Research

Transportation restrictions on rivers due to high or low water level events lead to disruptions of supply chains, which are exogenous to the current state of the economy. This paper proposes a novel method to exploit and quantify these surprising transportation restrictions which lead to regional supply chain disruptions and applies it to the river Rhine. A surprising decrease of the Rhine’s shipping capacity leads to a short-lived but significant decrease in economic activity, not only in the bordering federal states but entire Germany. This effect is more pronounced in industries and regions that rely more heavily on the Rhine and the goods shipped on it. Also, we observe a substitution pattern with respect to the countries of origin of these goods following the unanticipated supply chain disruptions.