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Drought disrupts shipping on the Rhine river

business-articlesDrought disrupts shipping on the Rhine river
Amid one of the worst droughts in European history, water levels on the Rhine – a crucial trade artery for Europe – are dropping dangerously low.

Europe is in the midst of what scientists say could be the worst drought in 500 years. After an unusually dry winter and spring, successive heatwaves have hit the continent, sparking fierce wildfires and drying up key waterways.

One river drastically effected by the drought is the Rhine, a vital shipping route through Germany’s industrial heartlands and on to global export terminals in the North Sea.

As the water levels drop, cargo ships are having to carry reduced loads in order not to run aground. This means freight companies need more ships to carry the same amount of cargo, which could in turn push up costs and further add to already eye-watering levels of inflation.

The drought is the latest in a series of supply shocks that have hammered Germany’s economy and caused snarl-ups around the world. The coronavirus pandemic, Russia’s invasion of Ukraine, and China’s zero-Covid policy have all caused significant disruption for Germany – traditionally the continent’s industrial powerhouse.

Reduced shipping capacity could have knock-on effects beyond inflation. Shortages of coal – traditionally transported along the Rhine – could dent activity at Germany’s coal power plants, which are being fired up again as Russia chokes off gas supplies to Europe.

Economists believe the disruption could shave half a percentage point off Europe’s largest economy this year, adding to the significant losses Germany is already expected to suffer.

There are hopes that rainfall could soon replenish the Rhine, as well as Europe’s other waterways. But rainfall following drought can lead to flash floods, which could cause other kinds of disruption.

Furthermore, analysts fear that such extreme weather events may become more frequent as climate change intensifies. These concerns pile further pressure on governments and industry to accelerate their actions on climate policy and prepare for similar events in the future.
Currencies Direct

Currencies Direct

Currencies Direct is one of Europe's leading non-bank providers of currency exchange and international payment services. Since we were formed in 1996, we've maintained our focus on providing innovative foreign exchange and international currency transfer services to corporations of all sizes, online sellers and private individuals. We have also expanded our services to provide dynamic and pioneering "business to business" solutions to help companies, tier 2/3 banks and other non-bank financial institutions to process their international payments. Our headquarters are in the City of London (United Kingdom) and we have operations in continental Europe, Africa, Asia, and the United States. Currencies Direct is jointly owned by private equity firms Palamon Capital Partners and Corsair Capital.

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