Supply Chain and Transport

Droughts are creating new supply chain problems. This is what you need to know

Economic damage from droughts jumped by 63% in 2021 compared with the 20-year average, according to the World Meteorological Organization.

Economic damage from droughts jumped by 63% in 2021 compared with the 20-year average, according to the World Meteorological Organization. Image: Reuters/Christian Kraemer

Ewan Thomson
Senior Writer, Forum Agenda
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This article was first written in November 2022 and last updated in October 2023.

  • Water is vital to global trade, with 90% of products moving around the world via oceans and waterways but recent summers have seen severe droughts render several international trade routes unpassable.
  • According to the World Meteorological Organization, economic damage from droughts jumped by 63% in 2021 compared with the 20-year average.
  • These images show how four key rivers were affected by drought and what can be done to prepare for the future.

But recent summers have illustrated just how sensitive some key waterways are to droughts. A major Brazilian port in Manaus hit its lowest level since records began in October 2023. And in 2022, the Mississippi, Yangtze and Rhine rivers all experienced serious bottlenecks.

Brazil's prolonged drought is expected to continue for several months more, and the prognosis for the future is for more extreme droughts worldwide, and not just in arid areas. By 2050, drought could affect 75% of the global population, the United Nations (UN) says.

This has potentially alarming consequences for global trade – when water levels are too low to facilitate the movement of vessels, the supply chain breaks down. And that can be expensive. Economic damage from droughts jumped by 63% in 2021 compared with the 20-year average, according to the World Meteorological Organization.

These images show how four key rivers were affected by drought and what can be done to prepare for the future.

Drought on the Rio Negro in October 2023.
Drought on the Rio Negro. Image: NASA Earth Observatory

Drought in the upper Amazon

A severe lack of rain between July and October 2023 has pushed the Brazilian state of Amazonas into drought, with river levels at the port of Manaus reaching their lowest point since 1902.

The Rio Negro is one of the Amazon's largest tributaries, and water levels fell as low as 13.5 metres in October 2023 – a more typical level would be around 20 metres.

Manaus is the primary transportation hub for the upper Amazon and is an important transit point for goods including beef and animal hides. The low river has led some barge routes to reduce large loads, while docking of transoceanic ships at Manaus has also been affected. Costs for northern shipping routes in the Amazon have been pushed up and there is a risk of disruption to the region's corn harvest.

The drought is not just limited to the Rio Negro, though, with other major tributaries also experiencing low water levels and leaving many communities in the Amazon basin isolated and unable to access drinking water. It has also caused many fish to die as well as river dolphins.

Europe’s worst drought in 500 years

Droughts are becoming more frequent and lasting longer, which has dire consequences for transport on key rivers like the Rhine in Germany.
Droughts are becoming more frequent and lasting longer, which has dire consequences for transport on key rivers like the Rhine in Germany. Image: ESA.

The Rhine River starts in Switzerland and runs for nearly 800 miles to the Netherlands where it joins the North Sea. It is a crucial transport link for Europe, moving over 300 million tonnes of goods a year.

Summer 2022 brought low water levels to the Rhine that caused severe delays to shipping arrivals and departures. Some vessels were forced to sail with cargoes at just 25% of capacity as Europe endured its worst drought in 500 years.

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America’s 22-year mega-drought

A birds eye view of low water levels on the Mississippi, with land surrounding the river.
October 2022: A lack of rainfall caused water levels on the Mississippi to reach lows not seen for a decade, significantly slowing barge traffic. Image: NASA.

The southwest US is in the midst of a 22-year drought – its driest period for 1,200 years. And even less arid parts of the US to the east are feeling the effects of drought more often.

The Mississippi River runs from Lake Itasca in northern Minnesota for nearly 2,350 miles to the Gulf of Mexico, transporting over 450 million tonnes of imports, exports and domestic freight every year.

But some routes were closed off in October because of low water levels, until dredging operations deepened shipping channels to allow a backlog of over 2,000 barges to reach destinations.

The cost of this was $20 billion in supply chain impact and economic damage, according to AccuWeather.

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China’s lowest water levels since 1865

Drought has contributed to the Yangtze river shrinking visibly year on year.
Drought has contributed to the Yangtze river shrinking visibly year on year. Image: ESA.

The Yangtze River Basin stretches from coastal Shanghai to Sichuan province in China’s southwest and includes Asia’s longest river. It dwarfs shipments on the Rhine and the Mississippi, with annual cargoes of over 3 billion tonnes.

But low rainfall in the river basin and high temperatures sped up evaporation, leaving August water levels in the drainage area of Yangtze River at 60% below average levels for the month.

China experienced a summer drought so severe that water levels on the Yangtze reached their lowest level since 1865, causing hydropower shortages and halting shipping.

The future of drought disruption?

Droughts are becoming more frequent and lasting longer as climate change increases global temperatures and makes water availability more unpredictable. Droughts are up by nearly 30% since 2000 – in both number and duration – compared with the previous 20-year period, The UN says in its 2022 Drought in Numbers report.

The short-term solutions for bottlenecks on waterways transporting commodities are limited. The German Government is looking at deepening a shallower section of the Rhine, a similar initiative to the dredging done by the US Army Corps of Engineers on the Mississippi. Adding water from elsewhere is also an option – China’s Ministry of Water Resources discharged over five billion m3 of water from reservoirs into the river during the harshest periods of summer.

Longer term, Germany’s Institute of Development and Sustainability’s report on drought suggests “investing in better early warning systems for low water levels, (and) shifting away from reactive and crisis-based approach towards a more proactive and risk-based drought management approach”.

Ultimately though, more intense droughts are an inevitable consequence of climate change, and reducing the severity of droughts will only be achieved by restoring ecosystems and limiting temperature increases.

“Recent scientific studies on drought point to a precarious future for the world and all nation-states, far beyond just those in arid regions. This wake-up call is louder and clearer than ever before,” warns the UN Drought in Numbers report.

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