Reader survey takes deep dive into the impact of coronavirus on supply chains

With the coronavirus, or COVID-19, dominating just about every facet of everyday life, its impact on all things supply chain cannot be understated. That was made clear in a recent Peerless Media readership survey of more than 120 buyers and users of freight transportation and logistics services.

The survey’s lead question—are your logistics and supply chain operations being impacted by the coronavirus?—drove home the point, with 73%, or 89 respondents, saying yes, and 27%, or 33 respondents, saying the coronavirus has not had an effect.

For those respondents indicating coronavirus is taking a toll on supply chain and logistics operations, the results varied and covered a fair amount of ground, including: a slowing of United States-bound imports; significant freight rate hikes; air freight out of Europe impacted by the U.S. travel ban; balancing inbound (already ordered) with anticipated (reduced) demand and adjusting costs to reflect reduced business volume; uncertainty and financial concerns; supplier shutdowns and transportation delays, among others.

“Logistics movements have been fine, but the more significant impact is from lower business volumes with our customers, resulting in less movement of materials,” said a shipper who declined to be identified. “The business environment has suddenly become so negative that I expect there will be lower business levels, including logistics operations and future needs.”

Another issue the LM survey covered focused on a risk management plan to handle unexpected situations. The findings were somewhat evenly distributed, with 55%, or 66 respondents, stating they have risk management plans in case, with 45%, or 54 respondents, saying they don’t use risk management plans.

Some examples of these plans were along the lines of deploying a dedicated crisis team, working remotely when and where applicable, leveraging alternate sourcing, sharing forecasts, schedules and priorities with supply partners and customers, turning to risk analysis, preparations, mitigation methodology and alternative supply chain options, and strategic inventory management practices, among others.

One of the many supply chain-related unknowns highlighted in the survey pertained to how when things may go back to normal. The findings varied, with 24% saying they are unsure, 30% saying less than three months, 34% saying three-to-six months, and 12% saying six-to-12 months.

Not surprisingly, the coronavirus’s impact on reduced U.S.-bound imports has become more apparent, of late. That was evident in data recently issued by Panjiva, a global trade intelligence firm.

Panjiva said that even though the timing of the Lunar New Year can distort figures, the 13.5% drop in shipments over January and February, from China (including Hong Kong) “may indicate” that the first impact of the coronavirus disruptions on shipping.

Panjiva research director Chris Rogers said that there is typically an expected drop in post-Lunar New Year shipments, and this year was no exception, given the flurry of first quarter factory shutdowns in China and the coronavirus situation, too.

“There is always going to be a drop, but by how much is always the question,” he said. “A lot of [cargo] arrives into the U.S. in February, just before the Lunar New Year. The West Coast port numbers will be bad, and the East Coast numbers will be down, too, but not as bad. March will show the full extent of it, and we will have a full Q1 comparison to see where things actually ended up.”

In terms of the impact of the coronavirus on U.S. import levels, Rogers said it is likely consumers will only spend on essential items and cut back on spending in general, which will reduce demand for various consumer products, too. Items that may see declines, he cited, included durable consumer goods, apparel, and furniture, among others.

One recurring theme for shippers since the onset of the coronavirus outbreak has focused on preparedness, in the form of business continuity plans on a global level, according to Mac Pinkerton, President of C.H. Robinson’s North American Surface Transportation division.

“The way we have been talking to [shipper] customers about it is to help them focus on things they need to be thinking about, relative to what is happening inside of their own supply chains,” he explained. “For us, it is about being prepared and having a solid business continuity plan and enacting it when necessary to ensure our customers don’t experience a drop off in efficiency.”

On more of an anecdotal basis, Pinkerton observed that shippers are telling C.H. Robinson that long-haul motor carriers are starting to withdraw capacity into the western regions of North America, which is due likely to lower import levels at West Coast ports because of coronavirus.

“For us, it is about leveraging a much broader North American capacity base to fulfill the very volatile and changing dynamics that coronavirus has caused or is going to cause,” he added. “A common sense approach to these areas more affected than others will have truck drivers not wanting to enter those areas and when that happens there will be less capacity in those markets, which is going to create route guide failure and create spot market opportunities.”