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Current Rhine River water levels could permanently disrupt shipping routes

Everstream Team | October 1, 2022

Extreme water fluctuations at Europe’s most critical waterway have become a recurring challenge for those relying on river transportation for raw materials or final products. This challenge is mainly fueled by increasingly unpredictable weather patterns that include prolonged periods of heavy rainfall, dry conditions leading to drought as well as the continuous melting of glaciers in the Alps that feed into the river.   

Record low water levels threaten Rhine River shipping 

Ongoing drought and heatwaves across western Europe have been causing significant reductions in water levels on rivers that are important for transport and manufacturing in the region including the Danube River and the Rhine River. Among other countries, Germany has been negatively affected by the lack of rainfalls which has caused a severe drop in water levels on important barge routes – including the section of the Rhine River stretching from the Amsterdam-Rotterdam-Antwerp region through Germany to Switzerland – which has disrupted cargo shipping continuity and manufacturing along parts of the river.  

According to forecasts, low water levels are likely to persist. Drought and river conditions continue to negatively impact logistics and manufacturing operations along barge routes in the region. 

Five year comparative water Rhine River water levels
Figure 1: Historic water levels at Kaub gauge from 2017 – 2022. 

The situation was further exacerbated in mid-August 2022 by a cargo vessel with a damaged engine that blocked the Middle Rhine between Sankt Goar and Oberwesel from the evening of August 16, which resulted in the suspension of shipping traffic on this part of the river while authorities worked to free the vessel. The vessel was successfully removed as of August 18 and the consequent backlog of over 20 vessels being stranded on the Middle Rhine has begun to ease.  

Low Rhine water levels deepen energy crisis 

As the energy crisis continues across the continent, energy supplies have been affected by the falling river levels in several ways. Coal shipments to the Datteln and Staudinger coal-fired power plants in Germany have been disrupted, forcing the operator, Uniper SE, to warn of irregular production at both plants through September. Energy supply from other plants along the riverbanks could also be disrupted as many plants use the river water for essential cooling processes. Low water levels and higher water temperatures of the Loire, Rhone, and Garonne rivers already disrupted operations at several nuclear power plants in France this summer, including at the Belleville-sur-Loire, Dampierre-en-Burly, Saint-Laurent-des-Eaux, and Chinon plants, which further underlines the risk power plants along the Rhine face as temperatures remain uncommonly high in many parts of Europe.  

Loss of river capacity impacts air, rail, and truck transport  

Companies in petrochemicals, minerals, steelmaking, and agricultural products rely on river transportation to move products throughout Europe, and barge traffic on the Rhine River also supplies finished components to manufacturers located along the river in addition to raw materials. Consequently, if water levels remain critically low for a longer period, production disruptions and reductions are expected to occur at a wide range of manufacturers. For example, on August 18, Shell announced that production rates had to be reduced at its refinery in Cologne due to the transport of goods being impacted by low water levels on the Rhine River.  

BASF SE, one of the world’s biggest chemicals manufacturers, and ThyssenKrupp AG, one of the world’s largest steel producers, have also warned that they may be forced to cut production amid disruptions to shipping traffic. In 2018, low water levels and a subsequent lack of cooling water from the river forced several steel and chemicals manufacturers, including BASF SE, Ineos Group, Solvay S.A., and ArcelorMittal S.A. to declare force majeure on some of their products, a scenario that cannot be ruled out in 2022 if water levels continue to stay below critical thresholds.  

Many companies will likely start turning to rail and truck transport to deliver goods if the low water levels persist, but the influx of additional cargo could cause delays and bottlenecks across the region and could lead to notable price increases for rail and road transport. Rail capacity for manufactured goods could also be further reduced by new regulations being considered by German authorities to give priority to the transportation of materials and equipment essential for energy production on the country’s rail network while river shipping disruptions linger. 

Air freight could also see impacts as shipping traffic on the Rhine River remains curtailed. Fuel transportation to Frankfurt International Airport has already been reduced as Lufthansa announced a significant reduction in jet fuel deliveries transported via barge with the airport only able to receive fuel through the NATO and RMR pipelines. Similarly, jet fuel is usually carried by barges to international airports in Amsterdam and Zurich. While no shortages have been reported at Dutch airports, the Swiss strategic reserve Carbura has already released jet fuel from stocks to alleviate any shortage.  

Historical water levels are shrinking over time 

From mid-April 2021, water levels of the Rhine River began to drop to critical levels, disrupting shipping operations on the stretch from Koblenz to Rotterdam.  

On May 3, 2021, water levels at Kaub, one of the Rhine’s narrowest points south of Cologne, dropped to around 135 cm, a level forcing shipping lines to impose low-water surcharges on shipments. This increased costs for river-dependent industries such as chemicals, metallurgy, and energy that move raw materials between terminals and suppliers from the Netherlands all the way to Switzerland.  

On August 12, 2021, a waterline level of 38 centimeters was reported at the Kaub gauge, which was below the 40 centimeters needed for larger and heavier vessels to safely navigate the river. While the waterway officially remained open for shipping traffic, carriers opted to run routes with partially loaded vessels to account for falling water levels, raising questions about the economic feasibility of continued shipping operations on the Rhine  

As a result of the low water levels, logistics service provider Contargo GmbH announced the suspension of operations on the middle and upper Rhine citing unsafe operating conditions. The suspension continued while water levels remained under the minimum 40 centimeters in 2021. Maersk A/S, one of the largest vessel operators in the world, confirmed that barge transportation became temporarily impossible to and from many locations in 2021due to the extremely low water levels.  

Shippers prepare for surcharges as Rhine River levels near critical lows 

Fluctuating water levels pose an ongoing threat to barge operators and manufacturers relying on river shipping as they can reduce the transportation capacity of ships, which requires companies to organize more costly alternative modes of transportation, such as road and rail, for large volumes of cargo. When water levels on the Rhine River fall below 135 cm, ships are only able to load as much as 50% of their usual capacity to avoid running aground. 

Due to the falling levels in 2022, Hapag-Lloyd announced on April 26 that it would impose low-water surcharges for both import and export shipments with immediate effect. The additional charges were calculated depending on the water level: When water levels stand between 131-150 cm, surcharges of 30 for a 20-feet container and 40 for a 40-feet container apply, and shipping can no longer be guaranteed if water levels at Kaub fall below 81 cm.  

Table 1: Water levels at Kaub 

Centimeter  20-foot container  40-foot container 
150 – 131  30  €40 
130 – 111  45  60 
110 – 101  60  75 
100 – 91  75  100 
90 – 81  100  135 

High water levels also pose shipping challenges  

While water levels reached dangerously low levels over the past two years, the opposite threat of high-water levels caused shipping traffic to be halted in January and February 2021, highlighting the increasing volatility of water throughput on the Rhine and higher risk of disruption for shippers.   

In February 2021, the banks of the Rhine River burst due to increased rainfall and snowmelt in the Alps, with water levels rising above Flood Stage 2, causing river shipping to be suspended at several sections between Karlsruhe and Koblenz.  

Low Rhine River water levels at Kaub from November through February 2021

Figure 2: Rhine River water levels from November 2020 to February 2021.  

Between November 2020 and February 2021, water levels had already experienced extreme volatility, with low levels threatening to disrupt shipping at the beginning of December 2020 and in mid-January 2021, before rapidly rising to surpass Flood Stage 1 in early February and then Flood Stage 2 in mid-February.  

In recent years, logistics and manufacturing operations relying on the Rhine River have increasingly faced shipping capacity reductions that disrupted both inbound raw material and outbound product delivery flows for companies located along the river. In 2018, water levels dropped to a record low of 25 cm, suspending shipping operations and forcing steel and chemical companies including Solvay, BASF, Ineos, and Arcelor Mittal to declare force majeure — a clause that allows companies to not fulfill their contractual obligations due to an event beyond their control — for an average of 2 ½ months. This subsequently caused ripple effects through downstream manufacturing supply chains relying on chemical and steel products, causing capacity crunches, and raising costs for a variety of raw materials and products.   

Outlook and recommendations 

With global river water level changes becoming more frequent, companies are advised to constantly monitor critical water gauges along the Rhine River to anticipate any disruptive trends.  

In the long term, organizations should consider increasing storage capacity for critical raw materials on site and/or secure space on alternative modes of transportation such as trucking, rail, or modified ships. Chemical producer BASF SE, for instance, has increased its use of special barges which can continue to navigate even during periods of very low water on the Rhine River. Such measures can help mitigate the effects of fluctuating water levels.  

Learn more about how low river levels and drought affect global supply chains

 

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