Another logistic crisis will provoke a rise in prices on Black Friday, writes NBC News. Floods in Europe and China could disrupt the holiday shopping season. Flooding will provoke a lack of goods in warehouses and delivery delays.
Western Europe and China’s Henan province, key transportation hubs, are grappling with the aftermath of devastating floods. Water poured into industrial areas, severely damaging facilities, equipment and warehouses, as well as railways. Earlier, transport hubs in South China have already been disrupted due to a shortage of shipping containers, the Suez Canal incident and the coronavirus pandemic.
The vice president of E2open, a supply chain software company, Pavan Joshi expects prices for many products to rise on Black Friday. Among them are electronics, furniture, clothing and household appliances.
Apple CEO Tim Cook also warned of rising transportation costs.
Several companies, including the largest steel producer in Germany Thyssenkrupp, have announced force majeure: due to unforeseen situations, including natural disasters, they cannot fulfill their contractual obligations and are exempted from penalties.
Also, flooding can be a serious problem for the automotive industry, which is already facing a shortage of semiconductors. Suppliers of specialized parts for the automotive, technology and aerospace industries in Germany, the Netherlands, Luxembourg and Belgium are expected to suffer major losses from the flood. Shekhrina Kamal, an employee of the logistics risk management company Everstream, spoke about this. The impact of the flooding is likely to take a few more weeks for supply chains, she said.
Floods can also disrupt the supply of copper, which is used in the manufacture of many goods, from electronics to electric vehicles. In Zhengzhou, the capital of Henan province, the disruption could affect a wide range of industries, from automobiles to pharmaceuticals and biotech, according to Everstream analyst Ryan Sea.
Zhengzhou is also home to the major factory of Hon Hai Precision Industry, also known as Foxconn. It is the world’s largest assembly plant for Apple’s iPhone. Foxconn previously reported that it has begun to take emergency flood control measures at the location.