Berlin, Aug 27 (IANS): Inland navigation on the Rhine river is set to become even more difficult, with already low water levels expected to drop again, according to the latest forecasts by Germany's Waterways and Shipping Administration (WSV).

"The low water level of the Rhine and many other rivers is currently affecting freight transport on inland waterways, and makes it more difficult to maintain supply chains," the Federal Statistical Office (Destatis) said on Friday.

During the record drought in late 2018, freight transport volumes on German inland waterways temporarily fell by more than a third, reports Xinhua news agency.

Germany's economy is highly sensitive to any disruptions on the Rhine, the country's biggest river and the busiest waterway in Europe.

Although the water level at the shallow Kaub monitoring station has now risen, total industrial output would decline by around 1 per cent should it fall below the critical mark of 78 cm for 30 days, the German Kiel Institute for the World Economy (IfW Kiel) warned recently.

Inland shipping in Germany is of particularly great importance for energy sources such as coal and natural gas.

Restrictions on transport via the Rhine would "hit supply chains that are already very strained", said IfW Vice President Stefan Kooths.

To secure sufficient energy supplies under these circumstances, Germany recently decided to prioritize rail transport of energy-related shipments over passenger transport.

"Even passenger trains can only run if our power grid and power supply are stable," said Minister of Transport Volker Wissing.

The country's industry association BDI, however, considers a switch from ship to train difficult due to current railway congestion, the pandemic and a shortage of drivers.

It is only a matter of time before further supply bottlenecks, and production cutbacks or even shutdowns hit the industry, BDI said.

"Politicians, the economy and society must prepare themselves for the fact that such dry periods will no longer be just exceptions in the future, but the rule," BDI managing director Holger Loesch warned earlier this month.

The current drought covers large parts of Europe and is the worst for at least 500 years, the European Commission has said.

Nearly half of the European Union is in a warning state, meaning that less precipitation than usual has fallen and soil moisture is in deficit.