Many companies along the Rhine obtain industrial raw materials by ship. But the water level is dropping, delaying deliveries and increasing costs. This can have very negative consequences.
Transport problems in industry as a result of the very low level of the Rhine could put additional strain on the German economy.
Although the low water is a much smaller problem than the looming gas crisis, if it lasts until December, it could cost 0.2 percentage points of economic growth in the third and fourth quarters, said chief economist Andrew Kenningham of the British analysis house Capital Economics, according to a study. This makes a recession more likely.
According to Kenningham, rivers are more important as transport routes for Germany than for most other Western European countries. Although the share of the total freight volume has fallen, it still accounted for a good seven percent of the total volume in around 2020 – and a large part of this is industrial raw materials such as coal, crude oil, coke and basic chemicals.
Road and rail transport costs more and takes longer
In principle, the transport of goods is shifted to road and rail if it becomes uneconomical to use water. The lower the water level, the less the ships can load and above a certain level, many can no longer sail at all. However, transport by road and rail involves additional costs and is usually slower for large quantities.
It can also be problematic for power plants and industrial companies that discharge warm cooling water into the Rhine. The chemical company BASF, for example, is only allowed to release cooling water into the Rhine at a maximum temperature of 33 degrees Celsius in the summer months – provided that the temperature has not yet reached the 28 degree mark.
Companies have been taking precautions since the very dry summer of 2018, which also weighed heavily on shipping traffic on the Rhine and cost the steel and chemical industries a lot of money.
More and new ships
CFO Ute Wolf of the Essen-based chemical group Evonik calmed down during a conference call with analysts recently: The group was less affected because of the situation on the Lower Rhine and had also taken precautions, for example by booking more cargo ships, since they could take fewer goods at low tide.
With a view to the situation on the Rhine, the same should also apply to Covestro, Lanxess and Bayer, as analyst Martin Kohlhase from the rating agency Moody’s said. Companies further up the Rhine, such as the Ludwigshafen-based company BASF, would be more affected.
BASF relies on low-water ships. The flagship is to be a new type of tanker with a high load-carrying capacity, which can still pass through the critical section of the Rhine in Kaub with a load of 650 tons, even at a water level of 30 centimetres. The level serves as a guide, but differs from the water level in the fairway.
On Thursday, the level was still around 45 centimeters and, according to the Federal Institute for Hydrology, should fall below the 40 centimeter mark in the coming days.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
