Auto & Transportation

According to reports, due to the unusually hot and dry weather and very low water level on the Rhine River, an important waterway in Europe, many ships could not be transported with full loads, and some key river sections were forced to suspend sailing. This has increased freight costs, further congested major European ports and threatened trade along the Rhine.

The Rhine is an important shipping channel in Europe. It flows from the Swiss Alps through the North Sea, the industrial heart of Germany. It is the main shipping route for grain, chemicals, coal and other products. It is also an important link between industrial manufacturers and global export terminals in North Sea ports such as Rotterdam and Amsterdam.

With water levels dropping to 32cm in some reaches recently, major barge operators said they would stop sailing on the upper and middle Rhine for safety reasons.

Low water levels on the Rhine have caused shipping delays, pushing up some freight rates by more than five times. Last week, barge operators imposed a low-water surcharge of €589 ($601)/TEU775 ($792) FEU due to lower water levels upstream of the reach.

Also, to prevent grounding, some cargo ships have been forced to reduce their loadings to about a quarter of their normal carrying capacity, meaning more ships are needed to carry the cargo that can normally be loaded on board.

"Usually, during the voyage, the depth under the boat is more than two meters, but now it is only 40 centimeters in some places. The challenge for us is to touch or damage the boat through these points," said one captain. "Due to the water level Lower, the sailing route narrows, and we actually start lining up like trains." And other boats that can't adapt to shallow water have stopped sailing entirely.

As far as the European supply chain is concerned, the Rhine shipping bottleneck "comes at a bad time" as Europe is dealing with severe port congestion. A Duisburg spokesman said: "Vessels can only carry less cargo, which further exacerbates the current supply chain problems."

Shipping lines may have to stop sailings this week to divert cargo to road and rail, according to reports. However, as coal and mineral products are priorities for rail, there is limited space for other products to be transported.

The Rhine is Western Europe's most important river for transporting fuel and other industrial products. For Germany, Europe's largest economy, its shipping bottlenecks are another drag. The country is grappling with high inflation and soaring gas prices after supply chain disruptions and a conflict between Russia and Ukraine.

Freight rates on the Rhine for a liquid tanker barge increased to €110 a tonne from €20 a tonne in June. Credit ratings agency Moody's said low water levels on the Rhine would increase costs for chemical companies, especially those with production facilities on the upper Rhine, and could lead to production cuts.

BASF Chemicals Group (BASF.DE) said last week it would not rule out production cuts. Two coal-fired power plants reported that they were asked to reduce operating levels because they were unable to transport enough fuel through the river. Coal-fired power plants are now an alternative to Russia's natural gas supply.

The German Federal Institute for Hydrology predicts that the Rhine may experience long-term low water levels in the future due to melting glaciers and reduced snowfall due to climate change.

Some economists estimate that the disruption to shipping on the Rhine could shave 0.5 percentage points off Germany's overall economic growth this year.

Businesses are reportedly moving more goods by truck or train to make up for supply shortfalls on the Rhine. According to a draft decree published on Sunday, Germany plans to prioritize transporting materials and equipment needed for energy production if the Rhine River falls further.