Concerns are growing that persistent low water levels in the Rhine River, Germany’s most crucial inland waterway, could negatively impact the national economy if the situation worsens. Economists warn of potential disruptions to industrial production and supply chains, drawing on historical precedents.
Nils Jannsen, head of the Germany Economic Outlook department at the Kiel Institute for the World Economy (IfW), told the Handelsblatt that a month-long period below critical water levels could dampen industrial output by approximately one percent. He highlighted the significant influence of the Kaub gauge on the volume of goods transported.
Claudia Kemfert, an energy economist at the German Institute for Economic Research (DIW), noted that companies may be forced to reduce or halt production due to shortages of raw materials and the inability to ship finished products.
Deutsche Bank economist Marc Schattenberg elaborated on the logistical challenges, stating that when the Kaub gauge falls to 75 centimeters, large cargo ships can only be loaded with containers to 25 percent of their capacity, requiring an additional four ships to transport the same amount of goods. This translates to longer waiting times and disruptions throughout supply chains for recipients. Currently, the Rhine level stands at 99 centimeters.
While acknowledging the potential for economic impact, Jannsen suggests that the consequences might be less severe than in 2018, when a prolonged period of low water significantly hampered economic activity. This difference is attributed to businesses having adapted their supply chains to be more resilient to lower water levels. Furthermore, a decline in production within the chemical industry, heavily reliant on the Rhine for transport, is expected to mitigate the overall economic effects.
The increasing frequency of longer dry periods, exacerbated by climate change and reduced snowmelt, is contributing to the fluctuating Rhine water levels. While intense rainfall events can lead to flooding, the overall pattern is becoming more unpredictable, posing a challenge to industries dependent on the river for transportation.