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Transport crisis hits Black Friday shopping in floods in Europe and China

TOPSHOT-Aerial photographs show the area completely destroyed by the floods in the Blessem district of Erftstadt in western Germany on July 16, 2021.

Sebastian Boson | AFP | Getty Images

The 2021 holiday shopping season can be compromised by out-of-stock items and delayed deliveries. Recent floods in Europe When China It exacerbates the already tense global supply chain.

Western Europe Henan, China, a major transportation hub and home of several major companies, is tackling the aftermath of a devastating flood.

The disaster damaged the railroads used to deliver goods and raw materials in both regions. Companies in the supply chain industry told CNBC that water had flowed into the industrial area, causing enormous damage to facilities, machinery and warehouses.

“The holiday season, when Black Friday and its products (and raw materials) are staged, will bear the brunt of the impact,” Pawan Joshi, executive vice president of supply chain software company E2open, said in an email to CNBC.

“Home appliances, dorm room furniture, clothing, and appliances all continue to run short as new school year shopping begins, gradually entering the peak season of holiday shopping,” he said.

Delays in the distribution of the raw materials needed to produce goods will have a chain effect and disrupt the supply chain “for weeks or months,” Joshi said.

The flood could throw another wrench into the mix for the auto industry, which is already upset by a shortage of semiconductors.

Pawan Joshi

Executive Vice President, Supply Chain Software Company E2open

Several companies including ThyssenKrupp, Germany’s largest steel maker, Declared irresistible power. Force majeure events occur when an unexpected situation, such as a natural disaster, prevents one party from fulfilling its contractual obligations and is exempt from penalties.

The flood-damaged industries include automobiles, technology and electronics, CNBC said.

Car production hits again due to lack of chips

Car production can be hit by production delays, as many of the world’s leading automakers and their suppliers are based in flood-torn areas.

“The flood could throw another wrench into the mix for the auto industry, which is already upset by a semiconductor shortage,” Pawang said.

Manufacturing facilities in Germany, the Netherlands, Luxembourg and Belgium are expected to bear the brunt of flood damage, supply chain risk management firm Everstream told CNBC in an email. Sherina Kamal, vice president of intelligence solutions at Everstream, says many suppliers of specialty parts for the automotive, technology and aerospace industries are based there.

“Most major highways and roads were expected to open last weekend as floods began to recede, but manufacturing operations soon due to the extent of flood damage in some of the affected industrial areas. It is unlikely to be restarted and can affect supply availability, “she said.

“Given that some companies have already issued warnings of profits and declared force majeure, the effects of the flood are likely to continue to spread throughout the supply chain in the coming weeks,” Kamal concludes. rice field.

Zurich-based gear parts manufacturer Klingernberg has warned that damage to its Hückeswagen plant in Germany could undermine its 2021 revenue target.

The collapse of bad copper news for electronics

Floods can also disrupt the supply of copper used in many products, from electronics to electric vehicles.

Vivek Dhar, a commodities analyst at the Federal Bank of Australia, said the flooded Henan province in China is a major copper production center.

Henan has seen strong growth in copper smelting in recent years, so copper prices rose sharply last week due to supply concerns, he said.

“Hope for copper demand is related to the rebuilding of damaged infrastructure in central China. China’s electricity sector is a particularly strong driver of copper demand,” Dahl wrote in a memo last week.

In Europe, Aurubis GmbH, a supplier of precision copper wire for the electronics and electrical equipment sectors, has declared force majeure after a major flood in its factories, according to Everstream Analytics.

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Transport crisis hits Black Friday shopping in floods in Europe and China

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