“In some locations our warehouses are up to 90 percent full,” said Roman Möbus, the company’s head of logistics, adding that the locations would close if it could not move its products soon at a reasonable price. Möbus’ concerns have grown as water levels in the Rhine have fallen to new lows, following a stormy summer followed by a dry spring and an unusually dry winter. At the gauging point in Kaub, 40 miles west of Frankfurt, the water level fell to 47cm this week, well below the 80cm required for fully loaded barges to pass safely. As a result, container ships are carrying a fraction of their usual cargo to reduce their draft, leading to higher transport costs and severe delivery delays as Germany grapples with soaring inflation and supply chain crises. “Low water levels will further squeeze capacity on already heavily used inland waterways,” warned business lobby group BDI. Cargo ships sail on the Rhine near Koblenz, where falling water levels have exposed the coast to islands in midstream © Thomas Frey/dpa Analysts say the water levels could have an even bigger impact than during the last severe drought in 2018, when cargo shipping ground to a halt, curtailing chemical and steel production and wiping billions from the country’s Gross Domestic Product. “[Four years ago] Shipping was suspended for about seven weeks from mid-October. . . This time the problems could last much longer as they started in mid-summer,” said Deutsche Bank economist Marc Schattenberg, noting that the economic backdrop was also worse this time around. Möbus highlighted a number of factors, from new surcharges to higher energy costs and a shortage of ships, which together have left companies with little room for manoeuvre. Contargo, which contracts with barges to transport goods on the Rhine, said it had charged a surcharge of 775 euros per 40-foot container shipped – about triple the normal cost. “Is . . . very difficult to explain to someone booking a container from Hong Kong to Frankfurt that there is a low water level on the Rhine,” said managing director Marcel Hulsker, who has operated barges on the river for 30 years. The BASF chemical plant by the Rhine in Ludwigshafen, surrounded by parched fields © Alex Kraus/Bloomberg Like the absence of rain, the bottlenecks had “everything to do with the war” in Ukraine, he added. The ships had been redeployed to transport grain across the Danube River amid a blockade of Black Sea ports only now temporarily lifted. Other ships were being paid exorbitant sums to carry coal as Germany rushed to reduce its dependence on Russian energy by increasing capacity at coal-fired power plants. Hulsker said his company regularly paid up to €3,500 for a container barge. “Now others are paying up to 10,000 euros to transport coal,” he added. Energy groups were even paying shipping companies to make empty return voyages to the ports of Antwerp, Rotterdam and Ghent, according to two people familiar with the current pricing mechanisms. Deutsche Transport-Genossenschaft (DTG), which operates about 100 ships on the Rhine, “receives requests every day” for coal shipments, according to CEO Roberto Spranzi. He also pointed out that many suitable ships had been sold off because the German coal industry was in managed decline before the outbreak of war. Germany now had little choice but to import coal via the Rhine, a dependence that Deutsche Bank’s Schattenberg warned “could become an Achilles’ heel” for Europe’s biggest economy. The utility company Uniper has already warned that it may have to curtail production at its Staudinger plant on the banks of the Main, a tributary of the Rhine, due to limited coal reserves. But the head of the government agency that oversees supplies insisted the country’s coal plants had enough stock — for now. “The current problems on the Rhine are temporary,” said Klaus Müller, head of the Federal Network Agency. “They will sort themselves out as we get closer to winter.” Another problem for the industry is that the waters of the Rhine are unusually warm. Moody’s analysts noted this week that the water temperature near BASF’s chemicals plant in Ludwigshafen, south of Frankfurt, was just 2 degrees Celsius below the limit set to limit the discharge of cooling water back into rivers. France has already changed its rules to allow its nuclear power plants to deposit warmer water in its waterways. For now, BASF and steelmaker ThyssenKrupp, the biggest industrial groups that rely heavily on Rhine transport, say their output has been unaffected by the low water levels, partly due to greater reliance on rail freight and investments in modern vessels. Water levels in the Kaub are still well above the 25cm low recorded in 2018 and rains are forecast this month. However, BASF warned that it “cannot completely rule out reductions in production rates at individual plants in the coming weeks.” But with costs fluctuating wildly, shipping experts said it was becoming increasingly difficult to predict how bad the summer drought would be for the critical shipping route. “I go home at night with a design and then come to the office in the morning and make a new one,” said DTG’s Spranzi. Additional reporting by Guy Chazan in Berlin
