Low Water On Germany's Rhine Deals Fresh Blow To Economy

Shallow water on the Rhine is imposing tighter limits on how much cargo can be moved down the river, sending riverboat freight prices up and heaping pressure on the German government to act.

The riverbed is partially dry near steelmaker thyssenkrupp's blast furnaces in Duisburg. The waterway also winds past car factories, chemical plants and big river ports as it passes through the industrial heartland of Europe's biggest economy.

Newly appointed transport minister Steffen Bilger plans to meet industrial executives, shipping companies and port bosses in Bonn on Thursday in hopes of finding practical solutions.

Michael Ebling, economy minister for Rhineland-Palatinate state, has called on the government to fast-track a project to deepen a key stretch of the Rhine, arguing the strategic waterway must remain operational year-round.

The river handles around 80% of Germany's inland waterway traffic, according to ING economist Rico Luman. Some 285 million tonnes of goods travel along it each year, linking Germany's biggest industrial hubs with the Dutch port of Rotterdam.

Industry feeling the pinch

The port in Duisburg, in the steel-producing Ruhr region, says vessel loading capacities have dropped to about one-third of usual levels. That has led to a 50 to 60 percent increase in port calls in recent weeks and a shift of cargo to smaller vessels, rail and road.

In the oil sector, loads are sometimes capped at 300 to 400 tonnes for 110-metre tanker barges, requiring far more trips. Prices for petroleum products shipped between Karlsruhe and the ports of Amsterdam, Rotterdam and Antwerp hit 200 euros (US$230) per tonne this month, breaking the previous record of 130 euros set in August 2022, according to Dutch firm Insights Global.

The blow comes as many German producers already grapple with high energy costs, stiff global competition and US tariffs. Thyssenkrupp and chemicals giant BASF have turned to shallow-draft ships. Covestro said shipping disruptions are already affecting supply and production at certain sites; it relies on the Rhine for more than 30 percent of its manufactured products and nearly 75 percent of raw materials. Cologne-based Lanxess called the situation "very difficult", while Shell said it is using more storage capacity and diverting some shipments to rail, road or pipelines.

DB Cargo said it is seeking "pragmatic solutions… within the limits of available rail infrastructure capacity". ING economist Carsten Brzeski noted a 2018 drought shaved an estimated 0.3 percentage points off German growth and said this year's impact could be even more pronounced, with levels already at unprecedented lows months before the usual September-October trough.