German industry has begun to show signs of strain as a six-day strike against its state-owned rail service has shown no sign of ending ahead of schedule.
Deutsche Bahn, Germany’s largest rail freight operator and the target of industrial action by the GDL train drivers union, has called the move “a strike against the German economy,” highlighting supply-chain implications across the metal, petrochemical and power sectors.
The GDL’s latest round of strikes became effective for cargo freight Jan. 23, followed by passenger rail services Jan. 24, and are set to end Jan. 29.
While industrial players have sought to mitigate strike impacts by shifting to road and shipping alternatives, product delays and rising freight costs have begun to materialize across several key sectors.
According to the German steel association, WV Stahl, the steel industry is the country’s biggest rail consumer, with limited ability to fully pivot to alternative transport routes.
The industry body estimates that 50.5% of steel transports are done via rail, with 29.8% on waterways and 19.7% via roads.
“The rail strike is getting on all our nerves. And it is a strain on our economy,” said Kerstin Maria Rippel, the association’s managing director.
Raw material shipments are transported via waterways for steelmakers in the Rhine-Ruhr region but finished steel shipments are usually via rail and road.
The car industry is particularly reliant on rail supplies, and Volkswagen told S&P Global Commodity Insights late Jan. 24 that they would be monitoring “with worry” and would not be able to rule out production disruption despite increasing transport via truck where possible.
While steelmaker ArcelorMittal stressed that production would not be impacted, it said it was expecting reduced supply of raw materials, with potential delays to some shipments.
Germany’s largest steelmaker Thyssenkrupp noted little immediate impact.
Sources were not expecting any immediate price impact as buying activity has remained muted on the week, though recurring disruption could pose a wider upside risk.
Platts assessed hot-rolled coil at Eur750/mt EXW Ruhr Jan. 24, down Eur10/mt on the day.Platts is a part of S&P Global.
Strikes are due to end next week, while the GDL has declined to accept the latest wage offers by Deutsche Bahn.
Author Kelly Norways, Laura Varriale, Mark Thomas