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The 'perfect storm' creates a crisis

The ‘perfect storm’ creates a crisis

The caveats are in line before fall shopping, not least before the big pre-Christmas shopping party.

This year’s Christmas may be marked by shortages and delays, as a result of recent floods in Europe and China adding to pressure on an already tight supply chain.

– Lack of merchandise

In both Western Europe and China, floods damaged the rail network used to distribute goods and raw materials. Floods also occurred in industrial areas, causing severe damage to factories, machinery and warehouses.

One of the most affected by the floods is China’s Henan Province, an important transportation hub that also houses many large enterprises.

Flood: Massive floods hit parts of central China. Dozens of people lost their lives and 200,000 people were evacuated. Video: Newsflare
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Pawan Joshi, senior vice president of logistics company E2open, said the shopping holiday is Black Friday, or the week it has become, and the Christmas season as a whole.

“There will be shortages of consumer electronics, living room furniture, clothes and white goods when we start the trade to start school, and this will spill over into the Christmas trade,” Joshi wrote in an email to CNBC.

He believes raw material shortages will remain an issue for weeks and months, and he says he believes there will be fewer and worse shows before Christmas this year.

When Black Friday comes, we can expect price increases for all kinds of goods, such as consumer electronics, furniture, clothing and white goods, Joshi says.

Terrible logistical crisis

Norway is also aware of, and notes, the logistical problems facing retail business around the world.

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Lekekassen founder Andreas Skalleberg is based in Grimstad. He notes that commodity prices have risen sharply around the world.

-When you see on top of that that the price of moving a regular 40-foot container has fallen from $2,000 to $15,000 during the year, it’s obvious that price increases will come, Skalleberg tells Bursen.

Long-term: This is not the first time that global logistical problems have been reported in the past year.  This image from April of this year shows a large number of container ships waiting to dock in Los Angeles during the Corona crisis.  Photo: Lucy Nicholson/Reuters/NTP
long-term: This is not the first time that global logistical problems have been reported in the past year. This image from April of this year shows a large number of container ships waiting to dock in Los Angeles during the Corona crisis. Photo: Lucy Nicholson/Reuters/NTP
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Toy box manager points out that toys are often bulky products that cost a lot of transportation.

– It’s the perfect storm. A terrible logistical crisis hits at the same time with increased demand…

We’ve done a lot of hedging and we’ve done a good job securing good deals, but smaller clients will notice the price increase very clearly. We’ve been working on this for about a year to reduce the risks associated with the situation. But problems are inevitable.

– Buy gifts early!

He believes that all industries will experience price increases.

It has already happened in several places and will happen to everyone. There is no escape from this. Because it would be a bad business to keep the same price available to customers if costs increase by 20 percent. Therefore, you will see a price increase in the coming months, Skalleberg says and come with the following encouragement for customers.

My advice is to go out early to buy Christmas presents. Because it will be more expensive, and the goods will run out.

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Bauer believes that they should largely be able to avoid this problem.

– There is a great degree of uncertainty regarding all the imports during the day, it has been a long time, but Power has pretty much been able to get the goods we want and need. We have increased both ordering and warehouse capacity to insure ourselves against fluctuations in deliveries, says Siri Røhr, Director of Communications at Power, to Børsen.

– When it comes to price increases, we have received some indication of this from major suppliers, but we are trying as much as possible to avoid having to increase prices for our products.

– Fewer campaigns

XXL admits that they have also noticed problems in the freight market. Andreas Nehim, director of communications, notes, among other things, that the ship was stuck in the Suez Canal, and that was when the problems peaked.

– It caused delays that particularly affected the supply of bicycles, but also general access to goods imported from Asia. Access to the bikes is somewhat better now, but there are still some delays.

Do problems affect prices for customers?

We have price matches and mechanisms for customers to always get the lowest prices on everything. As far as there have been changes, it has not been as many campaigns, for example on bikes, as before. It’s hard to have promotions on a product that you don’t have enough of. He says it would only be annoying to customers if there was a crackdown on a product that sold out quickly.

Basic support: Several ships are stuck in one of the most important canals in the world. The land is an earthed container. Video: Julian Kona / Nicholas Vivan.
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“perfect storm”

As Borsen mentioned earlier, one would have done it “perfect storm” brought large parts of world trade to its knees. New virus outbreaks, natural disasters, fires, accidents, pirate attacks and the critical situation of crews at sea are about to cause a crisis that could reach all parts of the world.

The coincidence of all these events led to a shortage of everything from bicycles to computer chips.

Many companies declared force majeure. Force majeure events are unexpected events, such as natural disasters, that prevent a party from fulfilling its contractual obligations, but exempt it from punishment for breach of contract.

This applies, among other things, to the German steel giant Thyssenkrupp.

There is also a global shortage of microchips, which has resulted in supplies being short on everything from headphones to cars.

Skalleberg in Lekekassen still thinks it doesn’t look dark.

Fortunately, this is a short-term problem. I hope it gets more under control in 6-12 months.