A prolonged dry spell is squeezing an already strained regional economy

Germany’s inland navigation agency measured the navigable depth at Kaub, the shallowest chokepoint on the Middle Rhine, at 29 centimeters on Monday — a slight rebound after the gauge hit 25 centimeters on Friday, matching the record set during the 2018 drought. The agency’s forecast calls for a drop to roughly 20 centimeters by Thursday, which would be a new record low. German federal data compiled by ETH Zurich show that a reading below 24 centimeters would be the lowest since record-keeping began in 1880.

Kaub sets the maximum draft, and therefore the maximum cargo weight, for every barge moving between the deep-sea ports of Rotterdam, Amsterdam and Antwerp and the industrial corridor running through Germany, France and Switzerland. Shallow water has left cargo vessels able to sail only about 20 percent loaded, with surcharges piling onto freight bills and loads split across multiple part-loaded ships. The cost of tanker barge transport from Rotterdam to Karlsruhe stood at roughly €145 to €150 a metric ton on Monday, against €45 at the end of June.

The river carries coal, oil products, iron ore, grain and containerized freight along a route of about 800 miles from the Swiss Alps to the North Sea. Traffic has not stopped. Traders said vessels can still move about 250 tons past Kaub — enough to keep the corridor technically open, but not enough to keep it economical.

Downstream in Hungary, the consequences have moved from freight rates to the power grid. Prime Minister Peter Magyar said Sunday that the country faces a critical five-day stretch as the drying Danube forces its only nuclear plant offline for the first time in more than four decades, with another heat wave arriving. As of Sunday evening the two-gigawatt Paks plant, which supplies roughly half of Hungary’s electricity, was running at just over 10 percent of capacity after the Danube fell to a record low. “We are facing the most critical five days ahead,” Magyar said, asking households and businesses to shift consumption away from evening peak hours.

The plant’s operator has been reducing output in stages since late July. A full shutdown became unavoidable because the river level fell below the suction pipes used to draw cooling water, even though the Danube still holds enough water to cool the reactors. Magyar said the domestic shortfall would be covered by imports, citing 3.6 to 3.8 gigawatts of import capacity. Voluntary reductions by households and more than 300 companies have already trimmed demand by 400 megawatts.

Romania is managing the same problem. Nuclearelectrica shut Cernavoda unit 1 and disconnected it from the national grid, citing the unprecedented low level of the Danube, describing the step as preventive and without impact on nuclear safety. Romanian naval forces carried out controlled explosions on the Danube’s Bala canal to redirect water flow toward the plant. In Serbia, output at the Djerdap 1 and 2 hydropower stations has fallen to 20 percent and 30 percent of installed capacity, respectively — facilities that together account for about 18 percent of the country’s electricity production.

For industry, the arithmetic is familiar. Low Rhine levels cut German industrial production by as much as 1.5 percent in 2018, though many firms have since restructured their supply chains, according to the Kiel Institute for the World Economy, and inland shipping’s share of German freight transport has slipped from 4.7 percent in 2017 to 4.1 percent in 2024. BASF, forced to curtail production at its Ludwigshafen complex during the 2018 low-water episode, has since developed alternative transport options that cost more, its chief financial officer said. Utilities including EnBW have built fuel stockpiles during plant outages, while operators are weighing smaller barges, lighter loads and shifting deliveries to rail — options that carry their own costs.

That last point is where American exposure sits. U.S. manufacturers and chemical producers with plants along the Rhine corridor pay the same surcharges as their European competitors, and the freight costs feed into the delivered price of goods moving back across the Atlantic. Refined product flows into the Amsterdam-Rotterdam-Antwerp hub — a market American refiners supply — face a bottleneck at the point where cargo transfers to inland barges. And when several gigawatts of European baseload capacity go dark at once during a heat wave, the resulting scramble for imported power and fuel tightens a market that American exporters already serve.

Drought conditions across central and western Europe have deteriorated in recent weeks, according to European Commission data. One trader summed up the near-term outlook plainly: weekend rain was too light to matter, and with little precipitation forecast against continued heat, the river is expected to fall again.

JBizNews Desk | New York

© JBizNews.com All Rights Reserved. Reproduction or distribution without written permission is prohibited.