The water level of the Rhine River, one of the most important inland waterways in Europe for cargo transport, reached over 50 centimeters on October 26, and it is expected to rise to around 70 centimeters in the coming days. This increase in water levels may only serve as a temporary relief for the fuel supply chain in the region.
Details on the Rhine Water Status
In the Kaub area, which is the shallowest part of the Rhine River, the water level reached 56 centimeters late in the afternoon on October 26 and is expected to exceed 70 centimeters by the end of the day. Information released by German authorities indicates that this increase in water level is the first time since September 4 that it has reached this level, and overall, from September 24 to October 10, the water level was often below 10 centimeters, and from October 11 to 22, it was also below 20 centimeters.
Read more: The lending situation of banks in the Eurozone is tightening
Challenges in Fuel Transportation
Despite the recent rise in water levels, market participants believe that this improvement will be temporary. In recent weeks, very low water levels have forced refineries to rely more on truck, rail, and pipeline transportation. Meanwhile, the movement of products remains generally slow.
Refineries in Switzerland are facing particularly serious challenges. Product inventories in the country have significantly decreased, and companies are focusing on securing fuel for distribution stations. The Swiss government issued a permit on October 23 to release diesel inventories to address shortages related to pipeline delivery delays due to heavy rainfall in southern France.
According to the Swiss Federal Office for Economic Supply, "Switzerland's logistical supply chain has been severely impacted by the low water levels of the Rhine River for months. If there is a problem with one of the other transportation methods, it could quickly lead to a bottleneck."
In comparison to Switzerland, Germany has been relatively less affected due to having a larger refinery base and being less vulnerable in terms of supply through the Rhine River. However, water levels still limit maritime transportation. Rail options in Germany are also limited due to the closure of the rail line on the right bank of the Rhine, which is a key route for cargo transport. This line is expected to remain closed until December 12.
S&P Global Energy CERA analyst, Sami Lsaaj, stated: "The situation for refineries along the Rhine has remained generally unchanged in October. The average water level in Kaub this month has reached about 14 centimeters. Crude oil supply is relatively stable, but the main logistical challenge is the discharge of refined products amid high transportation costs due to very limited options."
Lsaaj also added: "These additional costs are likely to be passed through the supply chain and will ultimately place a heavy burden on consumers."
On October 23, the price of ULSD 10 ppm cargo for Northwest Europe was assessed at $1,524.75 per ton and for Mediterranean cargo at $1,518.50 per ton. For comparison, the average price of ULSD 10 ppm cargo in Northwest Europe in September was $1,503.63 per ton and in August was $1,290.63 per ton.
Transportation costs from the Amsterdam-Rotterdam-Antwerp hub to Basel, Switzerland, have remained at €255 per ton (equivalent to $285.27 per ton) since October 8.
Read more: Natural gas prices in Europe decrease amid rising supply concerns · Baltic dry freight index drops to its lowest weekly level
