The global supply chain situation for Covid-19 March 3rd

Virus update

Hand hygiene - in case you've been wondering how much hand washing is enough, NHS London's twitter advises you should wash your hands for as long as it takes to sing Happy Birthday twice (Link).

The WHO dashboard currently reports 90,892 infections globally (up 1.5% globally since yesterday) with an extra 6 countries now reporting cases bringing the total to 73. Countries with large outbreaks: China (80,303 - up 129), Republic of Korea (4,812 - up 600), Italy (2,036 - up 347), Iran (1,501 - up 523). Other countries include Japan (268), France (191), Germany (157), Spain (114), Singapore (108) with the US likely to be the next to go into triple digits - currently it's at 88. 

USA's CDC no longer reporting how many tests are being performed - Lauren Morello, the deputy health editor at Politico reports on Twitter (Link) that the US centre for Disease Control and prevention (CDC) appears to have stopped reporting how many people are being tested for the virus in the US as of the 1st March. This has outraged Democratic Congressman Mark Pocan who has written a letter to the CDC Director demanding an explanation (Link). The Guardian is remaining neutral on the topic, but several high profile twitters are accusing the white house administration of a coverup for example the Washington Post reporter David Fahrenthold (Link) whilst a woman in Miami who thought she had the virus was denied a test (Link) by state and federal health authorities even though the hospital involved themselves requested the test.

The Guardian's take today - The WHO says the world is in 'unchartered territory' (Today's Guardian blog - link). It adds that the Coronavirus is being viewed so seriously in the UK that a ministerial ban has been broken on appearing on this mornings influential BBC Radio 4 today political program - Matt Hancock the UK health minister appeared on it. Closing schools at this stage would be ineffective he said, but part of the proposals of the emergency legislation being brought forward by the government will result in retired doctors and others, as well as volunteers, being able to come through to help out if there is a shortage of staff.

Other news in brief from the Guardian blog linked above - staff at Google's Dublin office are to work from home due to the worry a member of staff there has caught the virus, Twitter staff in all countries are being told to work from home if at all possible (confirmed on their blog - link), major concerts and events in the UAE are being cancelled as the country follows the lead of others including Switerland and France in banning large gatherings of people, two chartered flights will bring Hong Kongers back from Wuhan, the Australian central bank has brought interest rates down to a record 0.5% to try to protect the economy and British supermarkets have drawn up “feed the nation” contingency plans that would help the country cope with any panic-buying brought on by a sudden escalation of the coronavirus outbreak (more on that one in detail here).

Retail rationing starting - Staying on the topic of retail, hand sanitisers sales in the UK have soared by 255% reports Yahoo Finance (link) with some outlets of Boots (a major pharmacy/drug store chain in the UK) rationing sales to no more than 2 per customer. The same is being reported in the US with Kroger (a major US supermarket chain) enforcing a 5-item limit on orders of sanitization, cold, and flu products amid coronavirus fears says Business Insider (link).

Prepping: How to prepare for Coronavirus like a pro - With the CDC (US Centre for Disease Control and prevention) warning of severe disruption to the lives of ordinary Americans (6 day old link here), the MIT technology review magazine has an interesting argument (link) for prepping written by its senior editor for biomedicine. The author prepped a few weeks ago and his article touches on the societal aspects of prepping, the issues of panic buying and queries whether you'd cope if where you are suddenly gets quarantined for a sustained period (as is already happening in parts of China, Italy and South Korea). (Personal note, I will admit I did some over the weekend and will have another go tonight. Europe hasn't experienced stockouts yet because unlike parts of the US and Australasia, the shipping cancellations haven't yet really hit due to our geographical distance from China).

Economics

 PMI positive for US in February - Supply Professional reports that the American PMI in February was 50.1, down from 50.9 in January. They believe this will not sustain; many businesses have been impacted by Trump's trade wars and are now experiencing supply chain disruption (responses to my posts in the past few days have also given personal anecdotes of supply chain issues).  Link

Global PMI negative in February though - Bloomberg reports that the global PMI index tracked by JP Morgan fell to 47.2 (having been above 50 for the last 3 months).  Production dropped to its lowest level for 2 decades whilst the measure of new orders was down to levels last seen in 2009 with factory job losses also at a level last seen in 2009. The IMF issued a statement calling on central banks to provide stimulus packages as much as possible to ease the situation.  Link

China's container ports beginning to clear backlog - I only just saw this; Reuters reported 5 days ago that major Chinese ports are beginning to clear their backlogs as more people return back to work. The country processes 30% of the world's containers. The key port of Ningbo-Zhousan has 24,000 registered container truck drivers but at the peak of the disruption only 800 of them were working. Daily processing rates remain below 2019 average rates but are improving.  https://archive.is/wip/KVXKJ

Splash247 agrees that the backlog is clearing - it reports (link) that China ports are starting to stabilise their volumes. Cargometrics (an analytical company specialising in cargo movement tracking) says that both Chinese imports and exports are starting to return to normal levels. That doesn't mean this will all soon be over says the article; Writing in the latest issue of Clarkson’s Shipping Intelligence Weekly, Stephen Gordon, the company’s research head, stated: "Coastal ports have remained open and while the trend suggests activity is stabilising, a second dip is possible once initial backlogs are cleared. Operational challenges are also impacting, e.g. crew changes, acceptance of ships at ports, deliveries and activation of contractual clauses." A graph at the bottom of the article shows that containers waiting to be offloaded at China ports are 60% higher than normal.

South Korea launches financial aid for maritime firms impacted by the virus - Splash247 also reports today (link) South Korea’s Ministry of Oceans and Fisheries is offering up to $76m USD equivalent in low interest loans to companies affected by the virus impact. The ministry also said it would fully exempt shipping firms from port dues until their operations to China and Japan are normalised.

 IATA calls for slot rule suspension to ease impact - the International Air Transport Association has called for congested airports to ease the rules which mean that a failure by an airline to use at least 80% of their slots means they lose access the following season. Citing the severe disruption in parts of Asia which is now spreading in tandem with the virus, the association is calling for a suspension of the rules in 2020.  The article gives a historical example when cargo Kalitta air lost its slots at Amsterdam due to missing punctuality targets. Whilst passenger airlines are badly affected, cargo airlines are more consistent.  Link 

Coronavirus likely to hinder airfreight growth until the outbreak ceases - the two analytics firms Dreary and WorldACD have both released January 2020 reports agreeing that the airfreight industry is unlikely to grow until the virus outbreak is brought under control.  Airlines suffered a 5.8% drop in chargeable cargo Vs the same month in 2019 although high tech, pharma, flowers and meat all grew. WorldACD added that it expects February statistics to be "shocking".  Link 

DP DHL takes a €70m hit from Coronavirus - Aircargonews.net reports that the group has so far taken a modest €70m hit due to the Coronavirus with its express and forwarding divisions particularly hit.  “Thanks to our broad geographic set-up and our comprehensive portfolio we are more resilient than other companies. However, a worldwide crisis like the coronavirus does not leave us unaffected. It is currently hard to judge how strong the impact on our business will be, said their CEO.  Link

What does Coronavirus mean for retail chains - Forbes writes that the World Trade Statistical Review found that in 2018 – the most recent data available – China exported $118.5bn (￡91.1bn) of textiles and $157.8bn (￡121.5bn) of clothing, making it the world’s biggest exporter of these categories. China is a major producer of cotton, fabrics and silk, and its factories produce all types of clothing at both low and high end. One shoe retailer anonymously told Forbes that 100% of their products have some element of Chinese development in them.  Link

Another bullish article from Xinhua on toy manufacturing in China - the state owned media outlet has published an interview with the president and CEO of the US toy association, a non profit trade group. In the article, Xinhua point out that China is the no 2 market after the US (it'll become no 1 next year) and that 85% of toys sold in the US are made in China. Xinhua are at pains to point out the Chinese manufacturing industry is capable of meeting US safety demands as well as providing additional value add services such as design improvements.  The nation's toy industry generates approximately 28 billion annually in sales and supports about 650,000 jobs, according to the U.S. Toy Association.  Link

EDIT: A copy of this post has been published also on https://www.reddit.com/r/supplychain.