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.
The devastating floods in Western Europe and China’s Henan Province have caused considerable damage to key shipping hubs and businesses and could end up creating bottlenecks in the supply chain and increase prices on a day when consumers expect deep discounts, reports the International Business Times.
According to CNBC, railroads used to deliver goods and raw materials in both China and Europe were damaged in the floods, as well as facilities, machinery, and warehouses of companies in the supply chain industry.
Pawan Joshi, executive vice president of supply chain software firm E2open, told CNBC, “Black Friday and the holiday season, for which products (and raw materials) are being staged, will face the brunt of the impact.”
“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.
Joshi added that delays in the distribution of raw materials will have a “cascading effect” that will disrupt supply chains “for weeks and months.”
When you begin adding up the various crises the world has seen over the past year or two, including the shortage of shipping containers, the Suez Canal incident, and the coronavirus pandemic, not to mention the adverse weather events in Europe and China, together, they have fueled major delays at shipping hubs.
Some of the worst-hit industries include autos, technology, and electronics, according to those who spoke with CNBC, have been impacted by the flooding. Germany’s largest steelmaker, Thyssenkrupp, has declared force majeure.
A force majeure event occurs when unforeseeable circumstances such as natural catastrophes prevent one party from fulfilling its contractual duties, absolving it from penalties.
Toymaker Hasbro said in April that it would increase the price of its toys and games as it looked to offset the cost of increasing raw material expenses. Toy company Mattel also warned that it was suffering from a “significant impact” to its margins from rising resin prices and ocean freight charges at the same time.
The bottom line? Joshi says there will most likely be fewer and smaller discounts this Black Friday, and some goods will see their prices going up.
