CNBC's CEO of a shipping company said Monday that the floods in China, Europe and elsewhere are "another blow" to global supply chains. Mandarin Shipping CEO Tim Huxley says, "Rarely does one week go by without something new." Already this year, shipping has been subject to major disruptions. As some parts of the world recovered from the pandemics, higher spending caused a shortage of containers. This led to delays and drove up prices. In April, the Suez Canal was blocked by one of the largest container ships in the world, which halted traffic for almost a week. With about 12% trade passing through the waterway, it is one of the busiest waterways in the world. An increase in Covid cases in south China in June caused delays at ports, which again raised shipping costs.
Floods in Europe have caused 'broken railway lines'
Parts of western Europe have been devastated by flooding and heavy rainfall. The worst flooding was in Germany and Belgium. Some parts of Switzerland, Luxembourg, and the Netherlands were also affected. Huxley said that "this is going to disrupt supply chains because the railway connections have all been broken." He stated that this includes trains from Slovakia and Czech Republic to German ports in Rotterdam or Hamburg. He said, "And so that will delay cargo movements in-and out." It's going to really disrupt the industry.
Huxley called out Thyssenkrupp because the German steel-making giant couldn't get raw materials during the floods. He said, "That will ultimately have a knock-on effect on industries like the motor industry and domestic appliances and other such things." S&P Global Platts reported that Thyssenkrupp had declared force majeure July 16, citing a letter sent to customers. Unforeseeable circumstances such as natural disasters can prevent one party fulfilling their contractual obligations, thereby exempting them from any penalties. S&P Global Platts was told by a source from the mills that parts of Hagen's railway are "missing" and it is now more difficult to obtain trucks for delivery. Hagen, a West German city that was among the most affected by floods, is one of the worst.
Flooding in Henan, a landlocked province, disrupts supply of wheat and coal
Huxley said that flooding in Henan, China, is causing more disruption than usual because the province is not accessible by land.