Disruptions on one of Europe's most important trade arteries are poised to intensify after the Rhine fell to its lowest level on record. The water level at Kaub, a critical chokepoint for barge navigation in western Germany, dropped to just 15 cm on 11 August, down from 30 cm on 28 July.
Low water levels are already affecting businesses that depend on the waterway for transport. Barges heading from ARA into the Rhine are predominantly discharging at facilities in the lower Rhine. Wood Mackenzie data shows most of the barges are operating at around 25 per cent of their cargo capacity as of 12 August.
The economics of Rhine shipping have deteriorated sharply as a result. Freight rates from Rotterdam to destinations along the river have risen dramatically since mid-June, when water levels began their decline. The cost of moving cargo from Rotterdam to Cologne stood at €80/MT in the week ending 7 August, up from €17/MT in mid-June. Rates to Frankfurt climbed to €150/MT from €29/MT over the same period.
No refinery outages directly attributable to the low water conditions were recorded as of 10 August. However, the combination of reduced barge capacity and elevated freight costs could pressure margins for inland refiners if conditions persist through August and September, historically the driest months for the Rhine basin.
