UNPRF - Shipping crisis on the Rhine as water levels fall in Germany

An economic slowdown in Germany is more likely than ever as a crisis on the Rhine River poses a headache for shipping and heavy industry. Levels at Kaub, a key point on the waterway west of Frankfurt, are poised to breach 40 centimeters (15.75 inches) on Friday, and will continue to dwindle in navigability in the coming days. Below that marker, it's not economical for many barges to transit the river, which is used to ship everything from oil & gas and coal to chemicals and grain.

What happened? Weeks of dry weather have weighed on Europe's major waterway, with shallow depths preventing barges from loading their full volumes. The effects could ripple through the continent for months, just as the region is on the brink of recession from the war in Ukraine and untamed inflation. Economists estimate the Rhine disruption could knock half a percentage point off Germany's growth this year, adding to the significant price pressures seen in many Western European countries.

"We're expecting this situation to continue towards the end of the year," noted Toril Bosoni, head of the IEA's oil market division, adding that the situation could be more precarious for landlocked countries in central and eastern Europe that normally get energy deliveries via the Rhine.

Making preparations: Chemical maker BASF ( OTCQX:BASFY ) hasn't ruled out production cuts as it placed orders for shallow-water barges and uses more rail to transport goods. Utility Uniper ( OTC:UNPPY ) also warned that it cannot bring enough coal by train to run its plants at full capacity for an extended period of time, threatening output at Germany' coal-fired power stations. Crisis teams at steelmaker Thyssenkrupp ( OTCPK:TKAMY ) are also meeting daily as it uses ships with lower drafts to keep up supplies.

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