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The Impact of Coronavirus on the Supply Chain

posted in Air Exports, International Logistics, Supply Chain Management by

Over the past few weeks, more and more people are growing concerned about coronavirus, which has been spreading throughout the world. This virus has already proven to be deadly, which means that governments everywhere are on high alert.

This virus has been impacting the supply chain industry in a major way. Keep reading for what you need to know about the coronavirus and what it means for logistics.

Containing an Outbreak

The coronavirus was first reported in Wuhan, China, on December 21, 2019. Since then, reports have spread quickly about the virus, and the death toll has already reached over 200.

The coronavirus really started to have an impact on the global supply chain during the Chinese New Year (which for those that aren’t aware, started on January 25). Typically, factories halt production during the new year, and production managers across the globe need to plan for shipment delays. This year, however, the Chinese government has pushed back start dates for factories because of coronavirus.

Since the virus can spread from person to person, the government is trying as much as possible to stop people from gathering together, like they would at a factory or warehouse. This means that production is paused for certain industries until the end of February. You can read more about these closures in our Market Advisories.

How Coronavirus Impacts the Supply Chain

Coronavirus has been taking a huge toll on the supply chain industry, mostly because of how easy it is to spread.

The Chinese government has even started checking the body temperatures of people coming in and out of certain areas. This practice slows down the supply chain by adding mandatory stops. Some roads have even been barricaded to prevent traffic from coming or going between or within cities.

Since the spread of the virus, several airlines and air carriers have suspended flights visiting or coming from mainland China. This means that air freight is also being delayed, especially if it’s being sent or coming from Wuhan. In fact, Wuhan is essentially completely on lock down, which can be a huge problem for supply chains that rely on goods from this area.

What to Expect

The Chinese New Year is typically a difficult time for supply chains. Because factories are all closed, if a supply chain runs out of parts during this time, they probably won’t have a viable alternative.

However, this year may come with its own set of problems. It’s typical for some factory employees to go home for the Chinese New Year and not return to their jobs. But this year, with the increased worry over the coronavirus, there could be a large number of workers that don’t come back. If that happens, supply chains will be even more at a loss, as they scramble to find people to fill those spots.

Not too long ago, China suffered from the SARS outbreak, which took a massive toll on the country’s economy. Now, though, China has a much bigger part in the global supply chain and the world’s economy. While SARS hurt the global supply chain, China was able to bounce back from the deficit. Now, though, experts are expecting coronavirus to have a huge impact on the entire world, since China plays such a huge role in manufacturing on an international scale.

More information continues to come out daily about this virus. The best way to handle it is to stay in contact with our team and with your suppliers. That’s the only way to keep up with what’s going on in your individual supply chain. Plus, if you get in touch, we can help you plan how to prepare as the virus continues to spread.

06 Feb, 20

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