Factbox: Why falling Rhine water will hit Germany’s economy

A transport ship passes through the partially dried bed of the Rhine River in Bingen, Germany, August 9, 2022. REUTERS/Wolfgang Rattay

BERLIN, Aug 15 (Reuters) – Water levels on the Rhine are so low due to unusually hot and dry weather, preventing many ships from navigating important European shipping routes at full load. .

Here are some facts about why shipping on the Rhine is important for the economy.

Why is Rhine transport important?

Flowing from the Swiss Alps through Germany’s industrial heartland to the North Sea, the Rhine is a major route for products ranging from grains to chemicals to coal.

An important link between industrial producers and the world’s export terminals in North Sea ports such as Rotterdam and Amsterdam, canals and other rivers connect the Rhine and Danube and also enable shipments to the Black Sea. .

What happens if the water level is low?

As water levels drop, cargo ships must sail with less cargo to prevent running aground.

Some shippers say they are loading ships with about a quarter of their normal cargo volume these days.

This means that more ships are needed to move cargo that would normally fit on one ship, increasing freight costs. Carriers can usually pass on additional costs to the cargo owner. Cargo owners pass on higher costs to their customers.

What is critical water level?

There is no specific water level at which shipping stops and authorities do not close the river. It is the owner of the ship who decides whether it is safe to operate.

The reference water level at the Kaub chokepoint near Koblenz was 32 centimeters on Monday, down from 42 centimeters on Friday and 51 centimeters a week ago. A Kaub reference waterline of approximately 1.5 meters is required for a vessel to travel fully loaded.

What will be the impact on the German economy?

Transport bottlenecks are another drag on Germany’s economy, which is already grappling with high inflation, supply chain disruptions and high gas prices after Russia’s invasion of Ukraine in February.

Economists estimate that the Rhine shipping disruption could cut overall economic growth in Europe’s largest economy by 0.5 percentage points this year.

Low water levels in the Rhine could increase costs and reduce production for chemical companies such as BASF (BASFn.DE).

Coal-fired power plants are also back in vogue as an alternative to Russia’s gas supply, but face supply shortages as ships cannot carry enough coal. Utilities Uniper (UN01.DE) has warned of output cuts at two of his power plants, which account for 4% of Germany’s coal power capacity.read more

What is being done to mitigate the situation?

Companies are shipping more goods by truck and train to make up for the shortage on the Rhine.

Germany plans to prioritize the transport of materials and equipment essential for energy production over its domestic rail network if Rhine water levels drop further, drafted on Sunday.read more

Shipbuilders have also worked to design ships that can handle lower water levels.

Edited by Maria Sheahan.Edited by Edmund Blair

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