How do firms react to supply chain disruptions? – Evidence from low water levels in Germany – Saskia Meuchelböck

Sprecherin

Saskia Meuchelböck (Kiel Institute)

Abstract

In this paper, I exploit critically low water levels on major inland shipping routes in Germany as a natural experiment to examine the effects of a shock to firms' supply chains. My analysis builds on a novel customs dataset for Germany. The monthly frequency of the data in combination with information on the transportation mode allows me to leverage the timing of a particularly severe period of low water in the second half of 2018 to identify the impact on firms' importing and exporting behaviour. The results indicate that international trade by inland waterway transportation was severely disrupted during low water, and the shock propagated down the supply chain. In particular, German firms importing via inland shipping experienced a decrease in their exports that exceeded the direct effect of reduced transportation options for exports, suggesting that the negative effect originated from missing inputs. Firms with low ex-ante transportation mode diversification at the product level were most affected. Finally, I provide evidence that firms adjust their sourcing strategies in response to the low water shock, switching to other transportation modes for goods previously imported via inland waterways. Interestingly, even after the shock subsides, the probability of importing via other modes remained elevated, suggesting that temporary disruptions can result in lasting adjustments to supply chains.

Raum

Lecture Hall (A-032)