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How is Covid-19 impacting the world’s supply chains?

Here’s an overview of what we now know about the new coronavirus and its potential impacts on the world’s supply chains.

Now officially known as “COVID-19” the new coronavirus is making daily headlines as countries around the world rush to address and/or contain the outbreak. Sitting at the epicenter is China, a country that became mired in the worldwide issue just as its citizens were preparing for the Lunar New Year.

To date, many Chinese factories remain quiet and 780 million citizens are living under travel restrictions due to the outbreak. At press time, COVID-19 had killed 1,770 people and infected another 70,000 in mainland China. Worldwide, there are over 71,000 cases reported, more than 1,775 deaths, and 11,255 people who recovered from the illness. A total of 27 countries have been impacted by the outbreak.

What’s Being Impacted?

According to Dun & Bradstreet, the outbreak and subsequent shutdown of huge regions of China could impact more than 5 million businesses worldwide. It says that 49% of the companies with subsidiaries in impacted regions are headquartered in Hong Kong and that at least 51,000 companies worldwide—163 of which are in the Fortune 1000—have one or more direct or “tier 1” suppliers in the impacted region.

While most Chinese provinces planned to officially return to work on the 10th, many factories remained quiet at the start of China’s work day, with many extending their closures until February 17th. Factory labor remains short as the country’s large migrant force, which traveled home for the holidays, are still at home with children as schools are closed until Feb 25 or even March 1.

Transportation within China remains at a slowdown as many towns and cities are imposing two-week mandatory quarantines on truck drivers arriving or transiting through the affected areas. Local trucking operations are beginning to resume operations, but all trucking companies must follow local restrictions to receive a permit to resume operation and many are awaiting that approval (the Ningbo area, in particular, has a small number of trucking companies authorized to resume operations).

How Will the World’s Supply Chains Fare?

In Forbes, Supply Chain Insights’ Lora Cecere makes predictions about the potential impacts of COVID-19 on the world’s supply chains. She points to a downturn in Chinese demand, disrupted trade, and changes in normal demand patterns as some of the earliest impacts.

To companies whose complex, worldwide supply chains may soon face disruption due to the coronavirus, Cecere says now is the time to build an action team and deploy supplier development teams to map the location of first, second, and third-tier suppliers. “Make contact and offer help. Prepare plans for alternate sourcing,” she writes. “Invest in modeling capabilities to give suppliers accurate forecasts based on the shifts in demand.”

Here at Odyssey Logistics, we continue to watch the COVID-19 situation and provide periodic updates. Our customer service reps are actively monitoring that planned sailings are still viable and working on alternatives where possible to keep your cargo moving and will remain in contact with you should any of your shipments be impacted.

Review our previous article regarding the Coronavirus here.

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