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Transport disaster strikes Black Friday purchasing amid Europe, China floods

Shipping crisis strikes Black Friday shopping amid Europe, China floods

TOPSHOT – The aerial photo shows an area in the Blessem district of Erftstadt on July 16, 2021, which was completely destroyed by the flooding.

SEBASTIEN BOZON | AFP | Getty Images

The 2021 Christmas shopping season could be impacted by out of stock and shipping delays as recent floods in Europe and China exacerbate already tight global supply chains.

Western Europe and the Chinese province of Henan – an important transport hub and headquarters of several large companies – are grappling with the aftermath of devastating floods.

The disasters damaged railways in both regions, which are used to deliver goods and raw materials. Water entered industrial areas and damaged facilities, machinery and warehouses, supply chain industry companies told CNBC.

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

“Consumer electronics, dorm furniture, clothing and appliances will all continue to be in short supply as shopping starts early in school and enters the main Christmas shopping season,” he said.

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

The flood has the potential to take another blow to the auto industry, which is already suffering from a semiconductor shortage.

Pawan Joshi

Executive Vice President, supply chain software company E2open

Several companies, including Germany’s largest steel manufacturer Thyssenkrupp, have declared force majeure. A force majeure event occurs when unforeseeable circumstances, such as natural disasters, prevent a party from fulfilling its contractual obligations and release it from sanctions.

Some of the industries hardest hit by the floods include automobiles, technology and electronics, according to those CNBC spoke to.

Car production started again after lack of chips

Auto production is likely to be affected by production delays as many of the world’s largest automakers and their suppliers are based in the flood-ravaged regions.

“The flood has the potential to take another blow to the auto industry, which is already suffering from a semiconductor shortage,” said Pawan.

Production facilities in Germany, the Netherlands, Luxembourg and Belgium are expected to bear the brunt of the flood damage, supply chain risk management company Everstream told CNBC via email. Many suppliers that provide specialty parts for the automotive, technology and aerospace industries are based there, said Shehrina Kamal, vice president of Intelligence Solutions at Everstream.

“When the floods receded, most major highways and roads were expected to be cleared this past weekend,” she said.

“Given that some companies have issued profit warnings and even declared acts of God, the effects of the flood are likely to drag on through supply chains for several weeks,” concluded Kamal.

Zurich-based company Klingelnberg, which makes transmission components, warned that the damage to its Hückeswagen plant in Germany could affect its sales targets for 2021.

Disruption of copper is bad news for electronics

The floods could also disrupt supplies of copper, which is used in many products from electronics to electric vehicles.

Flood-hit Henan Province in China is a major center of copper production, said Vivek Dhar, a commodities analyst with the Commonwealth Bank of Australia.

Copper prices rose sharply last week on delivery concerns, he said, as Henan has seen strong growth in copper smelting in recent years.

“Hopes for copper demand are linked to the rebuilding of damaged infrastructure in central China. China’s electricity sector is a particularly strong driver of copper demand,” Dhar wrote in a note last week.

In Europe, Aurubis GmbH – a provider of high-precision copper wires for the electronics and electrical appliance industries – declared force majeure in the case of deliveries after extensive floods in their plant, according to Everstream Analytics.

Read more about China from CNBC Pro

Meanwhile, in Henan’s capital, Zhengzhou, the disruption could hit a wide range of industries, from automotive to pharmaceuticals to biotechnology, said Ryan Seah, APAC intelligence analyst at Everstream.

“Zhengzhou is a major transportation hub and one of the most important cities in China along the Belt and Road Initiative,” said Seah, referring to China’s gigantic infrastructure plan that spans several countries and continents. He added that the city is home to 91 China-listed companies and a variety of sectors.

Zhengzhou is also home to a large factory operated by Hon Hai Precision Industry, also known as Foxconn. It is the world’s largest assembly plant for Apple’s iPhones. Foxconn previously told CNBC that it had “activated an emergency plan for flood control measures at this location.”

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Business

The Week in Enterprise: Let’s Go Purchasing

The Week in Business: Let’s Go Shopping

Good Morning. The economy is showing more signs of recovery – jobs are returning, the stock market is rising (again) and people are spending. Find the latest business and technical news for the week ahead. Stay out there safe. – Charlotte Cowles

So what did you buy with your stimulus check? Retail sales in March exceeded expectations, rising nearly 10 percent as the final round of federal aid funds hit bank accounts. In restaurants and bars, business grew 13 percent, and clothing and accessories sales rose 18 percent. After a year of sweatpants, people are out and about and need new clothes. Another sign of better times: Last week’s unemployment claims fell to their lowest level since the pandemic began.

Coinbase – a marketplace where people buy and sell digital currencies like Bitcoin – went public on Wednesday, making it the first major cryptocurrency company to do so. The first day of trading made early investors, including basketball star Kevin Durant, very rich (well, even more than they already were). It also encouraged the crypto-curious to dip a toe – or take a plunge – into an increasingly hot market. Digital currencies have seen a boom over the past year as investors pushed their prices to new highs and brought in related companies (like Coinbase).

Are you planning to do business with the Kremlin anytime soon? Too bad. President Biden announced a series of sanctions against Russia last Thursday, banning American banks from buying new Russian national debt. The action was targeted at 32 people and organizations involved in Moscow’s disinformation campaigns and meddling in the 2020 presidential election. Mr Biden also officially blamed Russia’s top intelligence agency for the nifty hacking operation that breached American government agencies and dozens of large corporations over the past year. By restricting access to international finance, the Biden government wants to put pressure on Russian President Vladimir Putin to negotiate a more stable relationship with the United States.

Apple’s first product release of the year, titled “Spring Loaded,” will be streamed on the brand’s website this Tuesday. Expected gadgets include a new line of iPad Pros (frankly, your old iPad is running out of space) and new iMac desktops (to enhance your work-from-home setup that you may need in the long run). The company is also reportedly developing a small tracking device called the AirTag that can be attached to items like keys and wallets so you can find them with an app (now that you need it to get back to places!). But it’s unclear if they’ll make their debut this week. Stay tuned.

For years, Instagram has been planning a special version of its app for users under the age of 13. The children’s version is said to include stronger measures to protect against sexual predators and bullying. But it is facing an uphill battle. Last week, an international coalition of 35 children’s and consumer groups called on Mark Zuckerberg, managing director of Instagram parent company Facebook, to cancel plans for the app. On her reasons: “It will likely increase the use of Instagram by young children, who are particularly vulnerable to the platform’s manipulative and exploitative features.”

What does a global shortage of tiny semiconductors – also called chips – have to do with you? Well, they’re used for everything from cars to computers to kitchen appliances. And the companies that make them fluctuate from pandemic-fueled production snafus, causing problems for the auto industry and many other sectors to slide down. Mr. Biden wants to finance more domestic chip production with his infrastructure plan and has in the meantime signed an executive order to strengthen the supply chains. But that may not be enough to fix what has already become a major problem.

Bernie Madoff, who started the largest Ponzi program in history, died in prison at the age of 82. Almost four years after the infamous Fyre Festival sought shelter and water for its attendees in the Bahamas, ticket holders – many of whom had fired at thousands for what was billed as an ultra-luxury experience – will be compensated at approximately $ 7,220 each Piece received. And China’s post-pandemic recovery is booming. The economy grew a whopping 18.3 percent in the first three months of the year, from last year’s low.

Categories
Business

On-line procuring results in pressure at Port of Los Angeles

Online shopping leads to strain at Port of Los Angeles

The number of shipments delivered through the country’s busiest container port complex in Los Angeles has increased significantly from the first half, driven by a recovery in business and a change in consumer habits.

Gene Seroka, executive director of the Port of Los Angeles, said during an appearance on CNBC on Monday that cargo volume increased 50% in the second half of 2020 after arriving at the docks in the first six months of the year, and that loaded ships often anchor at sea waiting for a dock to open.

“It’s all the change in the American consumer,” Seroka said on Power Lunch. “We don’t buy services, we buy goods.”

The surge in shipments has put a strain on the seaport supply chain, which is managed by the Los Angeles Port Authority. It’s a stark contrast to spring, when volume plummeted as the coronavirus pandemic plunged the global economy into recession.

With retailers seeing a surge in online ordering and e-commerce in the world of stay-at-home, it has created long delays in unloading ships at ports across the country and a lack of desired storage space.

Seroka said the port expects demand to surge. The Port of Southern California has been the busiest container port in North America for the past two decades, welcoming 17% of all US cargo.

In November, the Port of Los Angeles saw 890,000 shipments, equivalent to 20 feet, passing through its facilities, up 22% from the same month last year, partly due to vacation orders. Imports from Asia are at a record level, announced the port authority. Meanwhile, exports at the port have declined in 23 of the last 25 months, partly due to trade policy with China.

“In addition to trade policy, it is the strength of the US dollar that makes our goods a bit more than would otherwise be the case for competing nations in the same product categories,” Seroka said. “And right now the most amazing statistic is that we are sending back twice as many empty boxes as we are American exports through our docks.”

Monthly cargo volumes averaged 930,000 units in 20 foot units since August, which Seroka called “unusual” at the end of the year. The activity is expected to last several months.

Seroka said the port has been focusing on digitization to streamline shipping schedules and logistics.

“The port is tense,” he said.