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As Europe deals with the fallout of record summer heat and rivers that have fallen to their lowest levels ever, the bloc's economies face the alarming prospect that this extreme weather has become the norm.

“This summer’s heat and drought were a catastrophe for millions of people and for the economy,” said Greenpeace Germany financial expert Mauricio Vargas. “Even though this natural disaster did not leave behind piles of rubble, the scale of the damage is staggering."

Europe relies on its inland waterways to transport roughly 473 million tonnes of goods each year. The drought that Europe is currently experiencing has driven water levels to record lows at several key chokepoints along the Rhine River, which typically carries 70% of Europe's inland waterway freight annually. As Europe's most important freight river, it serves as an vital artery for petroleum, chemicals, construction materials and other bulk commodities.

When a drought lowers water levels along the Rhine, it reduces the payload of small barges, and large barges can't operate at all. That means that vessels carry less cargo per trip, forcing shippers to switch to rail and trucking networks that lack the capacity to make up the difference.

“To replace one barge, you need between 100 and 200 trucks,” says Dr. Elena Maksimovich, CTO and head of climate data with climate risk consultancy Everloop. “That kind of [extra] capacity simply doesn’t exist.”

The 700-kilometer Rhine corridor that stretches from the Port of Rotterdam in the Netherlands to the German-Swiss border accounts for 40% of Germany's river freight, and just a single month of low water levels can lead to a 1% decline in the country's industrial production, the Kiel Institute for the World Economy estimates. Following this year's historic heat wave, Germany suffered at least €36 billion ($41.7 billion) in economic damage, according to an analysis from Greenpeace, while the German Economic Institute is predicting an 0.4% drop in gross domestic product for the year compared to 2025.

As it stands right now, Maersk is warning that most of the Rhine's inland ports can no longer be reached by barge, while Germany's federal inland shipping coalition is reporting that ships have been able to take on less than a quarter of their usual cargo. German chemical giant Covestro also issued a warning in mid August stating that it can no longer meet certain delivery obligations, given that more than 30% of the company's finished goods depend on inland shipping.

The impacts of Europe's summer drought have extended well beyond freight too. Along the Danube River in Serbia, Romania and Hungary, water levels fell to their lowest point in three decades at the end of July, forcing Hungary and Romania to shut down their river-cooled nuclear reactors for the first time ever. 

Dry conditions have also raised the risk of wildfires and dried out soil on farms, reducing crop yields and directly threatening the bread baskets Europe relies on to produce its food supply. The EU's Joint Research Centre has already lowered its yield forecasts for spring and summer crops, cutting its predictions for grain, maize and sunflowers by up to 7%. In France, maize harvests are expected to fall by 35% compared to 2025, The Guardian reports, while French growers have reported production shortfalls of 25% for zucchini, 35% for lettuce, 40% for peas, 60% for broccoli, and between 50% and 100% for artichokes.

In Spain, cereal harvests are down by nearly half in the Madrid region, while roughly 60% of Italy's farmland is experiencing a mild-to-severe drought that has devastated the country's Po River Basin rice belt. 

What's particularly concerning is that Europe experienced similar droughts in 2018 and 2022, each of which should have been once-in-a-century weather events based on historical standards, Maksimovich notes. Today, a continent that built out its infrastructure around the weather patterns of the past is confronting conditions those systems were never designed to withstand.

“We need to review the entire infrastructure in Europe — for drinking water, irrigation, energy, everything,” Maksimovich says. “What was supposed to happen once in a hundred years is no longer happening once in a hundred years.”

For businesses, the changing landscape of climate change has made it difficult to find tenable short-term workarounds. Alternative routes can certainly soften an isolated disruption to an extent, but companies can't conjure more trucks, rail capacity or suppliers out of thin air. In the meantime, building resilient networks that reflect today's new reality will take years that many businesses don't have. 

“Some brands might simply not recover from this level of disruption, particularly if they depend on a single source,” says Everloop founder and resilience strategist Marina Bradford. “It’s difficult to recover from one climate event before the next one arrives — there are multiple disruptions, and they keep coming."

Source: https://www.supplychainbrain.com/articles/44782-historic-drought-leaves-europes-supply-chains-high-and-dry