Refined-product freight rates rise as Rhine water level falls

01 November 2010 15:26  [Source: ICIS news]

LONDON (ICIS)--Low water levels on Europe's Rhine river have caused an increase in gasoil and fuel oil freight rates, market sources said on Monday.

Participants from the gasoil and fuel oil markets in Germany, Belgium and the Netherlands said water levels had been declining since early October.

The water level near Cologne, Germany, which was 3m one month ago, had since fallen to below 2m.

Freight rates have nearly doubled since early October, from around €3-4/tonne ($4.17-5.56/tonne) to more than €6/tonne. This is because barges are being forced to carry lighter loads as a result of the lower water levels.

The area around Frankfurt, Germany, had not been significantly affected, according to the sources, but there were said to be greater difficulties further south around the Mannheim region.

It was said that sellers at many ports along the Rhine were attempting to ensure that deliveries were dispatched as efficiently as possible in case the situation worsens.

Any threat to supply would drive up the cost of products as well as freight charges, sources said.

Despite the difficulties, diminished water levels on the Rhine are a regular occurrence and the current situation was not thought to be serious.

Market participants contacted were not aware of vessels ever having been fully stranded. Lightening barges by transferring material to other vessels helps to avoid this.

Rain was not expected in the affected regions for the next few days.

($1 = €0.72)

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By: Jo Pitches
+44 208 652 3214

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