Europe's key rivers, the Rhine and Danube, are experiencing historically low water levels as a result of prolonged heatwaves, leading to significant disruptions for various industries. The navigable water depth at the critical Kaub chokepoint on the Rhine was a mere 10 cm, lower than the previous record of 25 cm in 2018. This forces ships to carry significantly reduced cargo loads, often as little as 10% to 20% of their normal capacity, to ensure safe passage. Many vessels are no longer sailing, effectively cutting off the Upper Rhine and Main rivers from major trade hubs like Amsterdam-Rotterdam-Antwerp (ARA).
The reduced shipping capacity has triggered a major shift to alternative transport methods such as road and rail. However, these alternatives are struggling to absorb the immense volume normally handled by river barges; one section of the Rhine alone typically sees 360 vessels carrying 3,000 tonnes each daily, equivalent to 360 freight trains or 5,500 trucks. This surge in demand for road and rail has caused transport costs to skyrocket, with prices for petroleum products shipped between Karlsruhe and the ARA ports hitting 200 euros per tonne, more than doubling the August 2022 record of 130 euros per tonne. Companies like Thyssenkrupp, BASF, Shell, and Covestro are scrambling to adapt by using shallow-draft ships, diverting shipments, or utilizing storage capacity.
The economic fallout extends beyond transport. Chemical producers, utilities, steelmakers, and agricultural traders are facing higher costs, supply chain bottlenecks, and curtailed production. For example, LyondellBasell declared force majeure on butadiene supplies due to feedstock delivery disruptions, and BASF has also warned of potential force majeures. The energy sector is also heavily impacted; Hungary's Paks Nuclear Power Plant reduced output by 60% and shut down one reactor, while Serbia received only 25% of its planned fuel imports in July due to Danube low levels. Economists like Carsten Brzeski of ING Diba AG warn that dwindling rivers cause "real economic pain" and represent a new risk to growth. The 2018 drought, which saw similar low water levels, cut German industrial production by an estimated 0.3 percentage points, and the current impact is expected to be more severe.
While some German firms have adapted their supply chains since 2018, and inland shipping's share of Germany's total freight transport has slightly decreased from 4.7% in 2017 to 4.1% in 2024, the current situation remains critical. Analysis of past low water periods suggests that 30 days of low water levels can lead to a 1% decline in German industrial production. The decline in inland waterway exports and imports during the 2018 drought (nearly 20% and 12% respectively) indicated a significant supply chain effect, highlighting the broader economic vulnerability to these climatic events.
