FRANKFURT • Mr Kevin Kilps' car ferry churns the waters of Germany's Rhine river as he steers towards the bank opposite Kaub, a scenic village just south of the rocky outcropping named after the legendary siren Lorelei.
It's typically a busy stretch of waterway. On a normal day, the commuter ferry vies for space with cargo barges shuttling supplies to factories in the south and German goods to ports on the North Sea as well as tourist boats heading for nearby mediaeval castles and vineyards.
After a prolonged summer drought, the bustling traffic at one of the shallowest points on the Rhine ground to a halt for nearly a month late last year, choking off a critical transport artery. The impact dampened Germany's industrial machine, slowing economic growth in the third and fourth quarters.
It was the latest sign of how even advanced industrial economies are increasingly fighting the effects of global warming.
"You can see the water levels are lower each year," said Mr Kilps, who added extra flotation equipment to the 150-tonne boat to enable it to cross the river again. "It's scary to watch the climate change."
With its source high in the Swiss Alps, the Rhine - Europe's most important river - snakes approximately 1,290km through the industrial zones of Switzerland, Germany and the Netherlands before emptying into the sea at Rotterdam, Europe's busiest port. It serves as a key conduit for manufacturers such as Daimler AG, Robert Bosch GmbH and Bayer AG.
When low water halted shipping this summer, steelmaker Thyssenkrupp AG was forced to delay shipments to customers such as automaker Volkswagen AG.
Constraints on the Rhine cost BASF SE around €250 million (S$386.6 million) by pushing the chemical maker to use more expensive transport options. In a recent newspaper interview, BASF chief executive officer Martin Brudermueller called for major infrastructure investments such as locks and dams that can release water to ensure shipping lanes remain open.
"We have already seen the effects on national economic growth," said Mr Oliver Rakau, chief German economist at Oxford Economics. "The problem is related to global warming and can happen again."
The river is fed by glaciers and rain. But alpine ice flows shrank 28 per cent between 1973 and 2010 - the date of the most recent in-depth study by the Swiss government - and that decline may be as much as 35 per cent now, according to Dr Wilfried Hagg, glacier expert at Munich University.
"The Alps are warming at an even faster rate as snow and ice melts," he said. "A warming climate means that incidents like low river levels are more likely to occur."
Water depths, which hit 12-year lows at Kaub for most of the second half of last year, hobbled barge flows for months. The boats, which typically haul more than 18,000 barrels of diesel each, were prevented from loading at full capacity until late last month. Fluctuating water levels continued to affect cargo activity this month, according to Riverlake Barging, a Rotterdam-based broker.
Fuel pumps at some gas stations in Baden-Wuerttemberg ran dry this summer because of supply problems, which led to the release of emergency stockpiles in Switzerland and Germany. Natural gas prices in Europe jumped 13 per cent in November, when utilities boosted output at gas-fired generators as they struggled to get supplies for coal plants.
Even with Germany's extensive road and train networks, the Rhine is hard to beat. Barges can carry more than five times their own weight, making them cheap to operate. Shipping from Rotterdam to Basel costs around 40 per cent less than rail transport, according to the German Federal Institute of Hydrology.
To thwart future transport-related disruptions to the economy, Chancellor Angela Merkel's government is mulling measures such as permanently easing Sunday restrictions on truck traffic in Rhine states, lightening loads on barges and improving freight train connections.
BLOOMBERG
