Another shipping crisis strikes, threatening delays to Black Friday shopping


TOPSHOT – Aerial view shows an area completely destroyed by the floods in the Blessem district of Erftstadt, western Germany, on July 16, 2021.

SEBASTIEN BOZON | AFP | Getty Images

The 2021 holiday shopping season could be marred by out-of-stock goods and shipping delays as the recent floods in Europe and China exacerbate already strained global supply chains.

Western Europe and China’s Henan province — a key transport hub and home to several major businesses — are grappling with the aftermath of devastating floods.

The disasters have damaged railways used for the delivery of goods and raw materials in both regions. Water rushed into industrial areas extensively damaging facilities, machinery and warehouses, companies in the supply chain industry told CNBC. 

“Black Friday and the holiday season, for which products (and raw materials) are being staged, will face the brunt of the impact,” Pawan Joshi, executive vice president of supply chain software firm E2open told CNBC in an email. 

“Consumer electronics, dorm room furniture, clothing and appliances will all continue to be in short supply as back-to-school shopping starts up, and will trickle into the peak holiday shopping season,” he said. 

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

The flooding has the potential to throw another wrench into the mix for the auto industry, which is already reeling from a semiconductor shortage.

Pawan Joshi

executive vice president, supply chain software firm E2open

Several companies, including Germany’s largest steel maker Thyssenkrupp, have declared force majeure. A force majeure event occurs when unforeseeable circumstances, such as natural catastrophes, prevent one party from fulfilling its contractual duties, absolving them from penalties.

Some of the worst-hit industries from the floods include autos, technology and electronics, according to those that CNBC spoke to.

Auto production hit again after chip shortage

Disruption of copper bad news for electronics



Source link