CMA CGM lands 50:50 India JV for Nhava Sheva terminal concession
05.08.2022
US importers increasingly seek to reduce contract rates
05.08.2022

Rhine low water levels restrict loads, spark surcharges

Barges on the Rhine are forced to carry significantly reduced loads because of low water levels. Photo credit: Shutterstock.com.

Surcharges and cargo restrictions have been imposed by one of the main barge service providers on the Rhine River as the water falls to critically low levels at key points on the crucial European waterway.

The restrictions on cargo loads are limiting the capacity of river traffic at a time when inland logistics operators serving the ports of Rotterdam and Antwerp are under extreme pressure to clear the congested hubs.

Intermodal service provider Contargo has implemented a low water surcharge of 589 Euro ($600)/TEU and 775 Euro ($790)/FEU as water levels at Kaub upriver from Cologne in Germany are forecast to drop below 50 cm in the next few days.

Water levels at other key passages on the Rhine are also forecast to drop below their “critical points” — Emmerich on the lower Rhine below 30 cm and Duisburg-Ruhrort below 180 cm — with surcharges being levied by Contargo.

“For gauge levels of 80 cm or below in Kaub, 180 cm or below in Duisburg-Ruhrort, and 30 cm or below in Emmerich, we no longer have an obligation to transport,” the barge operator warned customers in an advisory this week.

Hapag-Lloyd spokesperson Hanja Maria Richter told JOC.com Friday that ships on the Rhine could only load 50 percent of their capacity, which affected the carrier’s inland logistics services.

“The available capacity on the river is already low because vessels are transporting bulk shipments of coal and other commodities for Ukraine,” Richter said, adding that Europe’s inland industrial regions relied heavily on the Rhine and Hapag-Lloyd had to find alternative transport solutions via train or road to move freight upriver.

“But everyone is asking for more space on road and rail, which means there is less capacity available for a higher price,” Richter added. Another option for Hapag-Lloyd was to reroute shipments through northern ports such as Hamburg or Bremerhaven that do not rely on the Rhine.

Long periods of low water on the Rhine restrict the loading capacity of barges, because as water levels fall, more tonnage is required to move the same amount of cargo.

“Costs go up substantially because as well as limited capacity use of the vessels usually available, it becomes necessary to charter additional tonnage and this gets more expensive as water levels drop and the market gets tighter,” Contargo noted. “To cover these additional costs, below certain water levels we need to implement so-called low water surcharges.”

The Rhine flows through industrial zones in Switzerland, Germany, and the Netherlands before emptying into the North Sea. While low water is a seasonal issue that occurs during dry summer, this latest restricting of cargo flows comes at a particularly inopportune time.

“Ships can only be loaded with less cargo, which further exacerbates the current supply chain problems,” a spokesperson for Europe’s largest inland port of Duisburg told JOC.com this week. Duisburg is on the Rhine near the German city of Essen.

Smaller barge call sizes

Because of barges’ limited loading capacity in the shallow water, container terminals in the Port of Antwerp-Bruges are allowing the barge services to and from the Rhine to operate with call sizes smaller than the minimum 20 containers. A spokesperson for the port said rail operators were also increasing the frequency of services and using longer trains.

Kuehne + Nagel also said the low water was an issue, with water levels at the Rhine-Main-Danube canal in Bavaria dropping to 161 cm this week.

“With an unloading depth of 161 cm, instead of the minimum 250 cm for Rhine-Main-Danube traffic under normal water levels, the available shipping space is indeed becoming scarce,” a spokesperson for the forwarder said.

DB Schenker also noted that the “particularly low water level” on the Rhine was restricting the available capacity on the river, and the forwarder has booked additional capacity with road and rail operators.

The German Federal Institute for Hydrology expects the Rhine to experience prolonged periods of low water levels in the future because of shrinking glaciers and less snowfall due to climate change.

It is a huge problem for manufacturers. The chaos caused by falling water levels in late 2018 hit German chemicals manufacturers especially hard, with BASF the first company to declare force majeure on the supply of plasticizers from its Ludwigshafen site, not far from Frankfurt. That was followed by similar declarations from several steel makers and other chemical companies, including ThyssenKrupp, Evonik, and Vestolit at the end of October 2018 when the Rhine dropped to a record low of just 25 cm, disrupting all shipping traffic between Cologne and Basel for weeks.

With capacity constrained on the Rhine, the transport alternatives for manufacturers are limited as raw materials comprise dangerous goods that cannot be easily shifted from barge to rail or road, while others must be transported in large bulk shipments.