Persistent drought conditions have driven water levels at the key shipping chokepoint of Kaub on Germany's Rhine River to a historic low this week, dropping approximately one-third further below the previous record set in 2018.

To mitigate the impact of shipping disruptions on industrial supply chains, four major economic regions in western Germany—North Rhine-Westphalia, Lower Saxony, Rhineland-Palatinate, and Saarland—have urgently suspended the Sunday truck ban, permitting freight vehicles to operate on Sundays for the first time in over three years. The state of Baden-Württemberg will also lift the ban starting next Sunday.

Currently, multiple German states enforce a Sunday ban on heavy trucks exceeding 7.5 tonnes, with violations potentially resulting in fines of several thousand euros. While river shipping accounts for only 5% of Germany's total freight transport, the Rhine serves as a vital artery for moving coal, crude oil, minerals, and ores, placing new pressure on Europe's largest economy as water levels fall.

Jens Schwanen, CEO of the German Inland Waterway Shipping Association, has warned that water levels could soon render the entire Rhine unnavigable, effectively splitting the river in two. Data from pricing agency Argus indicates that ferry services at the Kaub section were suspended on Monday evening due to low water, with freight rates rising to their highest level in nearly 15 years.

Carsten Brzeski, global head of macro at ING Group, noted that the Rhine is a piece of industrial infrastructure around which much of Germany's industry is built. The group has warned that Rhine shipping disruptions could trim as much as 0.3 percentage points from Germany's GDP growth this year, roughly half of the 0.5% economic growth rate forecast by the Bundesbank for 2026.

Several German companies have begun implementing countermeasures. Eva Scherer, CFO of Daimler Truck, stated during an earnings conference call last week that the company has arranged alternative transport plans, moving the latest vehicle models by road instead of the Rhine to ensure timely customer deliveries.

BASF and other chemical companies with operations along the Rhine noted last month that, due to the potential for "a raw material shortage to create a chain reaction" within their complex production networks, they cannot rule out force majeure declarations or product shortages in individual cases.

Germany's National Meteorological Service reported earlier this month that rainfall has been below average in nearly all regions since March. Nicole Razavi, transport minister of Baden-Württemberg, stated that persistently low water levels pose a major challenge to inland shipping, forcing companies to rely on alternative transport modes, with the temporary ban currently expected to remain in effect until the end of August.