The key statistic to monitor is the water level at Kaub, a picturesque town south of Cologne. On Monday, the gauge stood at just 95 centimeters, the first time in at least 15 years that the river depth there has dropped below the one-meter mark in March. On average, the river typically carries nearly two meters of water through the town at this time of the year.
Kaub matters because it’s a chokepoint for barges, the shallowest point in the middle course of the Rhine — and the gateway to manufacturing hubs further south. The current low level means that a typical 110-meter long barge carrying diesel fuel or chemical products can only transport about a third of its cargo to avoid going aground.
The German government declares a “low water” alert when the Kaub gauge drops below 150 centimeters, allowing barge companies to impose surcharges that significantly increase the cost of freight, and an “extreme low water” alert if it drops below 80 centimeters. Traffic all but stops if the water drops to 40 centimeters. What once were rare situations have become far more frequent in recent years because of the climate emergency.
In October 2018, the Rhine depth declined to 25 centimeters after a dry summer, the lowest seen since the 1920s. The 2018 drought tipped the German economy into a short-lived crisis as industrial giants cut production for several weeks, unable to secure raw materials or ship their output. German growth slowed to 0.4% in the third quarter and 0.3% in the final three months of 2018, down from 2.2% in the second quarter. Economists blamed the Rhine shipping stoppage for a significant chunk of that slowdown. Worryingly, water levels in late March and early April back then were twice as high as they are now.
The shores of the Rhine are home to some of Germany’s largest industrial companies, including the world’s largest chemical plant operated by BASF SE in Ludwigshafen (crucially, south of Kaub). Its banks also host large factories run by Daimler AG, Robert Bosch GmbH, Bayer AG, and Thyssenkrupp AG, among others. The river’s almost 800 miles connect industries across not only Germany, but also the Netherlands, France and Switzerland, before emptying into the North Sea in Rotterdam – the biggest port in Europe.
The river is the cheapest way to transport goods from Rotterdam into southern Germany. Although the waterway only transports about 5% of total German freight, half of what the country’s railways carry, it accounts for more than a third of commodities such as diesel, chemicals and iron ore. If the waterway traffic stops, replacing a typical barge is an expensive business, requiring more than 100 trucks per barge.
While the current situation isn’t yet as bad as it was four years ago, German industry is already facing trouble as the war in Ukraine threatens to disrupt the nation’s energy imports from Russia. For example, the giant Grosskraftwerk Mannheim coal-fired power plant last week warned it was running low on coal due to shipping restrictions on the Rhine. Germany is burning more coal now to conserve expensive Russian natural gas.
The risk is that without spring rainfall, water levels could drop dramatically in the later part of the summer. After 2018, German industrial giants put contingency plans in place to re-route some of their cargoes via railway if the Rhine dried up again to keep their factories buzzing. German weather forecasters don’t anticipate any end to the nation’s dry spell this week. Those emergency plans may soon be tested.
More From Bloomberg Opinion:
• Germany Will Struggle to Pivot From Russian Oil: Julian Lee
• How to Make Sanctions Bite Russia Even Harder: Tobin Harshaw
• All That’s Stopping a Full-Blown Food Crisis? Rice: Javier Blas
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Javier Blas is a Bloomberg Opinion columnist covering energy and commodities. He previously was commodities editor at the Financial Times and is the coauthor of “The World for Sale: Money, Power, and the Traders Who Barter the Earth’s Resources.”
