Falling river levels in Germany may tank the country’s economy within days.
After weeks of higher temperatures (30-35C*+) with little rain, Bloomberg is reporting that a key waypoint in the Rhine is set to become ‘virtually impassable’ at some point this week. The Rhine runs through the west of Germany, past the industrial powerhouse cities of Cologne, Dusseldorf, and Bonn. Meanwhile, the Danube is also ‘gummed up’ with trade being stymied. Barge rates are thought to have risen by 30% in a single day at one point.
Bloomberg wrote: “While disruptions to waterways would be a challenge at the best of times, the region is already on the brink of recession as Russia’s invasion of Ukraine fuels inflation by squeezing food and energy supplies. The situation — just four years after a historic halt to Rhine shipping — adds urgency to European Union efforts to make inland shipping more resilient.”
It added: “The poor conditions are expected to drag down the region’s economies far worse than the €5bn ($5.1bn) hit caused by Rhine transit issues in 2018, according to Albert Jan Swart, a transportation economist at ABN Amro Bank NV.”
Capital Economics weighed in on the situation yesterday, with an article by Andrew Kenningham, its chief Europe economist.
He said: “The fall in the Rhine’s water level is a small problem for German industry compared to the gas crisis, or indeed the recent shortage of semiconductors. But if it persists until December it could subtract 0.2ppts from GDP in Q3 and Q4 and add a touch to inflation.”
He added: “We know from previous episodes that transport on the Rhine becomes commercially unviable if the river falls below a critical depth at key locations, notably Kaub, near Mainz. Indeed, there have been nine previous occasions since reunification when this has happened, and their frequency has increased over time. (This seems to be partly due to Alpine glaciers shrinking, which reduces the annual meltwater).”
Meanwhile, the main arterial road into Berlin’s southwest was shut down this week, when a fire at an explosives facility owned by the city caused large parts of the Grunewald (forest) to go up in flames. The forest, dry as a bone after weeks with little-to-no rain, subsequently began to burn. The AVUS road, which runs through the forest and into city, was subsequently closed for nearly a week. Firefighters had to remain 1km from the source of the fire in case of further explosions. One imagines they must have had a very powerful fire hose.
