China has seen drops in new Covid-19 infections along with signs that supply chains there are recovering. But we’re likely seeing the calm before a very large storm. In the U.S., a rippling cascade of shocks is oncoming, with severe impacts expected in April and May. The American Hospital Association is bracing for infection rates of 30 percent to 40 percent, and 500,000 potential deaths. Some regions may see an Italy-like lockdown, with shipping and delivery of essential goods slowing significantly or stalling altogether.
The situation requires government and industry to act now to protect the supply chain that provides food, medicine and other necessary goods. The outbreak already has caused supply chain disruptions for about three-quarters of U.S. companies surveyed by the Institute for Supply Management. The Port of Los Angeles reported a nearly 23 percent drop in cargo volumes in February, compared to the year-earlier period. The Georgia Port Authority, meanwhile, is forecasting a 40 percent decline in incoming shipments in March and April.
As disruptions accelerate, we must take these three steps to protect U.S. supply chain continuity:
1) Restore global production, especially in China, as quickly as possible to serve our critical industries. Right now, only China has the potential production scale to meet the soaring demand in the United States and elsewhere for such vital products as medical-protective equipment, pharmaceuticals, electronics and household essentials. It is imperative for our country and the world that we encourage the rapid recovery of Chinese production capacity. Particularly, we need China to ramp up output quickly in areas of most-critical need, such as sophisticated protective gear for doctors and nurses; and pharmaceuticals/medicines for patients and households. The U.S. government will need emergency trade measures such as designating key Chinese and other suppliers in areas of U.S. crucial need. Policymakers can use preferred pre-qualified suppliers to procure larger volumes of necessary goods and can work to streamline customs and regulatory procedures.
2) Preserve the operations of supply chain hubs across the United States. Strategic command and control over critical supply chain assets is needed. This calls for a “U.S. Supply Chain Command Post” and an associated “Coronavirus War Room” to ensure business continuity at key ports, airports and highways. This post would include representatives from federal agencies such as DOT, DHS and DOD; from state transportation agencies and airport/port authorities; and from the shipper-carrier community. Its singular mission would be to protect the ongoing operations of the nation’s most vital sea, air, rail and ground freight hubs. This Command Post would surveil, plan, facilitate and monitor material requirements and help assure adequate national inventories of food, medical equipment, pharmaceuticals and other essentials. Evidence-based research has proved that today’s supply chain networks, routes and hub locations are key corridors for pandemic transmission. Now more than ever, the security and health of the domestic supply chain must be a primary mission focus at all levels of government.
3) Ensure delivery of needed food and medical/health supplies to home-bound populations. We must quickly scale a delivery infrastructure to homebound and vulnerable populations, and to the institutions that serve them. This infrastructure would best be coordinated and executed by a national “At-Home Delivery Consortium” involving major last-mile players, such as the USPS, Amazon, Walmart, FedEx and UPS — with help from the National Guard and funds from federal and state governments. The consortium also could assist in procuring and distributing necessary materials to U.S. anchor networks of hospitals, clinics and nursing homes.
We now know that Covid-19’s potential global transmissibility and lethality are greater than that of SARS. Pentagon research in 2003 tracked the entire cycle of emergence, spread and containment of the SARS outbreak in Singapore. It lasted 11 weeks, and its economic impact spanned four to six months. Managing so effectively during the outbreak made Singapore a world leader in health crisis response. Singapore Foreign Minister Vivian Balakrishnan said recently the economic imprint on the global economy from Covid-19 is likely to be felt for at least a year.
The facts speak for themselves. There were 8,437 known SARS cases and 813 deaths between November 2002 and July 2003. More than 90 percent were in Asia, with China alone accounting for 7,177 cases. By comparison, Covid-19 already has infected more than 124,518 people across 118 countries, with more than 4,607 deaths worldwide since December.
These facts tell us we must act quickly.
Sandor Boyson, research professor and founding co-director of the Supply Chain Management Center at the University of Maryland’s Robert H. Smith School of Business, also has served as a principal investigator and advisor in Supply Chain Risk Management for NIST and as a U.S. secretary of commerce-appointed member of the Advisory Committee on Supply Chain Competitiveness.