1, Europe's dry weather caused river water levels to drop, threatening European shipping;

2. As the water level drops, the capacity of passing ships decreases, transportation costs rise, and Europe's manufacturing output is also a major threat.

3, data show that from May to mid-July, through the Rhine River to a ton of diesel transport to Germany's southwestern port costs doubled.

Caixin News Agency, August 4 (editor Zhou Ziyi) Europe's dry weather not only triggered wildfires and food security risks, but also because the water level dropped, but also threatened the European continent's rivers on the transport.

The Rhine is an important trade route that flows through Germany and through various European cities to the port of Rotterdam. Last week, water levels in the town of Kaub, about 50 miles west of Frankfurt, dropped to their lowest this year.

as the water level drops, the traffic of passing ships decreases, the cost rises, and the price of transportation will also rise. Last month, major international shipping companies such as Maersk and Hapo-Lloyd said that low water levels on the Rhine meant they had to pass on surcharges to customers.

Tim Beckhoff, an expert in procurement and supplier management at consulting services McKinsey, said, "Over the past 20 years or so, the volume of traffic on the Rhine has remained more or less consistent. However since 2021, we have seen a year-on-year decline, which is a trend, and this trend is likely to continue."

goods such as oil, chemicals and grain are transported on the Rhine. In August last year, the water level of the Rhine fell to a very low level, and some waters were even cut off, so that some ships were only carrying the equivalent of 1/4 full load of goods.

Economic Impact

Water level drop on shipping caused by the impact of how to solve? For other means of transportation is an option, but the cost is quite expensive.

Deutsche Bank economist Marc Schattenberg, a large Rhine barge with a length of about 135 meters and a draft of 3 meters can carry about 2700 tons of cargo. According to his calculations, transporting the same goods by road would require about 110 large trucks.

He pointed out that "these figures illustrate the serious (impact) of changing shipping methods, and other vehicles are also operating at high load conditions."

Large quantities of heating oil and diesel are being transported through the Rhine, and shipping costs have increased, putting significant price pressure on these products.

Schattenberg added that from May to mid-July, the cost of transporting a ton of diesel via the Rhine to the southwestern German port of Karlsruhe doubled to about 50 euros (55 dollars).

the ripple effects of falling water levels can be huge. McKinsey's Beckhoff points out that "the entire economy depends on this relatively low-cost mode of transportation."

German research institute, the Kiel Institute for World Economics (IFW), believes that falling water levels will "seriously damage" manufacturing output. In a 2020 report, the IFW said that water levels in the Kaub region fell for 30 days in 2018, resulting in a reduction in the Rhine's water transport by about 25 percent and Germany's industrial output by 1 percent.

Solution

In order to cope with the low water level caused by the potential loss, people put forward other solutions, such as ship transformation, technology investment, widening the channel and so on.

Deutsche Bank's Schattenberg pointed out that due to the low water level's long-term impact, the transportation industry may be affected in many ways, such as allowing ships to adapt to shallower rivers.

in May this year, chemical company BASF launched a ship in partnership with the Stolt tanker. The company said that when the water level in the port of Cobb is low, the ship will have twice the loading capacity of traditional vessels. In Ludwigshafen, on the banks of the Rhine, BASF operates the world's largest chemical plant.

Schattenberg also said, "enterprises may adjust the supply chain and warehousing, when the forecast software investment expansion is conceivable."

McKinsey's Beckhoff also said that many customers are using predictive software to help them move from a cost-and quality-oriented supply chain to a resilient and agility-oriented supply chain. But it takes a while for those investments to pay off.

Beckhoff said, "Those who are really successful are those who 4. 5. six years ago began to pay attention to this problem."

In addition, the Schattenberg also pointed out that "of course, there are also discussions about dredging shipping channels. However, this is costly and may have negative environmental impacts."

Source: China Shipping Network