London — Aluminum transportation has been affected by the low water levels on the Rhine and this is likely to continue in the coming weeks, but the impact has not been as severe as for other commodities.
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"Barges can load up to 800 mt sometimes even 500 mt compared to 2,000 mt before," a warehouse source said.
Critically low water levels on the River Rhine, the main European shipping artery, have jeopardized shipments of a wide range of commodities since July.
However, the situation has deteriorated over the last two months, with little signs of recovery over the coming weeks.
"The last couple of months the barge surcharge has increased 80% or more," the warehouse source said.
Primary aluminum and products coming to the port of Rotterdam find their way to key consuming markets of Central Europe via the Rhine, with alternatives to barge shipments being trucks and rail.
Trucks are also experiencing high demand, particularly in Germany, with transportation costs increasing as well as due to tight supply.
"Trucking cost is important but hasn't increased massively, maybe like 10%," a trader said, adding "the cost of barge vs truck per ton however I think it has doubled."
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"Truck cost is up 10%-20% depending on the area," a second trader commented. "South Germany and Ruhr area are more affected," he continued and added that the impact on aluminum logistics had been minimum compared to other commodities like chemicals or diesel.
Truck supply is set to become tighter in the coming years as the European regulation becomes stricter and with fewer young people wanting to work as drivers.
"Delivery delays to customers can be up to three days," the warehouse source said.
Railway demand is also high, with railcars being fully booked for the rest of the year, according to the warehouse source.
"Only if you have long-term contracts you might be able to find extra wagons," the source said.
The second trader disagreed. "I am not saying it's not difficult but we work on spot and we still manage to get wagons."
Most market sources agreed that the situation in Rhine will become worst in the coming weeks due to lack of rainfalls.
According to German Federal Waterways and Shipping Administration, the Rhine water level at the point of Duisburg-Ruhrort was at 191 cm as early Friday , with the agency forecasting a fall to around 170 cm at the beginning of next week.
In mid-October a drop of water levels at Ruhrort at below 170 cm forced steelmaker Thyssenkrupp to declare force majeure.
--Vicky Bakourou, firstname.lastname@example.org
--Edited by Jonathan Dart, email@example.com