As COVID-19 continues to spread around the globe, its impact on logistics and supply chains continue to grow. While, initially, there were supply disruptions in China, there are now essentially end-to-end logistics disruptions. Here’s an overview of some of the key ways supply chains have been impacted by COVID-19.
There is a reduction in inventory and reduced shipping capacity
The initial supply disruption was caused by the closing of many Chinese factories, leading to reduced exports as well as a reduction in service by airlines and steamship lines. Less space exits for cargo means that a price hike for shipping goods via air and sea also exists. The general takeaway is that there’s less inventory to ship while there is less shipping capacity for the cargo that is there. Both have led to supply disruptions and increased prices.
Transportation, warehouses, and ports globally are working with skeletal crews
As the virus has spread to Europe and the United States, additional aspects of the supply chain have been impacted. While many businesses are closed around the world, transportation, warehouses, and ports have been deemed essential services and are currently open with some service changes and interruptions. Though they have remained open, they have implemented new procedures and safety protocols to comply with CDC COVID-19 recommendations. Most are working with a skeletal staff. This means slower service, longer delivery times, and a longer time frame for restocking stores.
Companies are working to create backup plans and to improve resiliency in the event of supply chain disruptions
One of the biggest takeaways from the COVID-19 crisis thus far is the need for diversification in the supply chain. With this in mind, many businesses are looking for at least dual sourcing for all aspects of logistics, including ocean-going logistics, manufacturing, carriers, and US transportation. It’s become clear that logistics redundancy is good, enabling companies to better manage supply chain disruptions.
This logistics redundancy would allow countries to make the decision to shut down or close its doors at any time if the virus continues to spread. To prepare for this potential, companies are working to create backup plans. Now is the time to ensure that these plans exist, such as a plan B (and maybe even C) for supply chain and logistics and a crisis team that creates and tests different scenarios.
The next few months promise uncertainty and volatility. The more businesses plan to handle supply chain issues, the better able they’ll be to stay competitive and meet customer needs.
The good news is our team of experts is here to help you get through these uncertain times. Contact us today and see how we can assist with your supply chain disruptions.
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