The Ripple Effects Of The Coronavirus On The Global Supply Chain<\/h3><\/div><\/div><\/div>![\"\"](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2021\/04\/Coronavirus_Global_Supply_Chain.jpg\")
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Currently,\u00a0China is the world\u2019s largest exporter of goods<\/strong>. Official estimates say Chinese exports amount more than $2 trillion, making the country the largest trading nation on Earth.<\/p>\nBut with China\u2019s economy running at\u00a0just 40% capacity amid Coronavirus lockdown<\/strong>, the effects on the\u00a0global supply chain\u00a0industry are devastating. Not only for the country\u2019s economy but to everyone else who depends on Chinese goods.<\/p>\nAt the moment,\u00a013 Chinese cities are under full or partial lockdown through transport bans<\/strong>. Authorities in these cities have halted all public transportation, suspended flights, and barred all non-emergency vehicles from entering or leaving.<\/p>\nThe lockdowns are severely\u00a0impeding logistics operations<\/strong>\u00a0that rely on access to highways to carry goods. Severe restrictions have also been imposed on inbound and outbound air cargo shipments, trucking and rail cargo services, and vessels along the Yangtze River. This means that even if production is slowly increasing, goods have no way of leaving the country and reaching their intended destination.<\/p>\nHow the Chinese production shutdown is affecting western countries<\/h2>\n
Dun & Bradstreet researchers found that at least\u00a051,000 companies worldwide have one or more direct or \u201ctier 1\u201d suppliers in the impacted regions, while at least 5 million have one or more \u201ctier 2\u201d suppliers. Training<\/p>\n
The report also identified that the top five major sectors, accounting for\u00a0more than 80% of businesses within impacted provinces<\/strong>, were services, wholesale trade, manufacturing, retail, and financial services.<\/p>\nBrazil<\/strong>, which relies on the Chinese market as its largest trading partner, will likely see slower growth this year due to the fallout from the outbreak.<\/p>\nA similar situation can be expected in the U.S. as well.<\/strong>\u00a0Currently, the American consumer is China\u2019s largest customer. The U.S. depends heavily on China for providing low-cost goods. It also depends on it to support its own exports. Next to Mexico and Canada, China is America\u2019s third-largest and by far its most rapidly growing major export market.<\/p>\nGeneral Motors<\/strong>, the American car manufacturer, is forced to slow down production as its factories, located in impacted areas, are only functioning at minimum capacity. Foxconn, the Taiwan company that makes iPhones and other gadgets on behalf of\u00a0Apple<\/strong>, also denied it will be able to reach 50% production levels by the end of February. Tim Cook, Apple\u2019s chief executive, confirmed that some of its suppliers could be disrupted.<\/p>\nThings don\u2019t look better in\u00a0Europe<\/strong>\u00a0either. The gloomy outlook briefly sent the euro to almost three-year lows against the dollar.<\/p>\nAirbus<\/strong>, the French aircraft maker, recently acknowledged that it cannot\u00a0meet global demand for narrow-body jets\u00a0with its Tianjin factory not working at full capacity.\u00a0Volkswagen<\/strong>\u00a0has announced that they have only partially restarted production after the Lunar Year Holidays, and they\u2019re looking into gradually increasing it \u201cwhile implementing all required health and safety measures.\u201d<\/p>\nThe Chinese economy constitutes around 20% of global GDP (gross domestic product). Analysts estimate that if containment of the outbreak is delayed beyond the summer, the \u201ccascading effect\u201d will cause\u00a0a drag of around one percentage point on global GDP growth<\/strong>.<\/p>\nThe consequences of a low level of production and lockdowns in China and beyond<\/p>\n
If lockdowns are not soon suspended, the impact on supply chain operations and industrial production throughout China will be huge. Experts estimate that the effects of this pandemic on the Chinese economy will\u00a0force the country into its biggest recession yet<\/strong>.<\/p>\nThough it\u2019s very difficult to predict\u00a0the exact consequences of the Coronavirus<\/strong>\u00a0impact across global supply chains, experts predict:<\/p>\nThe New York Times<\/strong>\u00a0|\u00a0By Liz Alderman and David Gelles<\/p>\nAs Boeing Jets Sit Idle, Airbus Can\u2019t Make Planes Fast Enough<\/strong><\/p>\nAirbus can\u2019t easily capitalize on the grounding of archrival Boeing\u2019s best-selling plane.<\/p>\n
\n- supply\u00a0shortages of materials<\/strong>\u00a0or finished goods coming from or routed through logistical hubs in impacted areas;<\/li>\n
- limited availability of white- and blue-collar labor<\/strong>\u00a0due to quarantine guidelines or illness;<\/li>\n
- limited ability to discover, qualify and certify new business<\/strong>\u00a0or programs and to transact business;<\/li>\n
- challenges in finding alternative routes and means of transportation<\/strong>\u00a0\u2013 even if materials are available, they won\u2019t be easily transported;<\/li>\n
- consumers may be more cautious<\/strong>\u00a0in their purchasing habits.<\/li>\n<\/ul>\n
\u201cSupply chain excellence is mostly a matter of efficiency and predictability. With the outbreak of COVID-19, both of these dimensions are being heavily impacted, with suppliers struggling to meet demand while navigating disruptions in workforce availability, transport plans, and their own supply chains.\u00a0<\/em><\/p>\nIn the next few weeks, we expect to see a significant increase in the number of procurement events, like eAuctions, organized via Prokuria, as procurement teams will likely scramble to identify, qualify, and sign new suppliers outside the impacted areas to ensure the needed quantities\u201d<\/em>, said Alina Naftanaila, Co-Founder\u00a0Prokuria<\/p>\nThe Coronavirus instilling the biggest crisis in Asia in recent years<\/h3>\n
From a supply chain perspective, the disruptions can be associated with past crises such as the 2003 outbreak of severe acute respiratory syndrome (SARS) that swept across Asia, the 2011 Fukushima nuclear disaster, or the 2011 Thailand floods. However, these events had a short-lived economic impact; the impact of the Coronavirus could be much more sustained.<\/p>\n
Moreover, this virus is\u00a0affecting both supply and demand<\/strong>, so the potential threats are graver than those earlier disruptions. We also have to consider China\u2019s growth since the SARS crisis as a manufacturing powerhouse and as a major consumer market.<\/p>\n
<\/p>\n
Currently,\u00a0China is the world\u2019s largest exporter of goods<\/strong>. Official estimates say Chinese exports amount more than $2 trillion, making the country the largest trading nation on Earth.<\/p>\n But with China\u2019s economy running at\u00a0just 40% capacity amid Coronavirus lockdown<\/strong>, the effects on the\u00a0global supply chain\u00a0industry are devastating. Not only for the country\u2019s economy but to everyone else who depends on Chinese goods.<\/p>\n At the moment,\u00a013 Chinese cities are under full or partial lockdown through transport bans<\/strong>. Authorities in these cities have halted all public transportation, suspended flights, and barred all non-emergency vehicles from entering or leaving.<\/p>\n The lockdowns are severely\u00a0impeding logistics operations<\/strong>\u00a0that rely on access to highways to carry goods. Severe restrictions have also been imposed on inbound and outbound air cargo shipments, trucking and rail cargo services, and vessels along the Yangtze River. This means that even if production is slowly increasing, goods have no way of leaving the country and reaching their intended destination.<\/p>\n Dun & Bradstreet researchers found that at least\u00a051,000 companies worldwide have one or more direct or \u201ctier 1\u201d suppliers in the impacted regions, while at least 5 million have one or more \u201ctier 2\u201d suppliers. Training<\/p>\n The report also identified that the top five major sectors, accounting for\u00a0more than 80% of businesses within impacted provinces<\/strong>, were services, wholesale trade, manufacturing, retail, and financial services.<\/p>\n Brazil<\/strong>, which relies on the Chinese market as its largest trading partner, will likely see slower growth this year due to the fallout from the outbreak.<\/p>\n A similar situation can be expected in the U.S. as well.<\/strong>\u00a0Currently, the American consumer is China\u2019s largest customer. The U.S. depends heavily on China for providing low-cost goods. It also depends on it to support its own exports. Next to Mexico and Canada, China is America\u2019s third-largest and by far its most rapidly growing major export market.<\/p>\n General Motors<\/strong>, the American car manufacturer, is forced to slow down production as its factories, located in impacted areas, are only functioning at minimum capacity. Foxconn, the Taiwan company that makes iPhones and other gadgets on behalf of\u00a0Apple<\/strong>, also denied it will be able to reach 50% production levels by the end of February. Tim Cook, Apple\u2019s chief executive, confirmed that some of its suppliers could be disrupted.<\/p>\n Things don\u2019t look better in\u00a0Europe<\/strong>\u00a0either. The gloomy outlook briefly sent the euro to almost three-year lows against the dollar.<\/p>\n Airbus<\/strong>, the French aircraft maker, recently acknowledged that it cannot\u00a0meet global demand for narrow-body jets\u00a0with its Tianjin factory not working at full capacity.\u00a0Volkswagen<\/strong>\u00a0has announced that they have only partially restarted production after the Lunar Year Holidays, and they\u2019re looking into gradually increasing it \u201cwhile implementing all required health and safety measures.\u201d<\/p>\n The Chinese economy constitutes around 20% of global GDP (gross domestic product). Analysts estimate that if containment of the outbreak is delayed beyond the summer, the \u201ccascading effect\u201d will cause\u00a0a drag of around one percentage point on global GDP growth<\/strong>.<\/p>\n The consequences of a low level of production and lockdowns in China and beyond<\/p>\n If lockdowns are not soon suspended, the impact on supply chain operations and industrial production throughout China will be huge. Experts estimate that the effects of this pandemic on the Chinese economy will\u00a0force the country into its biggest recession yet<\/strong>.<\/p>\n Though it\u2019s very difficult to predict\u00a0the exact consequences of the Coronavirus<\/strong>\u00a0impact across global supply chains, experts predict:<\/p>\n The New York Times<\/strong>\u00a0|\u00a0By Liz Alderman and David Gelles<\/p>\n As Boeing Jets Sit Idle, Airbus Can\u2019t Make Planes Fast Enough<\/strong><\/p>\n Airbus can\u2019t easily capitalize on the grounding of archrival Boeing\u2019s best-selling plane.<\/p>\n \u201cSupply chain excellence is mostly a matter of efficiency and predictability. With the outbreak of COVID-19, both of these dimensions are being heavily impacted, with suppliers struggling to meet demand while navigating disruptions in workforce availability, transport plans, and their own supply chains.\u00a0<\/em><\/p>\n In the next few weeks, we expect to see a significant increase in the number of procurement events, like eAuctions, organized via Prokuria, as procurement teams will likely scramble to identify, qualify, and sign new suppliers outside the impacted areas to ensure the needed quantities\u201d<\/em>, said Alina Naftanaila, Co-Founder\u00a0Prokuria<\/p>\n From a supply chain perspective, the disruptions can be associated with past crises such as the 2003 outbreak of severe acute respiratory syndrome (SARS) that swept across Asia, the 2011 Fukushima nuclear disaster, or the 2011 Thailand floods. However, these events had a short-lived economic impact; the impact of the Coronavirus could be much more sustained.<\/p>\n Moreover, this virus is\u00a0affecting both supply and demand<\/strong>, so the potential threats are graver than those earlier disruptions. We also have to consider China\u2019s growth since the SARS crisis as a manufacturing powerhouse and as a major consumer market.<\/p>\nHow the Chinese production shutdown is affecting western countries<\/h2>\n
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The Coronavirus instilling the biggest crisis in Asia in recent years<\/h3>\n
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