Another shipping crisis strikes, threatening delays to Black Friday shopping

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. Delays from the distribution of raw materials needed to produce goods will have a cascading effect and disrupt supply chains “for weeks and months,” Pawan Joshi, executive vice president of supply chain software firm E2open told CNBC.

Supply chains have already been majorly disrupted this year by crises such as the shortage of shipping containers, the Suez Canal incident and Covid cases causing delays at the shipping hubs in Southern China. Even if there are deals for the peak online shopping season, Joshi said it’s likely there will be fewer and the discounts will probably be smaller. Prices may also go up for some goods, he said. “Come Black Friday, we can likely expect to see prices rise for all sorts of goods such as consumer electronics, furniture, apparel and appliances,” he added.

Separately, Apple CEO Tim Cook also said during an earnings call last week that freight costs are high. Car production is likely to be hammered by manufacturing delays as many of the world’s major automakers and their suppliers are based in regions devastated by the floods.

The floods could also disrupt the supply of copper, which is used in many products from electronics to electric vehicles. The flood-hit Henan province in China is a major copper production hub, noted Vivek Dhar, a commodities analyst at the Commonwealth Bank of Australia. Copper prices last week rose strongly on supply concerns, he said, as Henan has seen strong growth in copper smelting in recent years.

Another shipping crisis strikes, threatening delays to Black Friday shopping, CNBC, Aug 3