Heavy rain has begun to help stabilize the River Rhine in Germany, which had been hit by low water levels for some time as a result of recent excessively dry weather, but this was unlikely to be sufficient to solve current shipping problems on the river, navigation authorities said on Thursday July 21st.
Shallow water has meant that, while vessels could continue to carry freight the maximum load per vessel is significantly reduced.
The entire river in Germany south of Duisburg has been affected, according to a spokesman for German inland waterways navigation agency WSA. The rain was likely to prevent a further deterioration in the coming days, but overall, water is likely to remain stable around current low levels, the spokesman said.
Vessels at the chokepoint of Kaub have only been able to travel at 30% of “normal” capacity.
JP Morgan said in a note that “the current situation is reminiscent of /autumn 2018; this could directly impact barging capacity, or cause disruptions to /road in the Rhine corridor”.
Based on the 2018 precedent, chemical and steel companies face the main danger of transport disruption, JP Morgan said.
Citing analysis by the Kiel Institute, economist Salomon Fiedler said in a report to clients on July 20th that in a month during which water levels were below the 78cm threshold every day (40cm being the minimum for transport purposes), German industrial production was about 1% lower than in a month with no low-water days. Delayed effects in the following month would bring the overall impact to about 1.5%.
Paradoxically, other external factors that threaten a recession in Germany mean that the impact on shipping might be mitigates, simply because less shipping is needed. However, Fiedler observed that ongoing supply-chain bottlenecks linked to the pandemic and the war in Ukraine had resulted in depleted inventories, meaning that the ability of firms to absorb delays in transportation was probably more limited than normal.
