Navigating Supply Chain Disruptions: How Firms Respond to Low Water Levels

This paper studies how firms adjust to temporary infrastructure disruptions, using a period of exceptionally low water levels on European inland waterways as a natural experiment. Linking monthly trade and transport data for Germany, I show that firms relying on inland shipping for imports reduced the value, variety, and geographic scope of their exports. These effects were strongest among firms with limited transport diversification and cannot be explained by demand shocks or export constraints, highlighting the role of supply bottlenecks. Affected firms adapted by persistently switching to alternative transport modes, showing that even short-lived shocks can induce lasting behavioural change.

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