Low Rhine water levels drive up logistics costs for chems, others

LONDON (ICIS)--Low water levels on German rivers, in particular the Rhine, are driving up logistics costs for shippers of chemicals and other commodities, officials said on Thursday.

The low water levels are a result of a lack of rainfall.

“Ship operators on the Rhine have not been able to load their ships to capacity for many weeks,” Florian Krekel, a spokesman for a German inland shipping authority at Bingen, a Rhine town near Koblenz in western Germany, told ICIS.

The Rhine is an important European shipping route for chemicals and other commodities, including minerals, coal and oil products.

Krekel said ship operators are facing much higher costs per tonne, which they will be likely to pass on to their customers in the form of higher freight rates.

If water levels continue to fall, operators will reach a point when it will no longer be commercially viable for them to operate their ships.

Based on current low Rhine water levels, 2,000 tonne double-hull barges are reported to be able to only load around 400–500 tonnes, and 3,000 tonne double-hull barges only around 600–750 tonnes, to upper Rhine destinations

However, Krekel said even at the current low water levels, Rhine shipping is continuing.

Authorities generally do not impose bans on shipping because of low water levels. They only impose bans in the case of higher levels, he said.

The situation will only improve with the resumption of rainfall, Krekel said.

“You tell me when it starts raining again, and I’ll tell you when Rhine water levels will rise,” he added.

At the same time, shippers incur additional costs as they try to secure alternatives through rail and road transport.

Particularly hard hit are the chemical, refining and steel industries, all of which rely on rivers for a good part of their shipments in Germany.

In the chemical industry, inland river shipping is the preferred method of transport for many hazardous goods, such as methanol, acids, fuels and liquefied gases, according to shipping trade group Bundesverband der deutschen Binnenschifffahrt (BDB).

In 2010, 21.2m tonnes of chemical goods were shipped on Germany’s inland waterways, up by 17.4% year on year from 2009, BDB said in its 2010/11 annual report.

According to BDB, many ship operators have agreed surcharges, pegged to river water levels, with their customers, thus allowing them to pass on additional costs.

Methanol industry participants fear that the low water levels could force an end to shipping on a stretch of the Rhine south of Kaub, near Bingen.

Many ferries crossing the Rhine have already stopped operating. Freight shipping on parts of the German stretch of the Danube has also been disrupted.

At Duisburg, a key German inland Rhine port in northwest Germany, water levels this week were reportedly at their lowest November levels in more than 100 years.

Meanwhile, in Switzerland, where the Rhine has its origin, water levels at the Rhine port of Basel were reported at only 1.5m this week, compared with a normal level of 3–4m.

As in Germany, ship operators responded by cutting loads. For the past two weeks, many have been running at only 30–40% of capacity. This drives up costs, which operators struggle to pass on to customers by hiking freight rates.

Switzerland has also seen only a little rain in the past month.

Adding further to logistical problems, a stretch of the river between Bingen and Koblenz will close on Sunday 4 December while a second World War bomb is defused.