Europe's vital industrial arteries, such as the Rhine and Danube rivers, are facing critical water level declines due to a series of extreme heat waves. These low levels are disrupting the transport of essential goods like chemicals and oil products, leading to increased freight costs. For instance, water levels at Kaub, a key chokepoint on the Rhine, have fallen to 25 centimeters, matching a 2018 drought low, and are predicted to drop further to 24 centimeters, the lowest since records began in 1880. This situation is creating significant logistical bottlenecks along the Rhine, which spans approximately 1,290 kilometers from the Swiss Alps to the North Sea.
The dwindling river levels are also severely affecting power generation. Rivers like the Rhine, Rhone, and Garonne are crucial for cooling riverside atomic reactors and coal-fired power plants. France has had to curb its nuclear power output, and Hungary is fully shutting down its sole nuclear plant for the first time in 44 years, which provides 40% of the country's electricity. Romania's Cernavoda plant and Serbia's Kostolac coal-fired plants have also cut output due to impaired cooling operations. Austrian utility Verbund saw its earnings reduced by about €370 million in the first half of the year due to drought conditions impacting hydropower production.
While some companies have adapted supply chains since a 2018 drought, which cut German industrial production by as much as 1.5%, the current situation poses new economic challenges. The share of inland shipping in Germany's total freight transport has dropped from 4.7% in 2017 to 4.1% in 2024. Roberto Spranzi, a board member of the German Inland Waterway Transport Cooperative, noted that some vessels can no longer operate due to technical limitations and high fuel prices. The ongoing heat waves and lack of significant rainfall relief until late fall suggest that these disruptions and their associated higher costs will continue to erode Europe's industrial competitiveness.
The drought also impacts agricultural production and water supply, with Italy's Po River dwindling below historic lows, threatening rice crops and increasing saltwater intrusion. Experts like Carsten Brzeski of ING Diba AG emphasize that these dwindling rivers represent a significant new risk to economic growth and underscore the escalating challenges of climate change in Europe, the fastest-warming continent.
