The Impact Of Coronavirus On The Global Supply Chain
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The Impact Of Coronavirus On The Global Supply Chain

  • General News
  • 24th February 2020

The New Year certainly made its arrival known as it brought with it a new global health pandemic* this can be better known as Novel Coronavirus (2019-nCOV). This is a respiratory illness originating in Wuhan City, China, where they are now hundreds of confirmed cases around the world.

This is leading to an ever-increasing death toll, and major logistical problems for business as they are left searching for solutions to prevent their supply chains breaking down and production grinding to a halt.

On January 23rd authorities in Wuhan, a major industrial and transport hub located within the Chinese province of Hubei, imposed a city-wide quarantine including severe transport restrictions after more than 6,000 residents were struck by the virus which by then, had claimed more than 130 lives.

The restrictions included the suspension of public transport, all flights in and out of the city, and the barring of all non-emergency vehicles from crossing city lines (both heading in and out of Wuhan). Another 12 cities rapidly adopted this approach as the virus continued to spread across the country.

The early efforts by the Chinese authorities have been extensively criticised, with strong public opinion that not enough was done to prevent the situation from worsening.

The timing of the outbreak coincided with the Lunar New Year when many Chinese manufacturers had stopped production for the holiday period, while this coincidence did initially seem fortuitous for the wider supply chain (as many businesses had ordered additional supplies in planning for the downtime).

This quickly became apparent that the transport restrictions were going to seriously impact the Omni-modal modes of transport that businesses across the globe rely upon to export their goods from China.

The Chinese festive period was extended until 2nd February across the country while companies and factories in major cities including Beijing, Jiangsu, Guangdong, and Shanghai were ordered to halt their operations until at least 10th February (with allowances made for medical and pharmaceutical companies, supermarkets, utility providers and logistics firms) as part of the efforts to stop the further spreading of the virus.

There is now a widespread panic that the virus will tip the world’s largest economy into a recession, which will have a serious impact on other economies around the world as concern grows about potential downward pressure on global trade volumes and growth prospects remain uncertain.

As with any global crisis, there is no way to predict what extent the coronavirus is going to impact businesses in the coming months.

One thing is certain, as we go to print, with so many supply chains relying on supply chains within China for their raw materials, parts, and products, panic levels are beginning to rise.

Procurement departments are desperately attempting to source local suppliers to stock up inventory levels, while logistics experts are working relentlessly to find ways around the restrictions to move products.

With so much dependence on China’s manufacturing industry, the eyes of the business world are firmly fixed on the country as we are forced into a waiting game with no end in sight.

*Although there are technically not yet enough confirmed cases of the virus to be a pandemic, the number of diagnoses is continuing to rise.

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