Low Rhine Water Levels Driven Impaired Shipping to Escalate Petrochemical Feedstock Logistic Costs in Europe
Europe’s Rhine River, which is a prime waterway transport for a major volume of petrochemical feedstocks, is exhibiting low water levels due to the abnormally extended dry weather in the November month making the barges unfit for loading to their full capacity.
The water level at the Kaub gauge station, which is marked as Rhine’s shallowest point, has reached down to 74 cm on Tuesday, decreasing from 88 cm level on November 19. As per the data provided by Rhine Shipping Authority, the water level at 85 cm at the Kaub gauge station can extend a fairway depth of only up to 2 metres. As a consequence of the low water levels in the Rhine, the barges are navigating with only 40-60% of their load-carrying capacity which is compelling the exporters to transport their cargoes in more number trips causing the logistic costs to multiply.
The Rhine River waterway makes for the most suitable mode of transport for the to and fro movements of shipment of petrochemical feedstocks like naphtha, ethylene, styrene etc., between the logistic hubs of the Netherlands and the petrochemical industrial heartlands in Germany.
As per ChemAnalyst, the high logistic costs triggered by the navigation of partially loaded barges is soon expected to create pricing pressure in the European petrochemical market. The high logistic costs amid firm demand for styrene and other feedstocks in the end-user industries are liable to reduce the profit margins of the traders who will be obliged to inflict the added prices on the customers. Furthermore, the export-intensive German producers may have to reduce their international trade of the petrochemicals and their downstream products which will cause their business to falter. Given that the Rhine River transport is exposed to low water level threats, the manufacturing of structurally more robust barges capable of holding more load capacity and navigating at low water levels should be prioritised.