Europe’s Worst Heat Wave and Drought Dry Up Key Trade Arteries

Rhine and Danube Drop to Record Low Water Levels

Nuclear Plants Curbed by Shortage of Cooling Water

Cargo Loads Shrink, Sending Freight Rates Up Threefold

A severe drought across Europe is hitting power generation and logistics as well as crop production. Lower river levels are disrupting nuclear plant operations and cargo shipping on inland waterways. At inland factories, rising transport costs have even created a “low-water premium” that is pushing up raw-material prices.

Reuters reported that Hungarian Prime Minister Peter Magyar said on August 2 that the Paks nuclear power plant would halt operations the next day for the first time in 44 years. He called the next five days critical. Magyar said output at the plant had fallen to 240 megawatt-hours on the morning of August 2 from 2,000 megawatt-hours previously, and urged people to reduce electricity use between 5 p.m. and 10 p.m.

The Paks plant, which accounts for about 40% of Hungary’s electricity generation, uses water from the Danube River for cooling. As the Danube has fallen to a record low, its four reactors have been shutting down in sequence since July 29.

Hydropower plants on the Danube are also at risk of stopping operations. Serbian Energy Minister Dubravka Handanovic told local media that output at the Djerdap 1 and 2 hydropower plants had fallen to 20% and 30% of installed capacity, respectively. The two facilities account for about 18% of Serbia’s electricity production.

The Danube, which rises in Germany and flows to the Black Sea, has been setting fresh record lows amid the drought. Water levels measured at a Budapest monitoring station on July 29 stood at 23 centimeters, 10 centimeters below the previous record of 33 centimeters.

In Western Europe, the drought has slammed logistics networks. The navigable depth at Kaub in Germany, the Rhine’s main bottleneck, fell to 25 centimeters on July 31, near the record low set in 2018. With water levels down, cargo vessels are sailing with only about 20% of normal loads. Some ships can carry as little as 250 tons while passing through Kaub. Cargo volumes moving between Rotterdam, Europe’s largest port, and the Rhine are about 10% below normal.

The drop in cargo capacity is driving up freight rates. Shipping costs for a tanker barge traveling from Rotterdam in the Netherlands to Karlsruhe in Germany jumped to 150 euros to 155 euros a ton on July 31 from 45 euros a ton at the end of June. The Kiel Institute for the World Economy said the Rhine drought could shave 0.1 to 0.2 percentage point off Germany’s third-quarter gross domestic product growth. The Rhine serves as a logistics artery carrying raw materials to industrial cities along its basin, from Cologne in the northwest to Stuttgart in the southwest.

Kim Ju-wan, Hankyung.com reporter, kjwan@hankyung.com