Low water on the Rhine: German industry logistics under pressure

Dusseldorf. At the Kaub Rhine gauge in Rhineland-Palatinate, you can see in centimeters how small the scope of German industry has become. At the end of September, the water level there fell below zero for the first time. Early on Thursday morning, October 1st, the level was even minus six centimeters. The value for shipping is dramatic, because Kaub is the crucial bottleneck on the Middle Rhine.

A Handelsblatt survey of companies that rely on Rhine shipping and associations shows that the logistical feat for corporations is becoming ever greater. Chemical companies are using additional low-water ships and shifting transport to rail and truck. At the same time, the reserves of these alternative systems are dwindling and freight prices are becoming increasingly expensive. And there are initial delivery bottlenecks.

Germany's rivers have been carrying unusually little water with short interruptions since the beginning of June. What matters is no longer just how low the water levels fall on a single day. The longer the exceptional situation lasts, the greater the effort that companies will have to make to keep their supply chains stable.

“With the current water levels at the Kaub gauge, only a few freight ships can pass through the Middle Rhine section,” says the Federal Association of German Inland Shipping (BDB). Even low-water ships can currently only hold 20 to 25 percent of their maximum cargo capacity. In the more developed Lower Rhine it is a maximum of around 30 percent.

There is only so much that can be done to absorb this. According to the BDB, a 110-meter-long inland waterway vessel transports approximately as much cargo as 150 trucks. Neither road nor rail had enough free capacity to permanently take larger quantities from the Rhine.

The section between St. Goar and Kaub is particularly critical. The channel there is less deep than on the Lower Rhine. Bulk chemicals and steel goods, petroleum products, building materials, agricultural products and containers are particularly affected.

There is no improvement in sight. Hydrologist and climate expert Harald Kunstmann says: “Normal autumn rain is not enough for a quick recovery.” The entire southern German region - i.e. where the Danube and Rhine originate - continues to have a massive rainfall deficit. The indications that this is becoming a structural problem are strong, says Kunstmann.

The chemical company BASF is closely monitoring the level development. Inland waterway transport has so far “been largely maintained by using a larger number of low-water vessels,” says BASF. However, due to the long low water phase, there are already delivery bottlenecks in individual cases.

Transport becomes twice as expensive for companies: Because the ships can only carry a fraction of their usual load, freight rates initially rise. In addition, shipping companies charge so-called small water surcharges when water levels are low. The longer and deeper the low water level lasts, the higher the costs per tonne transported become.

In mid-September, around 165 to 170 euros per ton were charged for transport from Rotterdam to Karlsruhe - a week earlier it was around 100 euros. At the end of June the rates were only 20 to 25 euros per ton.

The small water surcharge shows how far the costs are now out of the usual range. Normally, small water surcharges, i.e. the additional costs for transport during low water, are paid from certain water levels.

However, Kaub is now so low that there is no longer a regular surcharge, only a “free agreement”. This means that the price is negotiated individually because transport by inland waterway can hardly be calculated economically at these water levels.

Gasoline, diesel, heating oil and kerosene are also transported across the Rhine in large quantities. According to the business association En2x, the situation is tense. The supply to gas stations and other customers is not currently restricted, but: “Depending on the route, there are currently no ships sailing,” says En2x. The Kaub bottleneck is temporarily impassable.

The situation at the Miro refinery in Karlsruhe is particularly tense. Around a quarter of their products are usually picked up by ship across the Rhine. According to the company, the ships used can currently only carry around ten to 20 percent of their usual load, depending on the type. Transport will be shifted to rail and road as much as possible, but capacities are limited, especially on rail.

The logistics problem could actually become a production problem. According to the forecast by the Federal Hydrology Institute, there is no chance that the Kaub water level will rise significantly again until mid-October.

“The tense situation will continue at least until then,” estimates Robert Norpoth, an expert at the Prognos economic research institute. The basic conditions are likely to be in place for the economic damage to be at least as high as in the previous record year of 2018, despite companies being better prepared for low water today, says Norpoth.

Another calculation from the association shows how difficult the solution is: To replace the load of a single inland waterway vessel with other modes of transport, it would take around four tank car block trains or 188 tank trucks. However, all affected locations report that there are limits: the number of tank and tank trucks available, as well as the number of drivers, is finite.