Rhine low water drives freight costs up in Germany

Low water on the Rhine is restricting cargo traffic through Germany’s industrial heartland, raising freight costs and adding pressure on companies already facing high energy costs, global competition and US tariffs.

The river passes steelworks, car factories, chemical plants and major ports, and handles around 80 percent of Germany’s inland waterway traffic, according to ING economist Rico Luman. About 285 million tonnes of goods travel on the Rhine each year, linking German industrial hubs with the Dutch port of Rotterdam.

Duisburg port, in the Ruhr steel region, says vessel loading capacities have fallen to about one-third of their usual levels. It says lower loads have increased port calls by 50 to 60 percent in recent weeks and pushed more cargo toward smaller vessels, rail and road transport.

In the oil sector, loads are sometimes capped at 300 to 400 tonnes for 110-metre tanker barges. Dutch firm Insights Global said shipping rates for petroleum products between Karlsruhe and the ports of Amsterdam, Rotterdam and Antwerp reached 200 euros per tonne this month, above the previous record of 130 euros in August 2022.

Transport Minister Steffen Bilger plans to meet industrial executives, shipping companies and port bosses in Bonn on Thursday to discuss practical responses. Michael Ebling, economy minister for Rhineland-Palatinate state, has urged the federal government to speed up a project to deepen a key stretch of the Rhine.

Thyssenkrupp and BASF are using shallow-draft ships to keep cargo moving. Covestro said Rhine disruptions are already affecting supply and production at some sites, while Lanxess described the situation as very difficult. Shell said it is using more storage capacity and trying to divert some shipments to rail, road or pipelines.

ING economist Carsten Brzeski said a 2018 drought shaved an estimated 0.3 percentage points off German growth and said the impact could be more pronounced this year. He said Rhine water levels are already at unprecedented lows this week, although the lowest levels usually come in September or October.