Europe's major rivers, including the Rhine, Danube, and Po, are facing historically low water levels as a result of prolonged heatwaves and drought. This situation is severely impacting industrial transportation, particularly for chemicals, oil products, and other goods, leading to logistical bottlenecks and increased freight costs. For instance, the Kaub chokepoint on the Rhine, crucial for shipments to southern Germany and Switzerland, saw water levels drop to 25 centimeters, matching a 2018 record low.
The low water levels are also affecting power generation, especially at riverside nuclear reactors. Hungary's sole nuclear plant, which provides 40% of the country's electricity, is shutting down for the first time in its 44-year history, necessitating increased power imports. France has also had to curb output from its nuclear fleet due to rising river temperatures. While some companies like BASF have adapted supply chains with more expensive alternatives, the overall situation threatens to erode Europe's industrial competitiveness.
Economists, such as Carsten Brzeski of ING Diba AG, view the heat and drought as a significant new risk to growth, highlighting the economic pain caused by dwindling rivers and the challenges of climate change. Forecasts indicate that temperatures will remain 2C to 8C warmer than normal through early August, with little drought-busting rainfall expected until late fall. The Po River in Italy is also at historic lows, raising concerns about agricultural irrigation and saltwater intrusion.
