The COVID-19 outbreak has caused supply chain disruptions for nearly three-quarters of U.S. companies, and many are already pricing in revenue losses this year as a result, according to a special ISM survey.
What’s happening: Data show global production out of China fell to an all-time low last month, with freight and shipping slowing dramatically as the virus has shuttered factories and container ports.
- Quarantined workers and shortages of components have further crimped the availability of goods from China, which is the world’s hub for manufacturing.
The intrigue: Of the companies surveyed that expect supply chain impacts (80% said yes), most expect the severity of the disruptions will increase after the first quarter of this year.
Why it matters: The virus’ impact has not yet been quantified, but the survey from the Institute for Supply Management — the first of its kind — shows just how widespread its impacts have already been for American businesses.
- “The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” ISM CEO Thomas W. Derry said in a statement.
- “For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States — even if they can get orders filled.”
Details: ISM’s business contacts, of which 81% are firms with revenues of less than $10 billion, reported a laundry list of disruptions that have already resulted from the outbreak.
- Manufacturers in China report operating at 50% capacity with 56% of normal staff.
- More than 44% of respondents said they did not have a plan in place to address supply disruption from China.
- Six in 10 (62%) respondents are experiencing delays in receiving orders from China.
- More than half (53%) are having difficulty getting supply chain information from China.
- Nearly one-half are experiencing delays moving goods within China (48%).
- Almost one-half (46%) report delays loading goods at Chinese ports.
Of note: The survey was conducted between Feb. 22 and March 5 among 628 respondents that largely represent U.S. organizations.
