Cruising down the beautiful Upper Middle Rhine Valley it’s easy to miss. But a strange building displaying three numbers on it apparently can let river traffic grind to a halt. Pegel Kaub measures the water level at the shallowest part of the waterway, behind which lots of industry is located. When water levels drop to a critical point, as they did in 2018 and 2022, boats can carry smaller loads and at some point they can’t pass at all. This has some major implications for the German economy, and thus for practically every other European economy as well.
Due to climate change, low water levels become increasingly common. The supply of water in the summer and the fall diminishes because glaciers in the alps are melting away. Also, rainless periods occur more often and have a longer duration. To cushion the economic impact, adaption measures are need but that comes at a huge cost. If only we listened to… no let’s not go that way. Let’s have a look at some inland shipping economics.
From Basel to Kaub to Rotterdam
The Rhine has been an economic lifeline for millennia. From the Romans that used it as their frontier, to the powerful medieval cities of Cologne, Utrecht and Basel, to the current industrial clusters around the Ruhr, Basel and Rotterdam. The Rhine is easily the most important inland waterway in Europe and ranks third in the world as measured by tonnes transported, after the Yangtze and the Mississippi, despite being much shorter in length.
Around Kaub, the Rhine is shallowest and therefore the water level is crucial for the shipping industry. The number we see displayed on pegel Kaub, 143, is not the actual water depth. The baseline is positioned a little above the riverbed, so 112 centimetres need to be added to the 143 on the pegel. Too keep things easy, the rest of this blog refers to the pegel-level so not the actual water level.
Evaporating shipping
When the water level drops too low it becomes harder to transport containers up and down the river. Shipping company Contargo quotes prices depending on the water level at Kaub. The ideal pegel-level, when vessels can work at full capacity is about 250-260 centimetres. When it drops to 135 centimetres, capacity is reduced by half and at 75 centimetres vessels can only carry a quarter of their capacity. Prices are adjusted accordingly. The low water surcharges down from a pegel-level of 150 centimetres are shown in the two tables below.
Level Kaub Rhine-km 546.3 | Low water surcharge per 20′ fully loaded container | Low water surcharge per 40′ fully loaded container |
150 – 131 cm | €40.00 | €50.00 |
130 – 111 cm | €55.00 | €75.00 |
110 – 101 cm | €75.00 | €90.00 |
100 – 91 cm | €90.00 | €145.00 |
90 – 81 cm | €120.00 | €165.00 |
80 cm and below | Free agreement (see next table) |
Level Kaub Rhine-km 546.3 | Low water surcharge per 20′ fully loaded container | Low water surcharge per 40′ fully loaded container |
80 – 71 cm | € 201 | € 259 |
70 – 61 cm | € 283 | € 354 |
60 – 51 cm | € 387 | € 514 |
50 – 41 cm | € 589 | € 775 |
40 – 31 cm | € 975 | € 1.300 |
The tables show the surcharge but nog the absolute level. To provide an idea of the relative impact on absolute prices, a liquid container barge (not the types in the table) cost around € 20 in June ’22 before the pegel-level fell below 150 centimetres. On the 3rd of august, the level dropped to 61 centimetres and the price rose to € 87. One week later the price increased to € 110. The pegel showed a level of 48 centimetres by then and would drop further to 33 centimetres still one week further down the line. But shortly after, the water levels increased significantly as can be seen in the graph below. The graph also shows that in 2018 water levels were even lower and the duration was much longer.
Graph: Water levels at pegel Kaub in 2018, 2022 and 2023
The impact on industrial production
Now, it shouldn’t come as a surprise that low water levels have a huge economic impact. The renowned Institute für Weltwirtshaft researched the economic impact of low water levels on the Rhine. They found that in a month with 30 days of low water, the industrial production of Germany decreased by about 1%. Low water is defined in the paper as a pegel Kaub-level of 78 centimetres.
As industrial production accounts for about a quarter of total German GDP, a full month of low water means 0,25% lower GDP in that month. The researchers estimate that in November 2018, GDP was at least 0,4% lower than it would have been without low water. For November ‘18 that means around € 1 billion. So over the full year of 2018 we are talking about multiple billions. And that’s Germany alone. France, Switzerland and the Netherlands are directly affected too. On top of that, lower industrial production in Germany has spillover effects to other countries too.
Adaptation measures to counter the effect of low water include a transfer from river to road and rail transport, increasing storage capacity, adapting vessel designs and improving the waterway. But none of them comes for free. The federal Transport minister Volker Wissing proposed a plan to deepen the Rhine at a cost of € 180 million. His argument? It is the most cost-effective way.
What will happen this year
When I drove past Kaub last Friday it indicated a pegel-level of 143 centimetres, meaning that shipping companies were already asking for a low water surcharge. In the past two days it has dropped further to 135. Now I know all this, I’m going to regularly check up on it the rest of this summer. How many billions of € is climate change going to cost us this year?