What Does the Coronavirus Shutdown Mean for Your Supply Chain?

The coronavirus has swept quickly across the world, affecting supply chains, shutting down offices, and halting travel. Is your business prepared?

COVID-19 spread quickly through mainland China and has now spread to the United States and Europe. Globally over 114,000 cases have been reported, with most people making full recoveries.  (Visit John Hopkins’ live tracker for up-to-date information).

In an effort to control further spread of the virus, businesses are instituting remote working policies, events like South by Southwest are being canceled, and school districts are closing. 

Amid health concerns, manufacturing and shipping industries have been greatly affected by the outbreak. With many factories and businesses remaining closed or working at a limited capacity, it’s likely your business will be impacted by the virus. Here’s what you can do to prepare.

Effects on Production

The widespread factory closures have brought several major manufacturers to a halt. Wuhan is a manufacturing and logistics hub. Its closure has broken a link in many supply chains, shutting down manufacturing for companies including Honda and Nissan. Even Apple has come out saying that their supply chain will be disrupted in the outbreak’s fallout. 

Effects on Shipping

In addition to production delays caused by shuttered factories, the effects on shipping are expected to be widespread and long lasting.

 Seaborne shipping has all but halted in an effort to contain the virus’ spread. While this is mostly due to closures, many ports are also imparting a 14-day quarantine on boats coming in from China, as the virus can be spread during its 14-day incubation period.

The country is also home to seven of the world’s 10 busiest container ports, according to the United Nations Conference on Trade and Development. This means these closures will have a far-reaching effect on global shipping. 

The impact on air shipments will also be widely felt. With commercial air transport grinding to a halt, so too will belly cargo transports.

The reduction of commercial flights means that shipping companies will rely more on cargo planes to shuttle shipments, pushing freight prices up as a result.

 DHL has suspended deliveries in Hubei province, but doesn’t foresee additional changes to its operations, while UPS and FedEx Express continue to fly in and out of China. 

While manufacturing and shipping are at a standstill now, carriers expect a surge in shipping demand once more factories reopen and resume work. 

Effects on Travel

For logistics professionals that make regular visits to China, travel is limited and not recommended. The CDC has issued level 3 travel health notices for China, Iran, South Korea, and Italy. This suggests eliminating non-essential travel entirely, and many flights to these areas have been canceled or severely limited.

You can also expect delays returning to the United States. Travel restrictions are in flux as the situation progresses, so make sure you stay on top of changes.

Americans who have been to a country with a high number of reported cases of coronavirus have to endure a 14-day mandatory quarantine, with many others asked to self-quarantine and undergo health monitoring. 

How to Handle the Delays

If you’re concerned about the disruption to your business, here are some things to keep in mind. 

  1. Expect shortages for the foreseeable future. Even though many factories have reopened, the delay caused by the closures could be long-lasting. And shipping continues to be affected.
  2. Reach out to your contacts on the ground in affected areas. It’s important to remember that safety precautions trump business goals. Ensure everyone is safe and taking appropriate sanitation measures, and no one is putting themselves in harm’s way. Should they feel there’s no immediate threat, work with them to set expectations.
  3. Consider looking into other manufacturing sources if you haven’t already done so. Although it’s too late at this point to combat effects from the outbreak, relying on China manufacturing has long been a risky move. Between tariffs and politics, there are too many variables to bank your business on the country.

Let us help you navigate the problems and prevent future disruptions. Talk to an expert today.



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