Shipping crisis from floods in Europe, China threatens holiday shopping

WORLD

New York Post 03 August, 2021 - 08:17am 57 views

By Will Feuer

Industry insiders are warning that recent bouts of flooding in Europe and China are hitting global supply chains, threatening to drive up prices and cause shipping delays by Black Friday and the holiday shopping season.

Western Europe and China’s Henan province, an important industrial and shipping hub, are both recovering from severe floods.

While travel infrastructure and power have been restored in both regions, the flooding has damaged transportation routes like highways and — especially in China — is disrupting the country’s supply chain, including the production of food, cars and coal.

“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 Texas-based supply chain software firm E2open, told CNBC.

“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.

He said supply chains will be impacted “for weeks and months.”

“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.

In China, Zhengzhou, a city in Henan province, was hit hardest by the flooding last month. Zhengzhou is home to the world’s largest iPhone assembly plant, among other important manufacturing facilities.

“As Zhengzhou is a top national transportation hub and Henan province is a major producer of grains, raw materials and some manufactured products like iPhones, we believe the rainfall and flooding will have a material impact on business activity and inflation in the short term,” analysts at Nomura wrote in a note to clients last month.

Foxconn, the company that in Zhengzhou produces iPhones for Apple, said there so far has been no impact on its production facility, though it has had to offer new bonuses to lure more employees.

And in Europe, several companies with operations around Germany, the Netherlands, Luxembourg and Belgium are also feeling the impact, supply chain risk management firm Everstream told CNBC.

German’s largest steel maker Thyssenkrupp last month declared force majeure, which means the company won’t be able to meet its contractual obligations due to unforeseen circumstances.

And Zurich-based Klingelnberg, which produces gear components for cars, aircrafts and other vehicles, issued a warning that damage to its Hueckeswagen plant in Germany could hurt its revenue targets for the year, according to CNBC. 

“As floodwater started to recede, most major highways and roads were expected to be cleared over the past weekend; however, due to the extent of water damages in some affected industrial areas, manufacturing operations are unlikely to resume as quickly, potentially impacting supply availability,” Shehrina Kamal, vice president of intelligence solutions at Everstream, told CNBC.

“Given that some companies have already issued profit warnings and even declared force majeure, the effects of the flooding will likely continue to ripple through supply chains for several weeks to come,” she added.

The latest headaches in global supply chain come as companies and shipping routes were already being pushed to their limits as the whipsaw closing and reopening of economies around the world test the agility of railway operators, freight shippers, truckers and more.

A shortage of shipping containers has driven a surge in the cost of moving goods around the world, and the blocking of the Suez Canal earlier this year caused its own wrinkles.

And a surge in COVID-19 cases, either in the US or other countries where few people have been vaccinated, threatens to shutter facilities and shipping hubs at any moment.

Read full article at New York Post

Death toll from China floods jumps to 302, as Covid outbreak complicates recovery

CNN 02 August, 2021 - 11:59pm

Heavy rainfall hit the province of Henan on July 20, causing flooding in numerous towns and cities. Zhengzhou, the provincial capital of 12 million people, was one of the hardest- hit areas, with entire neighborhoods submerged and passengers trapped in flooded subway cars.

A total of 50 people are still missing across Henan, the vast majority of them from Zhengzhou, said Wu Guoding, the provincial deputy governor, at a news conference on Monday.

Of the total deaths, 292 were from Zhengzhou, Wu said. Most were killed from floods and landslides, while several dozen were killed from house collapses, and another 39 drowned in underground spaces including basements and garages.

The drowning deaths include 14 who died in a flooded subway line, where many passengers were stranded in subway cars up to their necks in floodwater, as fast-moving currents ripped through the network of underground tunnels.

Dramatic videos showing people clinging to ceiling handles to keep their heads above water shocked the nation and made headlines around the world. More than 500 passengers were evacuated from the subway line, authorities said several days after the initial flooding.

Another six deaths were from a road tunnel that had been fully inundated, trapping passengers in their cars inside. Rescue teams spent days pumping out floodwater from the tunnel in downtown Zhengzhou.

In a statement on Monday, China's State Council said it was establishing a team to "investigate and evaluate" the flooding and deaths. The team will review if there was "dereliction of duty," and will "hold people accountable in accordance with laws and regulations," said the statement.

The flooding hit smaller cities and villages as well, with rivers swelling beyond warning levels and numerous reservoirs overflowing, affecting hundreds of thousands of people, according to state-run media. The severity of the flooding was captured by numerous videos shared on Chinese social media, which showed people and cars swept away in surging torrents.

An outbreak of coronavirus has compounded the challenges facing Zhengzhou as the city struggles to recover from the devastating floods.

As of Monday, Zhengzhou has reported 13 locally-transmitted symptomatic cases, and 50 asymptomatic cases, which are counted separately, according to state-run news agency Xinhua.

Most cases are linked to an outbreak at a hospital, where janitors, medical staff and patients are among those infected. Only a few of the confirmed cases in Zhengzhou have no clear links to the hospital -- but they either live nearby or have traveled in the hospital's vicinity, according to state-run media Global Times.

Genomic sequencing has confirmed that the Zhengzhou cases are infected with the highly transmissible Delta variant -- which the US Centers for Disease Control and Prevention warned last week could spread as easily as chickenpox, even among fully vaccinated people.

As authorities continue cleanup, search and rescue, and investigation efforts into the floods, they must also now launch a mass testing effort for all residents, according to Global Times.

It's not clear whether the Zhengzhou outbreak is linked to another cluster of Delta infections in the eastern city of Nanjing, which has spread nationwide in the past two weeks.

The ongoing outbreak -- China's worst in months -- began in late July when nine airport cleaners in Nanjing were found to be infected during a routine test. Since then, locally-transmitted Covid cases have been reported in at least 16 provinces across China, including a tourist hot spot in the southern province of Hunan and the capital Beijing.

The country reported 90 new symptomatic cases and 23 asymptomatic cases on Tuesday, according to the National Health Commission. Most of the infections have been confirmed as the Delta variant, according to health officials in different regional news conferences.

Millions of people are now under restrictions on movement. Nanjing has launched several rounds of mass testing for its 9.3 million residents, and has locked down residential compounds with confirmed cases. Public spaces like bars, gyms and libraries are closed.

Similar measures and partial lockdowns have snapped into place in the city of Zhangjiajie, where a theater performance with thousands of attendees has fueled concerns of a super-spreader event. Restrictions have also ramped up in the national capital Beijing, which has banned people from medium- or high-risk areas from entering.

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Another shipping crisis strikes, threatening delays to Black Friday shopping

CNBC 02 August, 2021 - 10:05pm

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 CEO of a shipping firm told CNBC last week the floods in China and Europe are yet "another body blow" for global supply chains

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.

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

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

Manufacturing facilities in Germany, the Netherlands, Luxembourg and Belgium are expected to bear the brunt of the damage from the floods, supply chain risk management firm Everstream told CNBC via email. Many suppliers that provide specialized parts for the auto, technology and aerospace industries are based there, said Shehrina Kamal, vice president of intelligence solutions at Everstream. 

"As floodwater started to recede, most major highways and roads were expected to be cleared over the past weekend; however, due to the extent of water damages in some affected industrial areas, manufacturing operations are unlikely to resume as quickly, potentially impacting supply availability," she said.

"Given that some companies have already issued profit warnings and even declared force majeure, the effects of the flooding will likely continue to ripple through supply chains for several weeks to come," Kamal concluded.

Zurich-based Klingelnberg, which produces gear components, issued a warning that the damage to its Hueckeswagen plant in Germany could hurt its revenue targets for 2021. 

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. 

"Copper demand hopes are linked to rebuilding damaged infrastructure in central China. The power sector in China is a particularly strong driver of copper demand," Dhar wrote in a note last week. 

Over in Europe, Aurubis GmbH – a supplier of high-precision copper wires for the electronics and electrical equipment sectors – declared force majeure on deliveries following extensive flooding at its plant, according to Everstream Analytics.

Meanwhile in Henan's capital Zhengzhou, the disruption could hit a broad swath of industries from autos to pharmaceuticals and biotech, said Ryan Seah, APAC intelligence analyst at Everstream.

"Zhengzhou is a vital transportation hub and is one of China's principal cities along the Belt and Road Initiative," said Seah, referring to China's mammoth infrastructure plan that stretches across several countries and continents. He added that the city is home to 91 companies listed in China and a wide range of sectors.

Zhengzhou is also home to a major factory run by Hon Hai Precision Industry, also known as Foxconn. It is the world's biggest assembly plant for Apple's iPhones. Foxconn previously told CNBC that it had "activated an emergency response plan for flood control measures in that location."

Data is a real time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stocks, Quotes, and Market Data, and Analysis.

Another shipping crisis strikes, threatening delays to Black Friday shopping

NPR 02 August, 2021 - 10:05pm

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 CEO of a shipping firm told CNBC last week the floods in China and Europe are yet "another body blow" for global supply chains

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.

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

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

Manufacturing facilities in Germany, the Netherlands, Luxembourg and Belgium are expected to bear the brunt of the damage from the floods, supply chain risk management firm Everstream told CNBC via email. Many suppliers that provide specialized parts for the auto, technology and aerospace industries are based there, said Shehrina Kamal, vice president of intelligence solutions at Everstream. 

"As floodwater started to recede, most major highways and roads were expected to be cleared over the past weekend; however, due to the extent of water damages in some affected industrial areas, manufacturing operations are unlikely to resume as quickly, potentially impacting supply availability," she said.

"Given that some companies have already issued profit warnings and even declared force majeure, the effects of the flooding will likely continue to ripple through supply chains for several weeks to come," Kamal concluded.

Zurich-based Klingelnberg, which produces gear components, issued a warning that the damage to its Hueckeswagen plant in Germany could hurt its revenue targets for 2021. 

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. 

"Copper demand hopes are linked to rebuilding damaged infrastructure in central China. The power sector in China is a particularly strong driver of copper demand," Dhar wrote in a note last week. 

Over in Europe, Aurubis GmbH – a supplier of high-precision copper wires for the electronics and electrical equipment sectors – declared force majeure on deliveries following extensive flooding at its plant, according to Everstream Analytics.

Meanwhile in Henan's capital Zhengzhou, the disruption could hit a broad swath of industries from autos to pharmaceuticals and biotech, said Ryan Seah, APAC intelligence analyst at Everstream.

"Zhengzhou is a vital transportation hub and is one of China's principal cities along the Belt and Road Initiative," said Seah, referring to China's mammoth infrastructure plan that stretches across several countries and continents. He added that the city is home to 91 companies listed in China and a wide range of sectors.

Zhengzhou is also home to a major factory run by Hon Hai Precision Industry, also known as Foxconn. It is the world's biggest assembly plant for Apple's iPhones. Foxconn previously told CNBC that it had "activated an emergency response plan for flood control measures in that location."

Data is a real time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stocks, Quotes, and Market Data, and Analysis.

Robinhood Stock Depends on Retail Traders

NEWS9 live 02 August, 2021 - 12:25pm

Robinhood Markets rose 5.1%, to $36.95, around midday on Monday, nearly rebounding to its initial public offering price of $38.

Among the positive pieces of news for the company is that Cathie Wood of ARK Investments bought 1.3 million shares on Thursday, the day of the offering. And the company said in a notice on its app that 301,573 of its users—or 1.3% of the people who have funded accounts — had bought into the IPO.

The Robinhood logo is displayed on an iPhone

Robinhood Markets rose 5.1%, to $36.95, around midday on Monday, nearly rebounding to its initial public offering price of $38.

Among the positive pieces of news for the company is that Cathie Wood of ARK Investments bought 1.3 million shares on Thursday, the day of the offering. And the company said in a notice on its app that 301,573 of its users—or 1.3% of the people who have funded accounts — had bought into the IPO.

That number, though, doesn’t reveal how much of the offering went to the firm’s customers, who were expected to be allocated as much as 35% of it. Robinhood (HOOD) didn’t release the total number of shares that retail traders bought. Some experts said that the stock’s first-day decline of 8% means that companies will avoid allocating so much to retail traders in the future.

For the next few weeks, Robinhood’s fate is in the hands of those retail investors. Until the company reports its second-quarter earnings — on a date that has not yet been released — there will be an information vacuum that could keep the big money out of the stock. Even when those earnings are released, they may not move the stock much because Robinhood already previewed them in a securities filing last month. It will be weeks before analysts working for banks that underwrote the IPO (which includes just about every major bank on Wall Street) issue reports on the stock. It may not be clear until the third quarter if Robinhood can keep its momentum when trading volume slows.

The natural ebb and flow of the market is likely to take a while to kick in. Banks that underwrote the shares are prohibited from lending them to short sellers for 30 days, so shorting the stock could prove difficult early on. 

Big institutional investors who have been interviewed about the IPO have said they are not yet comfortable with the company’s growth story and risks, and may need more time to see if Robinhood can hold up as market volume declines.

In the interim, retail investors will loom large in the stock’s day-to-day gyrations. The company told investors on its platform that if they sell the stock within 30 days, they would be restricted from using its IPO Access platform to buy other IPOs for two months. The stock’s success may depend partially on whether they do as they’re told.

Write to Avi Salzman at avi.salzman@barrons.com

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