Importers and exporters in the United States have been most attuned to supply chain delays that they can see or immediately experience, like port congestion in Southern California and now in places like Savannah and New York or COVID-driven closures at factories from or to which they are buying or shipping.
The deluge which struck Dallas over the past several days notwithstanding, extreme summer heat and droughts have caused critical low water worldwide—or even worse no water, on navigable waterways in Europe and Asia which operate critical barge services for containerized cargo to and from ports in China and northern Europe.
With temperatures climbing above 40 degrees Celsius (104 degrees Fahrenheit), these record-breaking heat waves have all but dried up rivers in key parts of the supply chain.
EUROPEAN RIVER ISSUES AND ENERGY IMPACTS
These low water events have pushed container traffic in Europe to roads at a time when diesel prices are experiencing record highs and port warehouses are already full to overflowing with no place to put goods to be loaded into or devanned from containers. The demand for trucking in Europe has correspondingly pushed trucking rates even higher and covering established, contracted loads.
The upper and middle areas of the Rhine River have been closed off to navigation, as the levels dropped well below operating level to 32 cm on the Kaub gauge. The level necessary to operate is 41 cm for reduced loads, and though many barges were running at 20% capacity, the river was still too low to continue operations.
With the war in Ukraine, low water levels are adding to the energy crisis that the closing of the Rhine River could make worse by discontinuing 400,000 barrels per day of oil-product trade, effectively cutting off Ukraine to energy and coal supplies. With Russia already in control of gas pipelines, it could spell disaster for the country.
Even France’s Loire River is suffering in this heat, causing “pumping difficulties for irrigators and risking environmental degradation.”
CHINA HEAT CRIMPS TRANSPORT, MANUFACTURING
Closed rivers have shut down hydro power in China. In order to prevent the grid from failing, China’s government has prioritized energy supply to homes over businesses. This is having an impact on both finished goods and components for further manufacturing like semiconductors. These high-tech factories are also not just able to turn off a switch and turn it back on to resume manufacturing. Much of the equipment is high-precision equipment that must be recalibrated and tested before resuming production. The shuttering of those chip plants will worsen the chip shortage, negatively impacting Tier 2 and Tier 3 automotive suppliers.
In China, certain districts hit a record of 45 degrees Celsius (113 degrees Fahrenheit), causing parts of the Yangtze River to dry up. Officials stated they would be taking several measures to aid in relief of these conditions, such as financial aid, cloud seeding, and shutdowns of energy-intensive industries, and according to the Washington Post, the latter of which may cause more supply chain crunches as companies that make the products can’t produce. The Finance Ministry has also pledged to allocate approximately $44 million in disaster relief to the affected areas.
As the world’s largest emitter of carbon dioxide, China has been warned by experts for years that they would face extreme weather events due to their carbon emissions, but while Beijing has depicted its policies as tackling climate change, it has also continued with the course of coal-fired power plants. These places also add to the carbon, mercury, and other harmful emissions contributing to climate change.
TOC LOGISTICS REMAINS COMMITTED TO FINDING SOLUTIONS IN THE FACE OF THIS CLIMATE-DRIVEN CRISIS
Until such time as the heat subsides and rain falls, the supply chain will continue to be impeded at key and vulnerable points. We are working continuously with our partners in Europe and China to find alternatives to waterborne transport of cargo from inland points to ports of export. The fact that these rivers play such a critical and dominant role in the ways that goods get to ports of export mean viable alternatives are fewer in number but do exist.
TOC Logistics will continue to keep you informed with updates to the situation as it unfolds and push for more permanent workarounds to these supply chain crunches. If you have further, more specific questions, please contact your TOC Logistics representative today.