Germany is bracing for potential production cuts as critically low water levels on the Rhine River disrupt cargo shipping. The barge clearance level at Kaub, a key shipping chokepoint, fell to 14 centimeters on Tuesday, with forecasts suggesting it could drop to 9 centimeters by Saturday, the lowest since records began in 1880, according to the Federal Waterways and Shipping Administration. Steffen Bilger, Germany's transport minister, stated that while a supply crisis has not yet emerged, price spikes are occurring in some regions due to supply problems.
Key Details
Economic experts from the German Economic Institute (IW) warned that the reduced cargo capacity on the Rhine could lead industries to cut production. Thomas Puls, a transport expert at IW, noted, "Transport routes south of Kaub are now threatening to become completely severed, meaning the Rhine is cut in two." This disruption is expected to affect primary industries, as neither road nor rail can adequately compensate for the loss of river transport.
Background
The government is considering measures to address the situation, including suspending construction work to facilitate the movement of goods. Bilger mentioned that a crisis meeting was held last week, and another is scheduled for Wednesday. He emphasized the need for immediate action, saying, "The situation remains worrying, which is why it was good that we acted at short notice."
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The disruptions in shipping on the Rhine could lead to higher input costs for industries reliant on river transport, particularly in the chemical sector. Investors will watch for further developments from the upcoming government meeting on the situation and any potential policy responses to mitigate the impacts of low water levels.
Based on reporting by: fortune.com, dw.com