The global supply chain is at risk as manufacturing companies, shipping companies, retailers and buyers struggle to maintain operations in the face of the new strain of  coronavirus (COVID-19). Hubei province, where Wuhan is located, is thought to be the epicenter of the coronavirus outbreak and is also home to many major manufacturers. The province is currently on lockdown with factories closed and airlines and ships are functioning at reduced capacity. Now other countries are taking these extreme steps in an effort to curb outbreaks and stop the spread of the virus. Italy has placed 12 towns on lockdown as confirmed coronavirus cases spiked over the past 4 days.

It is likely that the impact on the supply chain will be far reaching and long-term. With many companies undoubtedly concerned about potential disruptions, it is important to understand how the coronavirus outbreak may affect organizations and what can be done to help mitigate these supply chain risks.


Retail, Technology and Automotive Supply Chains are at Risk

The disruption to trade can already be seen in ports as coronavirus impact climbs above 74,000 cases and 2,100 deaths. The reality is that the vast majority of trade occurs by ship. However, due to the coronavirus outbreak, shipping traffic in Wuhan has dramatically decreased when compared to rates a year ago. With China serving as a major supplier to raw materials, chemicals, and other products, many different industries are likely to feel the impact.

Retail is perhaps the industry that stands to be most negatively affected considering the vast role China plays in the supply chain. The affect is expected to impact discount stores and luxury brands alike. While retailers are not yet seeing effects directly, transportation experts caution that stock-outs could begin occurring in two to three months unless the situation is resolved quickly. As the outbreak continues to spread, there is significant concern that it will cause major disruptions.

Technology is another area that is likely to see negative implications as a result of the coronavirus. A significant amount of technology is manufactured in China including computers, industrial equipment, and smart phones. In fact, Apple has already warned that its iPhone production will likely be impacted and cautioned investors to expect declines in revenue.

Meanwhile, automakers are already beginning to feel the sting in some areas. Perhaps most notable is Korean manufacturer Hyundai. The firm has already had to decrease production due to component shortages caused by the virus outbreak. Fiat has also dialed back operations at its Serbian plant due to parts shortages. Nissan and Land Rover have also cautioned that their production may soon be affected.


How to Reduce Your Supply Chain Risk

With this outbreak yielding significant concerns for many different industries, companies must make preparations to minimize the risk to their bottom lines. Fortunately, there are a number of ways that firms can reduce their supply chain risk.

  1. Have a strong understanding of the actual physical locations of your supply chain. This can help you determine if your company is dependent on manufacturers in regions that are directly affected by the virus. This is an important first step in the supply chain risk management process.
  2. Prepare to be flexible with your air and sea shipments as factories begin to come back online, and the supply chain begins to stabilize. Like we have seen with other disruptive supply chain events in recent years, there will be backlogs and capacity challenges.
  3. Keep yourself as informed as possible of the current situation as it continues to develop. This is a very fluid situation and staying up to date can allow you to make changes quickly to avoid substantial impact.
  4. Find ways to negotiate these new challenges. This is key for companies that are trying to adjust to the situation. As organizations monitor the crisis and its effect on them, they can also seek to identify ways to diversify their supply base, identifying suppliers in areas less at risk or seeking external partnerships to help them through.


A Freight Forwarder can Help You Manage Supply Chain Risk

Some organizations are turning to freight forwarders to reduce their supply chain risk and help them navigate supplier issues. Mach 1 VP International, Justin Panasewicz explained the benefit of this for his clients, “Through our direct and indirect relationships with almost all passenger and cargo airlines, Mach 1 Global Services has the ability to offer flexible options through multiple routes. Our expertise in handling Aircraft Charters and On Board Courier shipments,  along with our closed loop North American Linehaul network gives our customers the ability to expedite their critical parts and products to their factories or final customers in a reliable and cost effective manner.”

As the situation involving the coronavirus outbreak continues to develop, companies must continue to investigate all options for responding to potential supplier disruptions. By applying strategic planning and innovative practices, many organizations will be able to reduce the impact that this situation has on their ability to get their products to market.


MACH 1 Global Can Help You Overcome Supply Chain Hurdles! CONTACT US TODAY!

With over 30 years of experience, Mach 1 Global is a freight forwarder that has experience with global supply chain disruptions and can help you reduce your supply chain risk.  With long established logistics networks, we can help you navigate any hurdle you may be facing in your supply chain. To discuss how Mach 1 Global can assist you call (800) 553-7774 or get a quote by clicking HERE.


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