Strategy January 29, 2020
Efforts to slow outbreak of disease also hamper supply chains as airlines cancel flights, container ships see delays, factories stay shut for extended Chinese New Year.
By Ben Ames
Retailers and other shippers are bracing for supply chain delays on goods moved in and out of China as a growing number of airlines and ocean carriers freeze operations across the country’s borders in the wake of a deadly virus outburst that has already killed scores of people and sickened thousands.
Thought to have originated in the wild animal food markets of the country’s Wuhan city, the coronavirus causes pneumonia-like symptoms and is similar to the severe acute respiratory syndrome (SARS) virus that killed hundreds of victims in 2003 and was also sparked by human consumption of wild game in China.
In an effort to slow the flow of people and contain the outbreak by reducing the spread of infections, the Chinese government on Monday announced it had extended its traditional Chinese New Year (CNY) holiday through Feb. 2 in most places and through Feb. 9 in more affected regions such as Shanghai, Ningbo, Hangzhou, and Suzhou.
That move is significant for supply chains because workers in Asian countries such as China, Vietnam, and Korea traditionally celebrate the Lunar New Year by traveling to spend time with their families. That mass movement has already shut down factories and warehouses throughout the region, so extending the holiday will likely prolong delays in producing and delivering goods worldwide.
In addition to broad government policies, individual companies have also responded to the virus by changing their specific shipping schedules. Ocean carriers have said ports are still operational, but that customers should expect delays, according to an update to clients sent by Noatum Logistics, an Overland Park, Kansas-based freight forwarder.
For example, the container fleet giant Evergreen Marine Corp. has reported that all its terminal ship-side operations are normal except for Wuhan, the city where the virus originated, Noatum said. Evergreen’s feeder service in and out of Wuhan and local terminal operations in Wuhan are both temporarily shut down due to the quarantine. Shipments already in route will be idled at other ports until the lockdown is lifted.
Commercial airlines are reacting likewise, with United Airlines saying it has canceled 24 flights between the U.S. and China during the first week of February, and British Airways canceling others.
In terms of the virus’ impact on specific companies, the quarantine on Wuhan will have a ripple effect on corporations around the globe because the city is an important manufacturing center, ranking 13th of 2,000 cities in China that host factories, according to Bloomberg News. Overall, the city’s province of Hubei is the seventh largest of 32 jurisdictions, containing 44 facilities run by U.S. companies and 40 more operated by European ones, including PepsiCo Inc. and Siemens AG, Bloomberg said.
One logistics company that has continued its flights to China is FedEx Corp., which has offered resources from its “Delivering for Good” charitable initiative, sharing expertise in shipping and logistics for communities in need.
On Monday, FedEx Express shipped more than 200,000 surgical masks and personal protective equipment such as gowns and gloves to its Asia Pacific Hub in Guangzhou, China to assist the response work of the humanitarian aid organization Direct Relief. To move the goods from the air hub to affected regions, FedEx is working closely with China Post, which will deliver the aid from Guangzhou to Wuhan Union Hospital, the company said.
“FedEx is proud to mobilize its global network to deliver aid, comfort and care to people suffering in the wake of this unprecedented health emergency,” FedEx President and COO Raj Subramaniam said in a release. “We will continue to work closely with humanitarian and disaster relief organizations to provide support and deliver supplies, doing what we do best to help those who need it most.”
About the Author
Ben AmesSenior Editor
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide “Hiking Massachusetts” and is a graduate of the Columbia School of Journalism.
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