German rail chaos cripples steel, automotive and chemicals sectors

Germany’s industrial heartland is reeling as weeks of rail chaos—delays, cancellations and last-minute rerouting—have pushed the country’s flagship steel, automotive and chemicals sectors to the brink, with executives warning of lost contracts, missed deliveries and spiralling costs. The disruption, which began with sporadic strikes in May and intensified through June, has now become a full-blown logistics crisis that threatens to erode Germany’s competitive edge just as global trade tensions escalate.

On Friday, *Welt am Sonntag* reported that the country’s three most critical industries—steel, automotive and chemicals—have sounded the alarm over “critical escalation,” citing freight delays that have already forced some plants to idle production lines and reroute shipments via road and air at triple the usual cost. “The rail network is no longer fit for purpose,” said a spokesperson for ThyssenKrupp Steel Europe, one of the sector’s largest employers. “Every day without reliable logistics is a day we lose to international competitors.”

The crisis comes as the International Monetary Fund’s departing chief economist, Pierre-Olivier Gourinchas, warned on Friday that tit-for-tat trade warfare is threatening to destabilise the global economy, calling attempts to gain marginal advantages “self-defeating” . Gourinchas, who steps down this weekend, said the cumulative effect of protectionist measures—from tariffs to export controls—risks choking supply chains already strained by geopolitical flashpoints such as the Strait of Hormuz, where analysts now question how long the global economy can “survive this ongoing war” .

In the Netherlands, meanwhile, a new Deloitte survey released on Saturday found that 52% of Dutch chief financial officers have grown less optimistic about the economic outlook, citing intensifying uncertainty over both geopolitics and domestic infrastructure reliability. “We’re seeing a clear shift from growth optimism to risk aversion,” said Deloitte Netherlands’ chief economist, Mathijs Bouman.

The German government has pledged €1.2 billion in emergency funding to stabilise rail freight, but industry leaders say the measures are too little, too late. “Money alone won’t fix a decade of underinvestment,” said Hildegard Müller, president of the German Association of the Automotive Industry. With freight volumes down 18% year-on-year and some chemical plants operating at 60% capacity, the question is no longer whether the damage is reversible—but how deep the scars will be.