Nowadays, experts mainly cover the topic of financial losses incurred due to pandemic consequences. However, another secret enemy is hiding in the shadows. Every year, seasonal climate disasters hamper local economies around the globe. The effects of the recent floods in China and Europe might also propagate through the global network of trade and supply chain.
"Rarely does a week go past without something new," says Tim Huxley, CEO of Mandarin Shipping. "The floods in China and Europe are yet another body blow for global supply chains. This is really going to disrupt the supply chain because the rail links have all been severed," he added. The railways from the Czech Republic and Slovakia to the German ports of Rotterdam and Hamburg have been hit the most. For this reason, there might be delays in the movement of freight in and out, which will eventually disrupt the industry.
Many large companies are already experiencing problems. For example, German steel manufacturer Thyssenkrupp was unable to obtain raw materials due to the flooding. It seriously affected such sectors as the automotive industry and the production of household appliances. The company has already announced force majeure. It frees the company from fulfilling its obligations because unforeseeable circumstances, such as natural catastrophes take place. No penalties will also be imposed. The steel giant also states that part of the railways in Hagen is missing. Thus, it is more difficult to get trucks for delivery than before.
A similar situation has occurred in the Chinese province of Henan. However, things are even gloomier there as the province is landlocked. The disruption of railways is going to cause a "big impact," Huxley pointed out. "Obviously, that will have an impact on shipping, that will force shipping rates up," he said. The distribution of wheat and coal has been severely damaged which is rather bad as Henan is the bread basket of China.
