The Friday Report: March 13th, 2020
Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry
Coronavirus Disrupting Supply Chains
According to a new survey by the Institute of Supply Chain Management, nearly 75% of companies are reporting supply chain disruptions due to coronavirus-related transportation restrictions. The survey also reported that over 80% of those survey believe that their company will experience some impact because of coronavirus disruptions. Of these companies 16% have already adjusted their revenue targets downward on average 5.6%.
Most American companies noted that lead times have doubled. In addition, there has been a shortage of ocean and air freight options needed to move goods to the United States, even if they can fill orders. Chinese manufacturers have been operating at 50% capacity with only 56% of the typical staff. 44% of the companies surveyed did not have a plan established to handle supply chain disruptions from China.
Adding to the frustration, 53% of those surveyed reported they were having difficulty obtaining information from China. In addition, 48% are dealing with delays moving goods within China and 46% are facing delays in loading goods at Chinese ports.
Globally Crops at Risk Due to Extreme Weather
Extreme weather events are plaguing the world. From Thailand’s worst drought in 40 years to the hottest winter in Europe, diminished rainfall in part of the U.S., New Zealand and Australia, warmer temperatures have been contributing to wetter weather. Market volatility has been marked. According to the United Nations Food Price Index, global prices of commonly traded food commodities increased to the highest level in five years in January 2020.
Concerns about unpredictable weather and reduced water availability in various areas will impact future food prices. Climate change is definitely a global risk to food prices.
Read more about weather conditions and their impact around the world on food prices
Ports on Both Coasts Fear Cargo Freight Drops
According to recent figures, cargo volumes are dropping. As ports scramble to recover from the recent U.S.-China trade war, the rapid reduction in Chinese factory output has begun to take its toll. According to the Port of Los Angeles, container volume decreased almost 23% in February. Correspondingly, the Port of Long Beach experienced a 9.7% year-over-year decrease.
Chinese factory production output continues to be at low levels, which should lead to lower volumes in March. Hope remains that there will be a surge of cargo freight as soon as production escalates.
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