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Business Observer Wednesday, Apr. 8, 2020 2 months ago

Area firm analyzes effects of COVID-19 on global supply chains

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The coronavirus pandemic has caused worldwide supply chain disruptions. A strategist from Fort Myers-based supply chain services firm Allyn International shares what she’s seeing and what might be ahead.
by: Grier Ferguson Sarasota-Manatee Editor

It’s hard to find an aspect of personal or business life untouched by the coronavirus pandemic.

With the outbreak stretching across countries and continents, global supply chains, for one, have seen major impacts.

Amy Reszkowski, digital strategist for Fort Myers-based supply chain services firm Allyn International Services Inc., regularly analyzes supply chains worldwide. Allyn, with 23 locations worldwide, about 400 employees and $32 million in revenue in 2018, provides transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. During the crisis, Reszkowski has been sending out updates to staff and clients three times a week with research and information from employees on the ground in China, the Middle East and throughout Europe.

Reszkowski says the supply chain industry can sometimes lag behind current events. It started feeling effects of the coronavirus a few weeks after the outbreak spread within China, causing the country to decrease production and exports.

It’s worth noting, she says, that the outbreak coincided with the Chinese New Year, which tends to reduce the country’s export function temporarily each year. “A lot of countries and companies that trade with China had prepared at least for a short-term disruption due to the Chinese New Year,” says Reszkowski. “Of course, that disruption continued as the outbreak grew, resulting in a longer shut down than we typically would see.”

‘This global pandemic is uncharted territory. We have seen nothing that has affected the world in this way ever before, so predicting what’s going to happen in the future is going to be difficult.’ — Amy Reszkowski, Allyn International

As the shut down continued, it caused delays for most industries. “Some industries that have been most impacted by the inability to obtain parts or supplies would be the medical equipment industry, automotive part industry and food distribution,” she says.

As the outbreak spread outside of China, Reszkowski says it’s impacted almost every supply chain in terms of prices to move cargo. “It drastically increased for air and ocean for international transport,” she says. “That’s mainly due to low capacity.”

Reszkowski says about 50% of cargo moving by air travels in the belly of a passenger aircraft. With the high number of cancelled flights, air capacity has been greatly reduced and prices have gone up. “There are cargo-only aircraft, but there aren’t enough of them to make up for the void that’s being caused by the cancellation of passenger flights,” she says. “Some passenger airlines, at a very reduced level, are flying their aircraft with cargo only to try to ease some of that pressure on the international air market.” Some Allyn clients, Reszkowski says, have chartered aircraft in recent weeks to move their cargo exclusively.

Meanwhile, ocean transport has been primarily impacted by cancelled trips (known as blank sailings) and a shortage of containers. When China was hit hard, ships would skip Chinese ports in fear of bringing the virus on board. If a vessel can’t be emptied, it’s tying up resources. “We’re still feeling that effect today with any nation that trades with China,” Reszkowski says. “They’ve ramped up their production and exports out of that region since they’ve reopened most of their country, but they are still working through that backlog.”

Within Italy, meanwhile, there are major shipment delays. The government has closed almost all domestic transport companies, she says. In India, a 21-day shutdown issued by the government is also affecting supply chains. Reszkowski sees major delays ahead for production, pickups, deliveries, exports and imports. 

Domestic transport in the U.S. hasn’t been as affected, but there have been impacts due to areas of the country experiencing virus hot spots. “Depending on where your goods need to come from and where your goods need to go will determine how much of an impact you’ll feel,” Reszkowski says.

With global supply chains reeling, one of the best steps companies can take is to plan ahead. “The earlier you can book to move your cargo, the better off you’re going to be in the long term,” she says. Booking ahead allows a company to lock in prices and secure space for its cargo. Companies should also expect an increase in transit time.

“This global pandemic is uncharted territory,” Reszkowski says. “We have seen nothing that has affected the world in this way ever before, so predicting what’s going to happen in the future is going to be difficult. But what we do anticipate is that once countries begin to heal and their people begin to heal, we’re expecting production to rebound and capacity issues will begin to ease over the course of the next several months as long as the global pandemic begins to ease.”

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