By early August, the Rhine barges were carrying only about 20% of their usual loads. The historically low water levels on the Rhine and Danube rivers are disrupting freight transport, jeopardizing certain energy infrastructures and intensifying pressures on various European industrial sectors. Although water levels are expected to stay low in the near term, their effects could persist over the coming months and affect growth in the most vulnerable economies, according to Coface economists.
European rivers, at historically low levels
For several months, Europe has been experiencing exceptionally warm and dry conditions, which have significantly reduced the flow of numerous rivers. The consequences are particularly visible on the Rhine and Danube, two strategic waterways for transport and economic activity across the continent. The Rhine water level reached a new historical low in early August at the Kaub measuring station (Germany), dropping to barely 8 cm, well below the 78 cm threshold beyond which navigation becomes restricted and, even, below the previous historical minimum of 25 cm recorded in 2018. Likewise, several sections of the Danube in Hungary and Romania also registered unprecedented levels.
Beyond the environmental issue, this situation is already having tangible economic effects. Low water levels directly affect freight transport, the operation of certain energy facilities, and, by extension, the activity of industrial sectors dependent on these infrastructures.
A logistics crisis that threatens supply chains
Although inland waterway transport accounts for only a small share of freight transport in Europe, it plays a strategic role in several Rhine- and Danube-crossing countries (5.4% of freight transport in Germany and up to 19.2% in Romania). In addition, 72% of European inland waterway transport is carried by the Rhine (60%) and the Danube (12%), and the option to switch to other transport modes remains limited: a river barge can carry about 2,000 tonnes of goods, compared with a maximum of 1,500 tonnes for a freight train and only 25 tonnes for a tanker truck.
On the other hand, as Coface economists note, the consequences of low water levels are already evident in both volumes transported and transport costs. In early August, some Rhine barges could carry only about 20% of their usual capacity. In certain Danube stretches, operators have also had to reduce loads, in some cases up to 40% on the Romanian stretch of the river.
During the previous major drought episode, in 2018, the cost of inland water transport rose 2.5 times for dry bulk goods and up to 4.5 times for bulk liquids, as a result of load restrictions and surcharges applied by operators. A reality that could repeat itself with this new climate event.
The energy sector under pressure in Central Europe
The drought’s consequences are not limited to transport. The Danube also plays a crucial role in cooling certain nuclear power plants. In Hungary and Romania, the river’s low levels have already disrupted operations at the Paks and Cernavodă plants, respectively.
These facilities are the sole nuclear energy sources in their countries and account for about 40% of Hungary’s electricity generation and 20.5% of Romania’s. To offset the reduced output, operators must import electricity or rely on gas-fired combined-cycle plants, a costlier option.
While there is no immediate risk of widespread power outages, this situation contributes to higher energy bills and worsens tensions in regional markets. In Romania, for example, imported electricity costs between 2x and 2.5x more than domestically generated power.
In addition, the governments of Hungary and Romania have already taken steps to temporarily curb electricity use among some large industrial consumers to ease the strain on the grid. These reductions particularly affect energy-intensive industries such as automotive, chemical, and metal sectors.
The German chemical sector, on the front line
The German chemical sector, heavily concentrated along the Rhine, is one of the industries most dependent on river transport. BASF’s Ludwigshafen plant illustrates this vulnerability clearly. Located south of the Kaub critical point, it ships roughly 40% of its goods by inland barge. A deeper decline in water levels could trigger further disruptions to connections with major ports such as Amsterdam, Rotterdam, and Antwerp, which are critical to its supply chain.
Indeed, during the last major episode of low water in 2018, Germany’s real GDP growth slowed by between 0.3 and 0.4 percentage points.
This setback comes as the German chemical industry is already weakened by high energy costs and loss of competitiveness, with production down roughly 20% since 2018.
The growing vulnerability of the European economy
In the near term, hydrological forecasts point to only a limited improvement. In the Rhine, the seasonal low-water period typically lasts into autumn, suggesting that disruptions could continue into the coming weeks.
In the longer term, diminished snow cover, glacier retreat, and rising extreme heat waves could make such episodes more frequent in the future. This underscores the need for companies and public authorities to more fully integrate climate risks into their logistics, industrial, and energy strategies. For businesses that rely on inland waterway transport, the challenge is no longer limited to the ad hoc management of a drought episode: it raises questions about diversification of supply chains and their capacity to absorb increasingly frequent climate disruptions.
“Low water levels on the Rhine and Danube show that extreme weather phenomena are no longer just an environmental issue. They are becoming an economic factor capable of simultaneously affecting logistics, energy, and industrial activity. The current situation is even more worrying because it has occurred earlier and with greater intensity than in 2018, in a context of weaker economic growth in Europe,” explains Eve Barré, Coface economist.
