Europe is facing yet another severe drought. While there is rain in some regions, the thunderstorms accompanying it are causing another kind of damage.
According to European Union’s Global Drought Observatory (GDO) has highlighted that the continuous heatwaves since May and continuous lack of rainfall has increased the risk of ongoing soil dryness.
The GDO is maintaining its position that continuous shrivelling rivers and shrinking water sources will impact energy generation at several power plants and reducing crops supply.
The drought has been affecting many parts of Europe since the start of the year and has been becoming worse since August. Drought hazards warning has been issued for Hungary, Romania, Luxembourg, Ireland, Belgium, the Netherlands, Germany, France, Portgual, Spain and Italy.
About 17 percent of Europe has been issued a red alert. Some rain in the region has helped alleviate drought in some Europe. However, the accompanying thunderstorms have caused damage and losses. Mediterranean regions of the EU should also expect more drought like conditions such as warm and dry conditions.
A major aftermath of this drought is the continent’s rivers are drying up. A very important waypoint between German, Dutch and Swiss economies is The Rhine. It is an important flow of diesel and coal, and it is currently impassable at the moment.
While, The Danube which is another important passage for grain and other trade which connects Europe to the Black Sea is also stuck. Additionally, France’s power crisis is also in a bad state as the waters in Rhone and Garonne are too hot to cool the nuclear reactors.
On top of all these issues, the EU is already facing recession like conditions as Russia’s invasion has caused fuel prices to soar and causing shortages of food and energy supplies. Europe’s rivers and canals transport more than one tonne of freight annual for each EU resident.
The total economic value is estimated to be around 80 Billion US Dollars. The drought is expected to cause losses of 6 Billion Euros. Due to the high costs and increasing difficulties in shipping, the cost of shipping has gone up by 30 percent for one barge.
Despite the higher costs of shipping, shippers are still restricted by the lower water levels, which means that heavy loads will not be possible. In Frankfurt, the river depth is predicted to fall by 40cm, which will prevent barges from sailing.
What would this mean for importers / exporters?
We can expect importers to be stockpiling more and production to be closer to seaport to have more convenience in shipping and energy infrastructure. As rivers become more unreliable due to climate change, business owners will need to find more alternatives and buffers to factor in this.
How are companies coping?
Germany ‘s largest steelmaker has switched to ships with lower drafts to accommodate for lower river levels. While BASF has custom made ships which can pass through Rhine’s low levels. Previously, BASF suffered a loss of 250 million Euros because of the Rhine.
With Trade Data Pro, you will be able to identify all the importers and exporters who are affected by this drought. As an importer, you can search for alternative exporters who are not affected. As an exporter, you will be able to find importers who are affected and fill in the gaps.
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