Low Rhine water levels strain German construction with material delays and rising costs
Falling water levels on the Rhine and other German rivers are cutting inland shipping capacity for construction materials, pushing up prices and delaying deliveries as the industry grapples with its third cost shock in a few years.
Transport bottlenecks on the rivers
Low water levels on the Rhine and other German rivers have reduced the load capacity of inland vessels, delaying deliveries of bulk construction materials to sites across the country. Sand and gravel, typically shipped in large volumes to concrete plants, are becoming scarcer and more expensive, according to Thomas Reimann, president of the Verband Baugewerblicher Unternehmer Hessen. He said the situation is already causing problems for the construction of multi-family housing and schools, as delivery times lengthen. Other materials affected include bitumen, crushed stone, natural stone, fuels, and mineral construction waste, all of which are normally transported in large quantities by ship.
Industry warnings
The Bauindustrieverband HDB has warned that suppliers have already announced delivery bottlenecks for initial construction materials, should the low-water situation persist, which is currently expected. Tim-Oliver Müller, the association's chief executive, told dpa that in extreme cases additional ships are needed or transports must be shifted to rail and road, though this is only possible to a limited extent and usually significantly more expensive. He does not expect widespread construction site stoppages, but the risk of shortages, higher logistics costs, and delays grows the longer the low water persists.
For construction projects, this can lead to higher material and logistics costs and, in the worst case, to delays in the construction process.
Third price shock in a few years
Reimann described the low-water situation as the third price increase within a few years, following the energy crisis during the Ukraine war and the Iran conflict. The price of bitumen, a binder for asphalt, has risen again after already becoming more expensive due to the Iran conflict. While the current price increase is still "rather manageable," Reimann noted that materials and transport costs have already risen sharply in recent years, and experience shows that many price increases become permanent.
- First construction material price increase in recent years
- Second price increase; bitumen, a binder for asphalt, becomes more expensive
- Third price increase; sand, gravel, and bitumen prices rise again
Housing shortage and political response
The rise in construction costs, which accelerated this year according to the Statistisches Bundesamt, is a key reason why residential construction in particular is stagnating. An estimated one million apartments are missing in Germany, driving rents higher especially in cities. Federal Building Minister Verena Hubertz (SPD) recently criticized construction costs in Frankfurt as having reached an "unspeakable level" and announced several countermeasures.
Sustainability as a response
Reimann, who is also a construction entrepreneur, sees greater sustainability in construction as an opportunity to respond to rising prices, including those caused by low water. Many construction projects already barely pay off due to higher interest rates and expensive materials. He proposed avoiding costly demolitions and keeping building shells intact, converting more empty offices into housing, and using more recycled building materials.
A solution would be to forgo the expensive demolition of buildings and instead leave the shell standing.
However, legal hurdles stand in the way. As long as recycled building materials, such as those from construction debris, are classified as waste in Germany, no builder can be convinced to install them in a house, Reimann said. Some concrete types allow recycled material to be mixed in, but demand remains low.
