowledge and dynamics, SSI looks more into the system, rather than a wider external view of the system as a whole. From a policy perspective SSI looks at the performance of firms in a sector (Coenen and Lopez, 2010: 1156). In comparison Coenen and Lopez, (2010) summarises that the Socio Technical (ST) frameworks application and use makes it suited to very different studies. The ST boundaries consider sociotechnical systems that are emerging or changing. In terms of actors and networks it is concluded in the literature that, ST take a broad view of actors but struggles in the analysis of actor behaviour (ibid). Although the literature does conclude that the ST framework allows for a more in depth study of institutions. In terms of how knowledge and system dynamics are analysed the article proposes that ST is more concerned with a change of the system rather than the other two models which look more within 16

17 the system. In terms of policy it is proposed that ST allows for a sustainable transition through fostering, showing a more macro level of analysis. The Technological Innovation System (TIS) is highlighted in the article as being one, which focuses on technologies that are emerging and/or in a state of transformation. The focus on actors, networks and institutions is similar to that of the SSI model. It looks at firm behaviour in a way, which enables a connection to a micro level of analysis, which suits the research topic. Again, there are similarities drawn in the article with how TIS links to SSI in terms of system dynamics and knowledge, in the way that they are primarily geared to explaining change in the system (Coenen and Lopez, 2010: 1156). In terms of policy TIS is explained as looking at the coevolution and diffusion of emerging technologies (Coenen and Lopez, 2010: 1156). In summary there are clearly similarities between the frameworks, but equally there are clear differences as well. Selecting a suitable framework needs to consider the aim of the study and specifically the second objective. This highlights the need to focus on a framework, which enables the analysis of the emergence and development of technologies, making either TIS or ST most applicable. Comparing these two, the main differences as highlighted by Coenen and Lopez (2010), is related to the difference in level of analysis with TIS enabling a link to microanalysis, which is more relevant to the question. Moreover, the approach to knowledge and system dynamics of TIS is one, which considers a change in the system rather than a change of system, is more relevant to achieve the aim of the investigation. Finally, the application of the TIS framework to various sustainable technologies in literature aids in the application of it to the question. Therefore the TIS framework will be applied to the question and further analysis of the framework will enable a greater understanding of its use and application. 17

18 2.4. Technological Innovation System Analysis The technological innovation system framework is one, which has developed over time. The first literature to conceptualise it was Carlsson and Stankiewicz in 1991, as previously mentioned. In this literature it highlighted the components of TIS including Actors, Networks, Institutions and Technology. Further literature in 2007, by Hekkert et al, looked at a functions framework, to conceptualise the model and how it works. The role of functions plays a key part in the understanding, and importantly the application of the framework to real cases. In a study by Hekkert et al. they looked at creating core functions that are integral to the success of a TIS. To further understand this work it is necessary to analyse each of the functions in more detail (Hekkert et at. 2007). Some literature has questioned whether all functions are relevant and useful for analysis. However, a study by Suurs and Hekkert (2009) analysed how all these functions were relevant when applying the TIS framework to sustainable technology. The study also highlighted that often the success of some functions is dependent on other functions Function Analysis Function 1 Knowledge Development The role of knowledge development is integral to the development of technology. By supporting knowledge development the author highlights how large its impact can be on the success of innovation. Areas where knowledge development can be measured include R&D projects as well as investigative studies (Hekkert et al, 2007). Function 2 Entrepreneurial Activities The second function is described as integral for the success of an innovation. Entrepreneurial activity ensures the development of innovation as well as its entry to market. The level of this activity can be used to gauge the success of an innovation (ibid). 18

19 Function 3 Knowledge diffusion through networks How knowledge diffuses through the network is incredibly important for the diffusion of R&D as well as communicating to actors about policy, legislation and market opportunities. Hekkert et al (2007) explains that the role of conferences and other communication channels can help this function succeed. Function 4 Market Formation The fourth function highlighted by the article looks at how the emergence of most technologies relies on their success in markets. These markets, normally niche markets, rely largely on help from governments in terms of funding or tax breaks to put them on a level playing field. The market formation, as well as the future market, is important to ensure that there is demand or opportunities available for the technology. In addition, Hekkert et al (2007) highlighted how government tax breaks for biofuel aided in its market formation in Germany. Function 5 Guidance of the search Hekkert et al (2007) highlighted that a required function needs to be the focussing of research on to particular areas; otherwise resources will be wasted unsustainably trying to achieve unspecified goals. An example given is how the Netherlands created an objective to achieve 10% of energy from sustainable sources by By creating this target it stimulated innovation around sustainable energy as well as focussing an aim (ibid). It is important to note that it is not just governments or firms who guide the search. It also involves various actors who make and design technology as well as those who promote it commercially. Function 6 Resource Mobilization Hekkert et al (2007) identified the sixth function as resource mobilisation. Integral to innovation is the presence of resources to fund them and aid their development. Therefore this function is concerned in ensuring that these resources are available, often this occurs through funding for R&D programs set up by industry or government to develop specific knowledge. Funds are also 19

20 required to test the technologies to aid diffusion. Other resources can be human resources to aid the technology development as well as finance from private sources who can invest into the technology. Function 7 Creation of legitimacy The final function explained in the literature (ibid) looks at how new technologies and innovations often rely on the cooperation of other actors, or face resistance in their diffusion. An example given looks again at Biofuels in Europe. When legislation by the EU was proposed to allow farmers to receive subsidiaries for growing biofuel crops, farmers formed a union to promote biofuel. They managed to agree with taxi firms a deal to use biofuels, which subsequently led to an agreement between Volkswagen and taxi firms to make the cars suitable for biofuels. This legitimacy gained by the union, combined with cooperation rather than resistance from other actors led to the success of biofuels (ibid) Analysis of the application of TIS to sustainable technology It is important to review literature, which has used the TIS framework to analyse sustainable technology. By understanding the key findings of these papers, this knowledge can enhance the understanding of the use of inland waterways, whilst also create a reference in terms of recommended actions. The first study by Breukers et al (2014) looked at the potential options for the use of biomass in the Netherlands. The study looked to use the TIS study, combining this with a participatory stakeholder analysis. The article justifies this dual approach on the grounds that the TIS approach fails to grasp the normative aspects of innovation, which is important with a technology such as biomass, which in some aspects can be viewed as controversial (Breukers et al. 2014). This decision highlights one weakness of TIS, in the fact it fails to account for the more subjective issues surrounding innovation. This needs to be considered when conducting further research. 20

21 The study found a variety of factors impacting the diffusion of biomass technology. The first factor explored was that although there is an active selection of stakeholders embarking in entrepreneurial activities they rely heavily on government subsidies but government support for entrepreneurial activities has been given in a piecemeal and halfhearted fashion (ibid: 231). Meanwhile the knowledge and development affiliated with Biomass is criticised on the grounds that there is a separation between the theory and practice. The network itself was criticised on the grounds that it is largely fragmented, however the study found that by diversifying network actors, the network worked better. In addition to this, the study found that like the network there was a lack of a clear guidance for the future. This was partly blamed upon the lack of a clear network formation and a disinterest and deficiency of guidance by government. This lack of network can partly be associated with the actual market formation failings, which are attributed to two main factors. Firstly, the Dutch EU fuel legislation favours oil companies, making it more difficult for biofuel to succeed. Secondly, although there have been pockets of support for biofuels as a sustainable technology, this has not been structured into a clear longterm directive. Moreover, the study found that although there were resources available for the technology, these focussed around financial resources, ignoring the fact that often technology needs time and learning to ensure that they successfully diffuse. The final comment on the frameworks application was that the lobbying groups lacked structure and failed to work together to create legitimacy. The study made various recommendations of actions that needed to be made for each function for it to succeed. Firstly the guidance of the search was highly focussed upon in the recommendations. Other suggestions included a need to improve this function by understanding and counteracting any risks, that might prohibit the innovation in the future, as well as a proactive attitude towards the improvement of existing applications was suggested. Another recommendation was to make it easier for small firms and innovations to diffuse into the market and overcome the failings of entrepreneurial activities that are important for the first function. Furthermore, recommendations are made to improve the market 21

22 formation by recognising the importance of learning by doing, for both technology development but also to enhance the market in general by creating as much transparency in the market as possible (ibid). The study concluded that the TIS framework enabled an analysis of barriers as well as the application of the seven functions to support the study, whilst the stakeholder dialogue enabled the investigation of future opportunities for sustainable biomass systems. The study did however critique the fact that the TIS framework failed to inquire indepth into the normative dimensions related to innovation processes (Breuker et al 2014: 234). They also criticised how the boundaries of the system are not clearly defined in TIS literature, instead relying on the investigator to set them. Quitzow s (2015) study looks at the rise of Chinas solar energy firms, comparing it with a global leader in the industry, Germany. The TIS framework was applied, as was the functions approach (ibid). The study attempted to draw comparisons between a developed nation, Germany, and a developing nation China, using the functions framework for comparison. Germany s functional patterns show entrepreneurial activities are focussed around two market leaders, which lead to a lack of entrepreneurial activity. There is also a strong growth in private R&D funding as well as R&D collaborations between manufacturers and equipment suppliers. The literature also highlights that there is a dense network of connections, which enables the successful diffusion of knowledge on top of there being a strong publicprivate dialogue on the R&D agenda and market pressures. The German market formation has allowed for a strong growth in the domestic market, fuelled by feedin tariffs. The resources of the German market have recently seen a decrease in global investments, although there is still a strong growth of demandside investment. All these factors have led to a strengthened solar industry that has enabled the creation of legitimacy and an increased political weight. It can be summarised that in general the German solar industry is 22

23 succeeding in most functional areas, although as noted there is an increasing rise in the domestic market and a retraction of foreign investment. In contrast to Germany, China is experiencing a rapid growth in entrepreneurial activities (ibid). However, the Chinese knowledge development is more focussed on learning by doing, with the network being created through the acquisition of international manufacturing firms as well as collaborations with German manufacturers. The Chinese example shows a far clearer guidance of the search set out by government aiming to attain the technological capacity to produce solar technology. For China there is a low, but stable, domestic market growth, but importantly there is a large internationalisation of investment and demand. This is supported by an increased legitimisation of Chinese Solar PV firms, which have been driven by a supply shortage in Germany (ibid). Comparing the two studies both countries appear to be successful in introducing the new technology. The state of each market appears to be quite different, with the German market relatively stable and established, with large domestic growth. In comparison, China appears to be driven by government plans for it to be an international provider of Solar PV through acquisitions of international firms and rapid expansions of markets. In Wieczorek et al (2015), it explored the application of the TIS framework to offshore wind in four countries; the UK, Germany, Denmark and the Netherlands. In the study it looked their capacity to use offshore wind and then analysed how these countries actually use this power. It was found that there were major differences between the UK and Germany who do use wind power and Denmark and the Netherlands who do not (ibid). The application of the TIS framework was measured using a numerical scale judging each function from zero to five. The trend amongst all the countries was that there was a high level of knowledge diffusion and knowledge development. All four countries are said to have positive knowledge bases as well as a high level of entrepreneurial activities. However, it is the UK that is highlighted as the 23

24 country with most potential, due to the geographical situation it finds itself in. However, the research does critique certain failings that face all countries studied when looking at wind energy. These areas of weakness are around guidance of the search, market formation and resource mobilisation. The study made various suggestions to counter these barriers. The first was to form a North West Europe conglomerate to drive forward wind energy as each of the countries has strengths in different areas, which the study highlights, could compliment each other. Another recommendation was to increase the training of labour immediately to tackle the lack of workers in the industry. A third recommendation was to decrease the costs affiliated with wind, but at the same time improve its efficiency so it is more commercially viable. The fourth recommendation was to create a stable and clear, European wide regulation on offshore wind. Gosens and Lu s study looked to apply the TIS framework to Chinese wind power (Gosens & Lu, 2013). The study, much like Quitzow s (2015) study into solar, looked at how a developing market like China can learn about sustainable technology from global markets and use this to develop their own domestic markets. By using the functions framework, they were able to highlight both strengths and weaknesses of the technology diffusion. The Chinese wind industry has seen a vast growth of knowledge, which has been guided by a government five year plan for the technology, which has also aided in legitimising the technology. This has subsequently led to many new market entrants, enabling a massive resource base. Although this resource base has in turn, led to an over capacity in manufacturing facilities. The main criticism drawn from the paper is the connection between domestic institutions such as Universities and the industry itself. It is because of this, recommendations are made that for the domestic market to flourish they must focus on the knowledge diffusion, instead of relying on foreign knowledge. The study highlights that there is a failing to currently engage in this knowledge diffusion, as currently the market is being driven by the turbine manufacturers 24

25 and subsequently needs a wider outlook. Another recommendation relating to this function is that China should attempt to assume a global industry leadership role. It is thought that by doing this, the quality of technology would improve, so they are more in line with global standards. Lei et al (2012) conducted a study into the use of Carbon Capture and Sequestration (CCS) in China. Their study much like Wierczorek et al (2015) study requested respondents to rank each function on a scale. This allowed for an analysis of the most successful areas as well as the areas not performing as well. The study highlighted that the most successful areas were knowledge development and entrepreneurial activities. Exploring these in further detail the study went on to explain that knowledge development was stimulated by government funding into R&D, as well as an encouragement to gather knowledge from international sources. Entrepreneurial activities were also explained to be successful due to a massive expansion of the market and firms entering the market in reaction to the Beijing 2008 Olympics (Lei et al 2012). Conversely, this expansion led to stagnation as the market became overpopulated, stalling entrepreneurial activity. The weakest functions were highlighted as the market formation and the guidance of the search. The Chinese market is said to be in a transition stage from a nursing market to a bridging market. The reason that the market is failing to form is because the technology requires high initial set up costs, that are often not repaid through the technology for a long period of time. Moreover, the literature says that the technology is a large risk and until this changes the market will struggle (Lei, X et al, 2012). It is also highlighted that the guidance of the search is a poor performing function. The reason given for this is that although China issues a large amount of government policy and regulations on R&D there are currently specific policies on CCS. It is explained when tailored policy is made for the technology it is likely to succeed. Lei et al (2012) make four main policy recommendations to improve the functioning of the framework. The first is to increase government funding to 25

26 support knowledge diffusion, as it is stated that this is important for the future. Secondly, they recommend promoting cross sector collaboration to encourage resource mobilisation. The third recommendation is to create a stronger policy in an attempt to standardise the market, and thus fuel further market development. Fourthly, they make the recommendation that the technology should be increasingly commercialised in its usage and scope, it is hoped that by doing this they will increase the stalling entrepreneurial activity. By summarising the functions it can be noted that there is an exponential knowledge growth in the Chinese market fuelled by a large growth in patents being awarded to Chinese firms. Another contributing factor highlighted in the analysis of the guidance of the search function was that the Chinese government are creating policies much like the patent awards, to encourage domestic firms to develop, making it more difficult for foreign firms. Another interesting analysis point was raised relating to entrepreneurial activity. The study found that there has been a rapid explosion of firms entering the market but this has resulted in negative consequences as these new entrants have little experience and have aimed to drive the price down. By driving the price down companies have had to cut costs to stay competitive and this has resulted in cuts in R&D budgets. The paper recommends a cap on entrepreneurial expansion (Gosens & Lu, 2013). 2.6 Summary In summary the literature review has provided an in depth analysis of the application of the TIS framework to sustainable technology. By focussing around the functions it has enabled a comparison of different technologies and also highlighted issues that need to be considered when pursuing the aims and objectives of this study. Identifying some of these issues has led to some conclusions being drawn about sustainable technology and the TIS framework. Firstly, for most technologies there was a lack in the guidance of the search and it was only technologies in China that established a clear future direction. Secondly, the resources available 26

27 for the market are often the defining factor, of whether a market moves forward. Moreover, the diffusion of knowledge as well as the communication between the actors in the network appeared to be an incredibly important factor for many of the studies. 27

28 3. Research Methodology To investigate further the barriers facing inland waterways it is important to create a research methodology, which aids the investigation. The research methodology should serve two main functions; firstly to explain the research approach that will be used. Secondly to explore and justify the research techniques that will aid in achieving the aim of the investigation. The overall aim of the investigation is: Ø To explore how the use of inland waterways could be used to make freight transportation in the UK more sustainable This aim is supported by three objectives: Evaluate alternative system approaches to understand sustainable transitions Apply an appropriate innovation framework to analyse the factors facilitating and hindering the use of inland waterways Evaluate the research to highlight key factors impacting freight transportation on inland waterways 3.1 Methodological Stance Considering the aims and objectives, the research methodology is integral to ensuring a high quality of research. To conceptualise the research methods used for this study, an analysis of Saunders et al, (2003) work in the analogy of the research onion has been used. The model represents the key decisions affiliated with the research philosophy, approach and strategy. Figure 5 shows this below. 28

29 Figure 5 Source: Saunders et al (2003) As highlighted by the model the first key decision is the Research Philosophy. This study will take an interpretivist approach. An interpretivist approach is suited to this study as it allows for the fact that the business environment is one that cannot be defined by a set of rules, rather it is a complex entity evolving, thus justifying its selection (Saunders et al 2003). However, one critique, which must be considered for the rest of the research, is that generalised conclusions are not made and the limitations of the model are fully understood (Saunders et al 2003). The research philosophy chosen subsequently shapes both the research approach as well as the research design. For this study an exploratory research method will be used. Saunders et al (2003) explained that an exploratory study enables the researcher to gain an insight into previously unstudied work. Much literature surrounding this research design questions the flexibility of the study, highlighting an issue of focus. However, Adams & Schvaeveldt (1991) argue that 29

30 although there is a degree of flexibility, this does not mean a loss of focus of the study; rather, the study analyses widely and then enables a focus on the key issues. When considering the question and the theoretical framework used, this further justifies the selection. 3.2 Data Type and Collection Methods The type of data that is aimed to be collected is an incredibly important decision. There are many factors, which shape this decision. This study will look to use mostly primary data sources. The reason for this is that the data collected is collected for the particular investigation, because of this, the data is targeted specifically to the study, as well as enabling continuity in data collection (Ghauri & Gronhaug, 2010). The next decision is whether to collect Qualitative or Quantitative data. Qualitative data tends to have an emphasis on understanding and interpretation, with an explorative orientation. On the other hand quantitative data tends to have an emphasis on testing and variation, with a focus on facts and with an aim to test a hypothesis (Reichardt & Cook, 1979). Some literature has highlighted vast differences in terms of Qualitative and Quantitative data and explored in some detail the implications of this (Holliday, 2002). However, this paper will choose the data type that is most relevant and applicable for the investigation. The first factor in this decision is analysing the type of approach and the research philosophy. This study is taking an explorative approach, which tends towards the collection of qualitative data (Gill and Johnson, 2010). By selecting to use qualitative data, it is now important to explore options in terms of data collection methods. Saunders et al (2003) highlighted three different methods to conduct exploratory research; a search of the literature, interviewing industry experts and conducting focus group interviews (ibid). Out of these options, the first choice is ruled out as primary data collection has been highlighted as the main source of research. Therefore there remain two options, interviews with experts and industry members and conducting focus group interviews. For this investigation there is a limited amount of resources available, as well as time being a constraint. This makes focus groups difficult to 30

31 organise and unlikely to produce useful results due to the constraints faced. Ghauri and Gronhaug (2010) said that in many situations interviews are considered to be the best form of data collection. Based upon these reasons and supporting literature, interviews appear to be the most appropriate choice to use in the study. By analysing how interviews have been used in previous studies that looked to apply the TIS framework to sustainable technology, it will be possible to draw guidance for the questions of this study as well as an outline of the individuals needed to be interviewed. Quitzo s (2015) study into photovolatics was conducted by interviewing 35 individuals who were involved in the industry. Another study by Wieczorek et al, (2015) looked at offshore wind by interviewing 30 stakeholders associated with the industry. The main difference was that the interview asked these stakeholders to rank certain factors out of five, this is not possible in this study as there are insufficient resources to interview such a large number of people and also by limiting the study to quantitative data it would limit the research potential of the interviews. Another study by Breukers et al, (2014) investigated the sustainable future of biomass. The study looked to interview 75 individuals related to the industry and based on the results of this initial interview, they then created three focus groups of people that they could further investigate the subject of biomass, using the functions framework to form questions. Ideally this method would be used in this study as it allows a broad analysis of individual stakeholders as well as the benefits from focus group interviews. However, with time constraints this double approach will not be possible. What can be concluded from analysing these studies methods is that the selection of both the interviewees and the method is very important. All studies have looked to analyse stakeholders affiliated with the industry. This study will be no different and look to interview individuals with various standpoints on the use of inland water transportation. King and Horrocks, (2010) explain that researchers must seek to find individuals with a varied position on the topic. 31

32 Furthermore, using the TIS framework for guidance it is clear that there are certain actors that are integral for the diffusion of innovation. For this study it is clear that the role of the market is one of these integral factors in driving forward the innovation and adoption of inland waterways. One study on the application of the TIS framework on sustainable technology looked to interview manufacturing firms, policy officials as well as industry experts from consulting firms, industry associations, research institutions and international organisations (Quitzo, 2015: 6). This selection of people can be used as guide for the sample of this investigation. 3.3 Sample Selection Interview subjects that are likely to either operate on the waterways or those who are likely to choose to use waterways to transport their goods are very valuable. Secondly, the role of technology and innovation itself to make inland waterways a more viable option is clearly very important so it is important if possible to seek out interview subjects who are currently creating new technologies to make inland waterways more useable. Thirdly, the use of inland waterways needs to be driven by legitimising agents. For this to work interviews of organisations such as the Commercial Boating Operators Association and specific waterway agencies such as Associated British Ports as well as Peel Ports both would add an important dynamic in the interviewing process. Fourthly, third party groups such as consultants or environmental pressure groups who might campaign for the use of inland waterways are significant to help understand the factors from a slightly removed standpoint. Finally, as briefly discussed in the introduction, European and international stakeholders already use inland waterways for transportation, so the possibility of investigating their main success drivers could aid in creating recommendations of how the system could be successfully implemented. There is the obvious difficulty in contacting international firms and policy makers, but at a planning stage it is important to at least explore the possibility. Figure 6 shows each of these groups, with suggested stakeholders for interviews, as well as an analysis of the success of each of these. 32

33 Figure 6 Stakeholder Group Suggested Examples Interview Subjects Companies who could use inland waterways to transport goods FMCG companies, Construction companies, Resources Companies Mark GrimshawSmith, Cemex Justin Kirkhope, Co Companies who could operate logistical services using inland waterways Companies who are innovating to improve the accessibility of inland waterways Legitimising agents Third Party groups International Organisations who are involved in inland waterways Logistic/ Freight/ Shipping companies Shipbuilders, Civil engineering firms, Inland waterway technology companies Waterway agencies, Port agencies Logistic Consultants, Sustainability Consultants Companies/Agencies from The Netherlands, Rhein (Rhein ports) Operative Graham Cross, GXD Logistics Peter Aaronsin, Danbrit Shipping David Lowe, Commercial Boating Operators Association Stephen Carr, Peel Ports Frank Robothom, Associated British Ports Mike Garratt, MDS Transmodal Mark Vanderhaegen, European Commission All the studies analysed looked to interview at least 30 different stakeholders. Unfortunately due to various constraints this number will not be achievable. Much literature supports the necessity to have a varied and comprehensive research base (King & Horrocks, 2010). Therefore, this study will interview 9 industry experts. Interviews can take various forms, Ghauri and Gronhaug (2010) highlighted the three main types of interviews; interview by mail, interview by phone and personal interview. It must be noted that with development of technology, and also video conferencing interviews can now be considered as viable alternatives. Each method has both positives and negatives but due to the complexity of the topic and the possible need for explanation, a telephone/video conferencing interview or a facetoface interview seem most appropriate (Gill & Johnson 2010). Considering these two 33

34 options there are limitations in terms of access to face to face interviews, therefore, the majority of interviews will be conducted over the phone or through video conferencing. Designing the interview and the questions themselves needs to be carefully considered. The first consideration is the structure of the interview. For this study, a semi structured interview approach will be taken. These interviews highlight beforehand the topics to be covered, as well as the sample size and the people that are to be interviewed (Ghauri and Gronhaug, 2010). They also aim to minimise bias by considering the order of questions as well as any inadvertent omissions of questions (ibid: 126). Another benefit of this structure is it allows for a comparison of the responses, which will be useful in drawing conclusions. 3.4 Interview Questions The questions themselves need to avoid leading the interviewee to certain conclusions, as well as allowing opportunity to explore the full topic (Saunders, 2003). Patton (1990) proposed that there are six types of questions that can be asked, this framework will be used to shape the questions. The other main factor used to create the questions is the functions framework proposed by Hekkert (2007), by using this framework it will allow the questions to test the validity of the TIS framework for inland waterways, whilst also potentially highlighting areas for improvement. Some areas of the function framework will be more easily researched than others through the interviews, and this limitation must be considered. Moreover, it must be considered that the applicability of all questions to all stakeholders is unlikely to be equal. Therefore the study will look for a core of 7 questions to be asked to all stakeholders. Some of these questions will allow for further exploratory questions, on possible future developments. These questions will consider this factor, but also must understand that some interview subjects might have little knowledge on such recommendations. It is also important that the questions do not overlap in terms of the topic covered. This in theory is straightforward by creating semistructured questions, but due to the structure of interviews it is possible other topics will be bought up at 34

35 different times. Wieczorek et al (2015) study into offshore wind has been used as a reference for question creation, although their study was seeking responses in the form of a numerical level of agreement, this impacted the questions, a factor which was considered. Some of the questions allow for future outlooks and hence some questions will probe for recommendations of improvements for the functions. Although this is unlikely to generate conclusive results it is hoped that they will aid the conclusions. The selected questions are illustrated below: Questions In your opinion what is the current level of knowledge into the use of inland waterways? (Knowledge and Development) In your opinion is there enough entrepreneurial activity involved with inland waterways? How do you think the current level of entrepreneurial activity could be increased? (Entrepreneurial Activities) What is the current communication network like between actors involved in inland waterway usage? How do you think communication networks could be improved? (Knowledge diffusion through markets) Is the current market as well as potential market associated with the use inland waterways large enough to support it? How do you think markets could be developed? (Market formation) Is there a clear future direction for inland waterways? And if so what is this? And if not why is this? (Guidance of the search) Are there sufficient resources (financial, human) available for the market? (Resource mobilisation) What resistances are there to inland waterways? How do you think barriers could be overcome? (Creation of legitimacy/counteract resistance to change) 35

36 For the investigation it is important to ensure that the research follows ethics guidelines. For this study it is especially important when handling private company information. All the interview subjects need to have the views and opinions respected and only presented if they are happy. This means that all interview subjects need to be consulted if they are happy for the use of the company or organisations name to be used, this consent form can be found in appendix a. One clear limitation previously mentioned is the sample size. By limiting this to nine individuals, albeit these individuals are experts in their field and relevant to the study, it is important to note that the research should not attempt to provide general conclusions. To fully investigate the topic, a larger sample size would be required. Instead the findings need to be considered in the wider context and used to further the literature on the topic. 3.5 Summary In summary, the research will look to use interviews to further investigate the aim of the research. It is hoped nine interviews with industry experts will enable an insight to the barriers and also opportunities offered by inland waterways. The questions asked were designed with other sustainable TIS studies in mind, shaping the particular questions around the functions framework. It is hoped that the findings will enable a detailed analysis of the situation, fulfilling the third objective and aiding in the fulfilment of the investigation aim. 36

37 4. Results and Analysis The research collected was gathered through interviews of nine industry professionals. These individuals come from different backgrounds and are illustrated in figure 7 below. The questions were based upon research of the TIS framework with further justification in the research methods chapter. The interview responses were recorded and notes taken, these notes can be found in the appendix b. Figure 7 Interview Company/ Individuals Role Interview Date Respondent Name Organisation Mark Grimshaw Cemex Head of UK Rail & 2 nd April 2015 Smith Sea operations Stephen Carr Peel Ports Head of Business 9 th April 2015 Development Justin Kirkhope The CoOperative National Transport 15 th April 2015 Support Manager David Lowe Commercial Boating Vice Chairman 15 th April 2015 Operators Association Peter Aaronsin Danbrit Shipping Managing Director 20 th April 2015 Graham Cross GXD Logistics Managing Director 20 th April 2015 Frank Robotham Associated British Group Head of 20 th April 2015 Ports Marketing Mike Garratt MDS Transmodal Managing Director 22 nd April 2015 Marc Vanderhaegen European Commission Team Leader of Inland Waterways for the Directorate General of Mobility and Transport 27 th April

38 The interview structure as outlined in the research methodology was focussed around the functions framework of the TIS. The data collection as well as the data analysis will focus around each of these functions. Further analysis will use the literature review to compare key failings of sustainable innovations with the challenges faced by inland waterways. The use of external reports will be drawn upon where appropriate to aid the investigation and give a wider research base. These reports have been published by organisations such as the Freight Transport Association as well as the Canal and River Trust. The overall feedback from the interviews was positive, with most respondents expressing a desire for it to be further developed as a technology. However, all interview respondents did highlight their own concerns. These views differed based upon the background of the individuals with a degree of clustering in views for those individuals with similar interests. The general consensus was that inland waterways did have a future but it is one which needs to be carefully considered from a commercial perspective, rather than an attempt to reminisce a technology from a bygone era Function 1 (Knowledge Development) The knowledge affiliated with the waterways is incredibly important looking to move the technology forward. All interviews for this question responded in a similar nature. The general agreement was that the knowledge base is very limited and has not been developed. A couple of respondents made reference to the old use of the waterways, saying that the knowledge and level of technology was from a bygone era, these views were shared by both Peel Ports and Danbrit Shipping. A view of the waterways proposed by GXD Logistics related to the knowledge that waterway usage tended to be affiliated with organisations moving bulk freight such as building material and manufacturing companies. The representative of the European Commission supported the opinion, that there is a lack of knowledge at the user level. 38

39 An interesting issue arose from some responses. This was the fact that they felt the knowledge base itself does not need to be massively expansive. Instead, the knowledge base needs to be a size that is necessary for the industry. The CBOA explained this view further by saying there needs to be a focus of knowledge around the relevant stakeholders. These stakeholders are port authorities and actors who are dealing with waterways regularly. Another view was that the level of knowledge of inland waterways had failed to develop at a comparable pace to that of road and rail. Cemex and the Co Operative shared this view and suggested it needed to be developed. Overall the response to the level of knowledge was that the knowledge base itself was relatively small, however this is not necessarily a prohibiting factor. As mentioned some interview respondents highlighted that the knowledge base only needs to be large enough to incorporate those who have a vested interest in waterway freight. Considering these findings with the findings of the literature review all technologies investigated relied on a strong knowledge development. However, it could be argued that based upon the nature of inland waterways the knowledge base is slightly different and is more focussed around the knowledge in terms of the opportunities to use the waterways. Work by the FTA (FTA, 2014) and the Canal and River trust (CRT, 2014) in their two papers explores in further detail the role of knowledge. While, this is more from an educating purpose looking to inform the industry about the potentials, rather than exploring knowledge development for the future Function 2 (Entrepreneurial activity) The role of entrepreneurial activity is incredibly important to any technology. The literature review highlighted that it was vital to achieve an active level, but equally an over saturation can cause price wars and restrict funding as was shown in Gosens and Lu s study (2014). When conducting the interviews entrepreneurial activity was discussed and included various different functions, 39

40 for some respondents it was related to companies actively engaging in the use of the waterways, whilst for others it related to the development of technologies to aid the waterways. Cemex, Peel Ports and the CBOA all noted that entrepreneurial activity 3 or 4 years ago was very small. However, over the last couple of years there has been a notable improvement of activity in terms of freight on the waterways. Cemex explained that there are certain areas such as the Thames, which has seen particular growth. They did express though, that these areas have a lot more potential, which is failing to be acted upon. Peel Ports also highlighted that they have recently signed a large contract with refrigerated logistics company Culina at Port Salford to create a large multimodal transport hub, which will stimulate entrepreneurial and economic activity along the Manchester Shipping Canal (MSC). Other respondents criticised the level of entrepreneurial activity. For example the CoOperative highlighted that for them activity surrounding the waterways needs to make sense from a strategic perspective, including comparable costs and lead times. This was explained further by emphasising, that before businesses engage in entrepreneurial activity, the operation needs to be financially viable, as well as strategically beneficial. Interestingly the role of technology and innovation was only really considered by three respondents. The first of these was from the representative of Danbrit Shipping. They discussed how in the past they worked on a project with naval architects to design a vessel called a split ship. The idea was that it could be split in the middle for inland waterway navigation in the UK and also not require the vessel to be unloaded from sea voyages. Although the innovation won the government Smart award and received an initial funding award it struggled to attract any considerable funding and failed to be further developed. This idea of a vessel designed to navigate UK waterways appeared to be a focal point in terms of desired entrepreneurial activity. The representative from the CBOA highlighted the need for the UK to aim for a standardised barge in the form of 40

41 European standards, that being the Eurobarge 1 and 2. This could then make it clear which waterways are navigable by certain sizes and conform to EU water navigation guidelines established in 1992 (ECMT, 1992). This innovation falls in line with comments made by the ABP who highlighted that for inland waterway to flourish from a commercial sense, ships need to be able to carry hundreds of tons of goods to enhance efficiency and their environmental impact through economies of scale. Thirdly, the representative from the European Commission explained that in Europe, studies and trials are taking place with the use of Liquid Natural Gas (LNG) as an alternate, more sustainable fuel source. In summary, the entrepreneurial activity appears to be on the rise as cases such as Culina at Port Salford have shown. Moreover, as GXD Logistics highlighted there are marketable benefits to using the waterways, one being the environmental benefit. From an entrepreneurial point of view this gives companies an added incentive to engage in the activity. Nevertheless, there remains a long way to go and this is made more difficult by the fact that there is not the suitable vessels to make the waterways a viable, comparable option. However, as highlighted in Lei et al s (2012) study, entrepreneurial activity can be enhanced by increasing the commercialisation of the technology, although this is a lot easier said than done, but could be taken as a directive for the future Function 3 (Knowledge diffusion through the network) Question three allowed for a more in depth analysis of the communication network between actors. Breukers et al (2014) study of biomass highlighted this to be one of the key failings in the diffusion of biomass. Meanwhile Quitzow s (2015) study highlighted the difference between Germany s dense communication network and China s communication network, which was developed through international acquisitions leading to a lack of communication. For the case of inland waterways the communication network was highlighted to be relatively small. Its success differed based upon the stakeholder s position. For those customers who would potentially use the waterways such as Cemex 41

42 and the CoOperative they felt that the network failed to engage customers. This was reinforced by GXD Logistics who felt it was difficult as a logistics company to know who to speak to if they wished to engage in moving freight onto the waterways. However, for port authorities their views differed. Peel Ports highlighted that communication networks for a very long while existed more like a communication chain and was very fragmented. Both Peel and ABP felt the need for them to take more of an active role to work with all parties involved to further develop the network. The CBOA who act to coordinate and move forward the use of waterways stressed that every effort is being made to try and build and develop the communication network. Their recommendation was that communication could be developed by an increased awareness of the waterways for companies, and it was suggested this could be achieved by running freight on the waterways as an example, so that others could be made aware of the possibilities. In support of Peel Ports and ABP, the representative from the CBOA highlighted that the role of ports is now changing and the responsibilities they have to drive the waterways forward is equally growing. This view was equally shared by MDST who said that communication needs to be orchestrated by organisations with a large reach and who are highly influential. From a European perspective the representative of the European Commission explained that in Europe the communication network is also poor, potentially prohibiting communication with the UK. They explained that the communication links tended to be in closed networks, such as certain stretches of rivers, and that this needs to change. In summary, the responses regarding the communication network all made reference to the fact that the network is relatively small. Those actively engaged in the promotion and use of the waterways expressed their opinion that the network only needs to be big enough to incorporate the relevant stakeholders. However, the customers who would potentially use the waterways felt that they were out of the loop. In the CRT report they highlighted that communication to bring all stakeholders together was necessary. They stressed that a North East England focus group was a possible solution to this as there are opportunities 42

43 with the Humber (CRT, 2014). Although as Peel Ports, ABP and MDST stressed the role of communication networker appears now to rest at the feet of port authorities who must assume a role which acts as a coordinator of actors, as they have links with all industry stakeholders. Analysing this function from the literature review articles, parallels can be drawn with Gosens and Lu (2014), who highlighted that communication networks needs to be improved between institutions and industry actors to further develop wind power technology Function 4 (Market formation) The market formation as well as the potential market plays an important role in deciding whether a technology will successfully diffuse. For Wierczorek et al (2015), the potential market was an important factor when highlighting where wind energy is worth pursuing in the future. They made recommendations that the UK has a great potential for market growth, although the UK struggled in the market formation structure. For inland waterways, the market is important as it relies on people using them to flourish. It was the depletion of the market coupled with the emergence of other technologies that led to the shrinking of the market that started in the early 2000 s (FTA, 2014). However, Mike Garratt, who has over thirty years of industry experience highlighted that he saw the beginnings of a decline in the market as early as the 1970 s. Conversely, the interviews with the stakeholders produced a large degree of positivity in terms of the market. It was expressed that there is a large market potential. Peel Ports noted that there has been a large increase in volume since 2009 on the Manchester Shipping Canal (MSC) from 3000 containers per annum to now 22,000 containers in This volume is projected to rapidly increase and Peel Ports hope that the MSC can accommodate 100,000 containers, accounting for 2% of all containers movements in the UK, and 10% of all movements in the North West of England. In addition to this in a recent publication of The Environmentalist (Suff, 2015) it was found that the River Thames is also showing large potential for growth and development. Between 2012 and 2013 the Thames saw an increase of freight between terminals of 62%. 43

44 This statistic can be shown in further detail by analysing the graph below. As figure 8 shows, (DFT, 2015) inland waterways have been in a steady decline for many years, however over the last three to four years there has been an increase in volume. From a European perspective the representative from the European Commission explained that there is a large potential across Europe and they are looking to publish a report to further explore this in the near future. Figure Major Inland Waterways Freight Statistics River Thames Billion Tonne Kilometres Manchester Ship Canal / River Mersey River Humber River Ouse Aire and Calder 0.0 Year Source: (DFT, 2015) This opinion is shared by the CBOA who estimated that there is the potential to transport up to 3.8 million tonnes of freight on the Humber, towards Leeds. The obvious benefit of inland waterways from a market perspective is there are no delays in congestion, as well as being able to carry larger volumes than road freight. GXD Logistics stressed these points, however they also stressed that the waterways can only accommodate a certain level of freight. This point was strongly presented by the representative of ABP who said that the market formation and potential is irrelevant in comparison to the issue of capacity. They 44

45 highlighted that although there are a large number of possible users for the waterways, these users need to be aware of which waterways are possible to be used as well as what the capacity of the waterway is. The capacity is in their opinion the greatest barrier to the future market. Although, one benefit of the waterways, which gives them an edge over other modes of transport and supports their future market potential, is that a large degree of freight is delivered regularly to a timetable. This freight could be transferred to water as timing adjustments could be made allowing for the same delivery time. This point was made by the representative of the CBOA, who highlighted that the boats can be used as a floating warehouse. Therefore illustrating the market potential. On the other hand, other stakeholders shared views relating to different issues. One of these issues was the fact that a large degree of the market affiliated with freight transportation requires the transport to be as quick as possible. Although waterways allow twentyfour hour a day travel the maximum speed these vessels can reach is very low compared to road and rail. This is incredibly important for fast moving consumer goods as highlighted by the CoOperative. To conclude, the market as well as the potential market seems to offer strong possibilities. The growth statistics presented in figure 8 supports this, as does the projections by Peel Ports. However due to the commercial nature of freight it appears there are limitations in what can be moved by water due to its shelf life Function 5 (Guidance of the search) Hekkert et al (2007) emphasised that for a technology to successfully develop there needs to be a clear guidance of the search, otherwise resources will be wasted in an unsustainable manner. Failures to complete this function appeared in Breukers et al (2014), Wieczorek et al (2015) and Lei et al (2012). This failure prohibited the development of the technology. 45

46 The response from all respondents to this question was that there was no clear future direction. However, some respondents felt that although there was not a clear future direction currently, efforts were being made to change this. Examples of this given were the CRT report (2014). Although this report was commended for its efforts, some respondents felt that the CRT do not have enough market influence to steer the industry as a whole. It is necessary for the technology to have a clear direction to drive it forward. In some cases the government takes this responsibility. In the literature review Quitzow (2015) highlighted that China successfully created a clear future direction for solar energy, largely due to the role of government in creating policy. This was not the case with UK inland waterways. Peel ports highlighted the difficulty with the Department for Transport (DFT) is that Road, Rail and Water are all separated into different offices so a combined UK effort on freight is difficult to coordinate. Moreover, as highlighted by the CBOA most waterways in the UK are covered by the Environment Agency, whilst some are covered by the DFT, this also makes it difficult to produce a universal future direction. Various actors suggested that the mantle of the guidance of the search is the responsibility of Port authorities. Much like function three and four, Ports have the greatest influence to drive waterways forward. The work that Peel Ports has done to develop the MSC exemplifies this and can be taken as an example that others could follow. However, it must be noted that the MSC was in a good condition and already had the capacity to carry large vessels. This might not be the case for other inland waterways Function 6 (Resource mobilisation) Resources available vary in importance for different actors. Financial resources are often vital to kick start a technology diffusing, although this initial investment can be a risk that needs to be considered. Government authorities can provide these financial resources. In the literature review it was found that government funds provided by the Dutch government in the case of biomass 46

47 energy aided the development of technology. Although they critiqued the fact that the only resource considered was financial and subsequently ignored the need for technological and human resources to enable learning and development (Breukers et al, 2014). Many respondents focussed on the access to financial resources as the main failing for the technology. This includes Cemex who highlighted that navigation on the River Severn would not of been possible without government funding. The CoOperative highlighted they were unaware of resources available for inland waterway although stressed that if similar resources were available for water as there were for rail then they would consider using waterways. GXD Logistics and Danbrit Shipping both emphasised that if there were more financial incentives offered to use the waterways then they feel it would greatly improve their use of the waterways. The FTA (2014) report did attempt to highlight the funding options available, including the mode shift revenue support, which is a fund available for those looking to transfer freight off the road to either rail or water. Other funding options also included the Waterborne Freight Grant Scheme, although this funding is primarily focussed at coastal and short sea shipping, but allows for a bidding process where transportation is more expensive than road. The representative from the European Commission explained that the financial conditions in Europe over the last five years has led to a reluctance of financial investment in new technologies from the private sector. Other interview respondents made reference to a lack of resources that enables the waterways to be used. MDST stressed that if supporting infrastructural resources were available such as rail connections then the waterways could be further improved. However, almost all respondents agreed that there was sufficient human resources available. This is important as the literature review highlighted it is integral to have individuals with knowledge and experience of the technology, a feature lacking in many of the examples. 47

48 In summary, all respondents agreed that there is a need for greater financial resources to kick start the use of inland waterways and create a level playing field with other modes of transport. However, as MDST highlighted the supporting resources need to be in place to make the overall operation more fluid. 4.7 Function 7 (Creation of legitimacy) The final function looked at the resistance to inland waterways and subsequently how it can create legitimacy as a freight option. The question acted as a summary for many respondents who highlighted the main barriers that they felt inland waterways faced. The creation of legitimacy is important when driving a technology forward as functions such as market formation, entrepreneurial activity and resource mobilisation rely on this function. An example of this is in Breuker et al (2014) who found that the creation of legitimacy of solar energy in Germany gave the technology more political weight to change policy. They also found that in China as their own solar industry has internationalised it has aided legitimacy, which in turn has fuelled its domestic market. Meanwhile, Hekkert et al (2007) explained how farmers formed a union to promote biofuel, this legitimated biofuels as an alternative sustainable energy source that aided in its diffusion as a fuel and helped it become adopted by carmakers and subsequently used in Taxis. The first resistance highlighted by Cemex, CBOA, MDST and ABP relates to the commercialisation of waterway areas. Explaining this point further, for waterways to operate they require wharfs to function as a way to transfer freight from waterways to land and store the freight. However, a large amount of this waterside land is being bought by property developers and being turned into apartments and housing. This makes the transfer of freight very difficult. In the CRT (2014) report they highlighted the need for a wharf in Leeds to allow for the transfer of freight, but highlighted the difficulties in achieving planning and finding suitable locations. Meanwhile, Cemex have experienced difficulties 48

49 operating upon the Thames as property developers are buying wharfs around Battersea as well as other locations. Building upon this point ABP felt the single most important issue relating to inland waterway freight is the issue of capacity. They felt that until waterways improve their capacity and improve the awareness of what capacity each waterway can carry it will not move forward. Peel Ports expressed similar sentiments saying Infrastructure is integral, although MSC is large enough there are not many other feasible alternatives. They continued by explaining that it is unfeasible to create more canals and infrastructure and instead specified that specific bottleneck areas, that require small improvements for large positive impacts, need to be highlighted. The second resistance highlighted was from a commercial competition sense. GXD Logistics as well as MDST and the CoOperative all stressed that currently road and rail offer rates and a service level which is superior in most cases to waterways. In addition the European Commission used an example of the Danube, which investors and companies did not want to make a longterm commitment to using the inland waterway until there was guarantees of reliability and commercial feasibility. Until this changes waterways will not make sense commercially and will not be used. Even if they develop further, it was expressed that road and rail will attempt to become more competitive in attempt to preserve their own industry. The third resistance that was emphasised by Peel Ports and CBOA was the resistance to change, linking to the previous point. They felt that the industry has developed to a stage now where people are knowledgeable about road and rail this makes them unlikely to want to make the risk of changing to water freight unless there are vast benefits. The European Commission explained that the resistance is partly caused by the fact that the inland waterway industry is too inward looking and it requires more integration with the logistics industry as a whole. This could also act to reduce the resistance to change and reduce the perceived risks. 49

50 Although there were various resistances highlighted there was a consensus among the responses that there is nobody against waterways operating. However, for them to do so it was stressed that they had to be operated from a commercial perspective, rather than attempting to reminisce an age where they carried all freight to all locations. 4.8 Summary An overall analysis of the interviews can conclude that each function analysed different factors impacting inland waterway. Interview respondents were overall very enthusiastic about the idea of inland waterways, although there was a degree of caution regarding its use and understanding its limitations. By using the literature review, comparisons can be made with various sustainable technologies and inland waterways. From this analysis of each function some key barriers have been identified. These barriers need to be overcome for the successful diffusion of inland waterways as a more sustainable technology. Suggested improvements and justification of these improvements will be made in the conclusion. 50

51 5. Conclusion At the start of the study an overall aim and objectives were set. It was hoped that this aim and objectives could help guide the study whilst also allowing for evaluation of its success. The overall aim of the investigation was: Ø To explore how the use of inland waterways could be used to make freight transportation in the UK more sustainable This aim was motivated by the environmental pressures the world currently faces, with a hope to aid in the improvement of sustainability through carbon dioxide emission reduction. The first objective to achieve the aim was to evaluate alternative system approaches to understand sustainable transitions. Innovation systems have existed in many forms for many years. As highlighted by Lundvall (1992) an innovation system allows for an analysis of relationships and elements in a system and how new, economically beneficial knowledge can come to the market. Although it could be argued that inland waterways is not itself a new technology, in the UK it faded into near insignificance, subsequently its re- emergence has presented it as a new technology. Adding to this justification, innovation systems have, for a long time aided sustainability studies as they allow for a macro view of a country, which is relevant when considering the actors and reach of sustainable technology. The second objective set out to apply an appropriate innovation framework to analyse the factors facilitating and hindering the use of inland waterways. The literature review chapter analysed three possible innovation systems perspectives to use. All three systems, sectorial innovation systems, socio- technical system and technological innovation systems, had merits to be used to analyse sustainable innovations. However, after comparing the systems it was decided that the TIS framework would be most suited to the investigation. It is a wellused framework to analyse sustainable innovation (Coenen & Lopez, 2010), 51

52 and the functions framework (Hekkert et al, 2007) allows for a structured analysis of technologies. This study focussed particularly on the application of these functions to sustainable technology. Moreover, the literature review expanded on this function by analysing different applications of the TIS framework to sustainable technology. These studies included Breukers et al, (2014) study in to the sustainable future of biomass in the Netherlands, as well as Quitzo s (2015) study into solar photovoltaics in China and Germany. These examples justified the choice of the framework and also enabled structure to aid in the investigation of objective three. Objective three was to evaluate the research to highlight key factors impacting freight transportation on inland waterways. This objective was achieved firstly by outlining a methodology suitable for the investigation in the research methods chapter. This method focussed around interviewing industry stakeholders, asking them a set of questions focussed around the functions framework. These questions enabled an analysis of various functions impacting inland waterway freight, as well as allowing for further exploration of each issue, aided by the use of semistructured interviews. The key findings of factors impacting inland waterways as mentioned were focussed around the TIS framework functions. The findings were that the knowledge of inland waterways is very limited and only exists amongst those involved in the industry, and even the,n the stakeholders feel that it is not sufficient. This lack of knowledge is currently not helped by a poor communication network. This leads to a lack of clear direction for the future of waterways. The industry itself is seeing an increase in entrepreneurial activity as well as a large potential market. However, this growth is impacted by a lack of financial resources as well as resistance from other modes of freight transportation. These factors have clearly highlighted that there are many factors impacting inland waterways. However, as the findings from the interviews show there is a potential for the market. Therefore there is a need for recommendations for the 52

53 industry to overcome the impacting factors and aid in the further development of inland waterways. The first recommendation this study makes is that the role of ports needs to be vastly developed so that they become network coordinating actors. This role is aimed to combat many issues relating to the findings. Firstly, by acting as a networkcoordinating actor, ports can facilitate and increase a communication network that they are at the centre of. The justification for this is that ports have communication links to all industry actors required. This improved communication network would increase the transfer of knowledge between actors, thus combatting the poor knowledge base. In addition to this, the financial backing and reach that ports have, means that they can influence and raise funds, which can spur on entrepreneurial activity, vital for further market development. In addition to this, the literature review highlighted that the central features of a technological system are the clustering of resources, economic competence and an institutional infrastructure (Carlsson and Stankiewicz, 1991). If ports were to become networkcoordinating actors they could enable all three of these factors were enhanced. The second recommendation is to clarify and highlight the commercial opportunities that inland waterways can offer. This means assessing which waterways have the capacity to carry a volume of freight that makes it a financially competitive alternative to road and rail freight. This degree of commercialisation would also need an assessment of which waterways are unfeasible to use for freight, highlighting bottlenecks to develop and for those waterways that cannot be developed left solely for leisure use. This recommendation is similar to that made by Wieczorek et al (2015) with respect to offshore wind and acts as further justification for this recommendation. These two recommendations would hopefully help achieve the overall aim of the investigation to find out how waterways could be used, but also where changes could be made to improve the situation. It must be noted that although the interviews involved various stakeholders it must be acknowledged that the size 53

54 of the sample is somewhat limited. Building upon this the sample size somewhat limits the credibility of the recommendations for the future. However, every attempt has been made to produce an unbiased investigation and given this fact it could be hoped that this study can add to the literature on the topic. Although this investigation has drawn some conclusions it has also raised other questions. These questions justify further exploration of the topic. These future investigations could focus on how the role of a network coordinating actor could implement and orchestrate change throughout other TIS. Other research questions could explore; how would the strategies differ across systems or across countries? And what factors may facilitate or hinder their capacity to stimulate change? Another avenue for research could focus on which waterways could be commercialised and what capacity these could take? Based on this research, a commercial analysis of the three main freight options could be created. 54

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58 7. Appendix Appendix A 58

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