Rhine drought strands ships and forces German production shutdowns

{"text":[[{"start":9.34,"text":"Water levels on the Rhine have dropped to near the lowest in eight years due to extreme heat and drought in Europe, disrupting the flow of goods and causing manufacturers to cut production."}],[{"start":20.02,"text":"The benchmark level of Germany’s most important inland trade corridor has nearly fallen to 25 centimetres in recent days, close to a record low recorded in 2018."}],[{"start":30.8,"text":"The drought means that vessels can carry significantly less cargo along the Rhine, requiring more ships to transport the same volume and making it more expensive, the latest example of the economic costs of extreme heat in western Europe."}],[{"start":44.84,"text":"The longer shipping is restricted, the more the strain increases, Marc Schattenberg, an economist at Deutsche Bank, said. “The volumes that would have to be shifted are so large that replacing them by rail or road would be difficult, especially as some important connections are currently undergoing construction work,” he said."}],[{"start":63.2,"text":"In Germany, temperatures reached towards 40C again this week after a record-breaking June heatwave. The low-water period started “unusually early” this year, according to the Federal Waterways and Shipping Administration."}],[{"start":76.24,"text":"Last month was the hottest June on record on the fastest-warming continent as a result of climate change."}],[{"start":null,"text":""}],[{"start":82.12,"text":"Some economists have warned that disruption due to low water levels could shave as much as 0.2 percentage points off German growth."}],[{"start":90.4,"text":"German chemical companies, such as BASF, Covestro and Evonik, have plants concentrated along the banks of the river and are particularly exposed to further disruption."}],[{"start":99.88,"text":"BASF said there could be disruptions to supply from its plant in Ludwigshafen if water levels continued to sink, though it had options to deploy specialised ships or switch cargo volumes to other means of transport."}],[{"start":113.24,"text":"Chief executive Markus Kamieth told analysts this week that it would “not be wise to exclude that there will be force majeure announcements or . . . product shortages in certain cases”. He noted that acute supply shortages of individual raw materials could have “ripple effects” in production at complex chemical plants."}],[{"start":130.92,"text":"Still, BASF said it was better equipped than during a previous dry period in 2018 when it suffered a €250mn hit to its operating profit as it was forced to scale back production."}],[{"start":140.02,"text":"Covestro said it had built up raw material stocks “several weeks ago” to maintain production, and had also switched to vessels with a lower draft which do not sink as low into the water."}],[{"start":153.32,"text":"The measures “entailed higher costs” for Covestro, as the volumes carried by each ship were reduced, the number of trips was increased and therefore more fuel was used, the company said."}],[{"start":164.28,"text":"Germany’s economic affairs ministry said businesses had already adapted to the risk by holding larger inventories, adding storage locations and using a wider range of transport routes. “The negative effects are therefore likely to be less severe overall than in previous years,” it said."}],[{"start":null,"text":"

"}],[{"start":180.64,"text":"Heavy industry located on or near the Rhine is facing complications shifting materials via inland waterways. Thyssenkrupp was forced to limit hot metal production in Duisburg after facing disrupted delivery of raw materials, but said that customer supply was “currently not at risk”."}],[{"start":198.4,"text":"The company has taken its own fleet of barges out of service and chartered vessels capable of navigating shallower waters to ensure supply."}],[{"start":206.36,"text":"The Danube has also fallen to a record low in Hungary, forcing the nuclear power plant which supplies nearly half the country’s electricity to shut down within the next few days, the government said on Thursday. Prime Minister Péter Magyar said the situation was “unprecedented” and asked the population to refrain from using electricity in the peak evening hours."}],[{"start":227,"text":"Romania has also been forced to shut down one of the two reactors of the Cernavodă nuclear power plant, which also takes cooling water from the Danube."}],[{"start":235.52,"text":"Additional reporting by Marton Dunai in Budapest and cartography by Steven Bernard"}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":241,"text":"Where climate change meets business, markets and politics. Explore the FT’s coverage here."}],[{"start":246.32,"text":"Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here"}],[{"start":256.9,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785480499_9407.mp3"}