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Billions lost due to Rhine traffic decline during low water – IHS Markit Dredging and Port Construction

The Rhine near Nierstein and Oppenheim. Credit: Getty Images

The Central Commission for the Navigation of the Rhine (CCNR), acting as regulator for the river, has published its 2019 European Inland Navigation Market Observation annual report, in conjunction with the European Commission.

European inland navigation in 2018 was affected by the protracted low water period experienced in the second half of the year, which must be seen as an important factor influencing several economic parameters.

From a regional perspective, the influence of the extreme drought on transport activity was particularly pronounced on the Rhine, its tributaries, the Upper and Middle Danube, and the Upper and Middle Elbe. Transport activities on many canals in the Netherlands, Belgium, France, and in northern Germany were significantly less affected.

The Rhine posted a 10% decline in container traffic (in terms of TEU) following growth in the five previous years.

Shipping on the Middle and Upper Rhine, the two stretches of the Rhine that account for 49% of container transport output on the river, was severely curtailed at the end of 2018. In October and November 2018, when container vessels were no longer able to sail upstream towards Strasbourg or Basel, container traffic had to cease for several weeks.

The interruption in the logistics chain, not only for container transport, but also for chemicals, petroleum products, iron ores, and other industrial raw materials, caused economic losses on a considerable scale. Statistical calculations indicate a loss of almost EUR5 billion (USD5.51 billion) for German industrial output in the second half of 2018 as a result of the decline in Rhine traffic.

However, shipping on the Lower Danube in Romania and Bulgaria held up well, owing to its river-sea nature in the vicinity of the Danube estuary. Container traffic, which continues to be concentrated almost exclusively on the Rhine countries, maintained – and, in some instances, even increased – transport volumes in 2018, as large swathes of its operational area are located on canals or waterways enjoying considerable resilience in the face of low water levels in Belgium, France, the Netherlands, and northern Germany.

It expanded in France in the Nord-Pas de Calais Mining Basin, whereas its previous level was unchanged in the Seine and Rhône-Saône basins.

A further consequence of the low water levels was the sharp hike in transport prices, especially on the Rhine. In October and November 2018, freight rates for liquid cargoes were more than four times higher than before for Amsterdam-Rotterdam-Antwerp Rhine trade.

For transport movements in the Flushing, Amsterdam, Rotterdam, Antwerp, Ghent (FARAG) areas, a statistical analysis based on freight rates for liquid cargoes revealed that prices in the second half of the year rose, as well. Even if water level conditions in this part of Western Europe have been significantly less affected, the increase in freight rates can be explained in terms of market responses.

Belgian and Dutch operators, especially those with small vessels, switched their area of operation to the Rhine in late 2018 to take advantage of the high freight rate level. Consequently, this withdrawal of capacity within the FARAG region caused a general upward pressure on freight rates there.

The Rhine countries’ freighter fleet is characterised by an increasing average cargo capacity and a decline in the number of small vessels, a development that continued in 2018, especially for the French fleet.

This also points to the necessity of a partial rethink of current logistical concepts, for instance, vessel size and design.

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