Water levels on the Rhine River are forecast to drop again in the coming days, threatening to push barge rates even higher and continuing to choke many deliveries of goods to and from Europe's biggest port. The cost of moving diesel and other fuels to Basel in Switzerland from the crucial port of Rotterdam has risen again so far this month, with a respite in October that stemmed from higher water levels proving short-lived. Switzerland was forced this week to release more supplies of jet fuel from reserves, partly blaming the low Rhine and rail service disruptions.
Water levels on the Rhine, a key transportation route connecting European factories with global markets, have hit record lows this year after drought and heat waves. That has for months restricted deliveries inland of goods from coal to grain, with the disruption lasting longer than a previous period of extreme dryness in 2022. Diverting cargoes to rail has also proven more problematic than usual because of maintenance on part of the network near the river.
The river, which snakes hundreds of miles from Switzerland to the North Sea, also carries oil products and iron ore, and is dotted with major chemical plants, refineries and steel factories. Rates for moving diesel from the Rotterdam area to Basel are near a record in data going back to 2018. The barge clearance level at the key Kaub chokepoint is forecast to slump through Nov. 9 to as little as 5 centimeters (2 inches), according to the WSV waterways authority in Germany, compared with a five-year average of over 150 centimeters for that day.
"Kaub remains difficult, with standard barges no longer able to pass that point," said Sebastiaan Kosman, head of data provider Spotbarge. Only low-water barges can pass the chokepoint, he said. Ineos Group this week said it has been forced to cut petrochemicals output this year at its Cologne production site due to low water levels, while energy giant Shell Plc and power generator Steag GmbH have also had output affected.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing