The economic blow from Europe’s heatwave is looming, with manufacturing powerhouse Germany scrambling for supply chain troubles due to low water levels in its commercial canal, the Rhine.
Water levels at Kaub, a key chokepoint for barges on the Rhine, dropped this week to their lowest levels this year. The low water level means that 80% of Germany’s inland cargo transportation, including crude oil and natural gas, will be greatly restricted, because cargo ships will not be able to sail with full load.
Last year, Germany suffered from headaches due to the lower water level of the Rhine River. The volume of goods transported through German waterways recorded 182 million tons, a decrease of 6.4% from 2021 and the lowest level since German reunification.
Now, due to the ongoing heat wave, the German Federal Waterways and Shipping Agency expects water levels to continue to drop. And this will have a nightmare impact on Germany’s manufacturing industry. Experience shows that if the Kaub water level is below 78 centimeters for 30 consecutive days, Germany’s total industrial production will drop by 1%.
Industrial production and sales are hindered
German chemicals maker Covestro ships 30 percent of its finished products via the Rhine and relies on it to receive most of its raw materials. Climate change and frequent low water levels pose major challenges for Covestro and others, according to Uwe Arndt, head of Covestro’s Rhine task force.
The company’s three main factories in North Rhine-Westphalia, Germany are all located on the Rhine River, and mainly produce polyurethane, polycarbonate, diphenylmethane diisocyanate (MDI) and other products, which are key to industries such as automobiles, construction, and daily chemicals upstream. The production capacity of these three factories accounts for about 30% of the company’s global production capacity.
Another chemical giant, BASF, also suffered from it. According to BASF, it has already started using cargo ships available at low water levels to supply its Ludwigshafen plant, where 40% of raw materials are also transported via the Rhine. For flammable and toxic chemicals, water transport is often the only viable transport option.
Barbara Hoyer, vice president of BASF, pointed out that most of the liquid raw materials in BASF’s raw materials, including naphtha, are transported through the Rhine River, and BASF needs a large amount of raw materials to maintain production, and it is very difficult to obtain these raw materials from other places.
According to HGK Shipping, a subsidiary of the municipal utility of Cologne, Germany, energy, chemical and steel companies have limited alternatives for transporting large quantities of raw materials and do not have the capacity, infrastructure and personnel to make the switch from water to land in the short and medium term.