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Global Supply Chains Counting The Cost of COVID-19, Impact is Widespread Says Panjiva Research

The COVID-19 outbreak has caused huge disruption in the global supply chain and continues to face widespread risk. The impact is nearly in all sectors starting from starting from autos, electronics, capital goods, commodities, apparel sectors and majority in retail.

All these sectors are experiencing slowdown in sales and availability of products or parts in their supply chains according to the latest research by Panjiva, the supply chain intelligence unit of S&P Global Market Intelligence. The report says that the global supply chain is expected to take an extended period of full recovery.

Many firms have expedited deliveries to maintain their supply chains, but order effects are also emerging with various industries like apparel, consumer products, capital goods, shipping, logistics, auto and electronics now seeing a shortage in materials and availability of parts due to lack of supplies from various countries.

Key findings from the research:

  • Logistics sector has  slowed down rapidly as U.S. seaborne imports from China fell by 21.5% year over year in February
  • The chemicals, autos and technology hardware industries appear to be the most preoccupied with the impact of the virus based on recent company conference calls
  • Tariff lessons come in handy as companies are accelerating their supply chain restructuring efforts
  • Expedited deliveries particularly using airfreight have become more prominent
  • Second order effects are also emerging with the apparel industry now seeing a shortage in materials for manufacturing outside of China
  • Asian revenue exposure seems to matter less than supply chain exposure in the retail sector
  • Healthcare sector should in theory benefit from a global health emergency, but upstream supply shortages can curtail the ability of firms to actually profit from the trend

The automotive sector has been particularly affected as a result of its just-in-time supply chains which include giants like Nissan motors, Tata joining the list that are facing the pinch occurred due to the epidemic spread.

The above figure represent how the epidemic spread caused disruptions to manufacturing have spread across global automotive supply chains.

There was a 7.6% drop in total Japanese auto exports in December and a 5.8% slide in U.S. Imports of vehicles from all countries in the same month because of falling sales. Restrictions to international shipping activity linked to COVID-19 are leading to a shortage of containers for commodities export.

Container-line Maersk reported a 5.5% year over year drop in revenues in Q4 and the firm has taken a downbeat outlook to 2020 with a decline in profits expected due to COVID-19 coronavirus which has “significantly lowered visibility” for the first half of the year.

The toll to the apparel sector from COVID-19 has been spreading with giants like Adidas and Puma warning about the impact on sales. In this way each and every sector getting affected with revenue, sales, operations etc.

(Image Courtesy: www.exentago.com)

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