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Covid-19 update Friday 10th April
(Sorry about no post yesterday, my day job exploded in my face and demanded all of my attention). PS I still feel absolutely fine, no virus for me yet. I hope to keep it that way, I’m being careful on isolating.
Virus news in depthNew York sees record coronavirus deaths again as Cuomo warns economic toll 'worse than 9/11' - The Guardian reports that whilst the death rate in New York state continues to set new records on a daily basis, the hospitalisation admission rate is beginning to stabilise, suggesting that self isolation and lockdown procedures are beginning to have an effect. New York State Governor Cuomo was quick to sound a note of caution. “Remember, the 1918 Spanish flu came in three waves,” Cuomo said. “We’re on the first wave. Everybody is assuming, well, once we get through this, we’re done. I wouldn’t be so quick to assume that. This virus has been ahead of us from day one.” New York City has since the 19th century used Hart Island to bury New Yorkers with no known next of kin or whose family are unable to arrange a funeral. In a typical week 25 bodies are interred by low-paid jail inmates working on the island, which sits off the east shore of the city’s Bronx borough and is accessible only by boat. That number began increasing in March rapidly and the city is now burying about two dozen bodies a day five days a week and is also using contractors for the work (due to an outbreak of the virus in the island’s jail plus for additional safety reasons). In a Reuters article on the New York City situation, Diana Torres, a nurse at Mount Sinai Hospital in New York City, the center of the nation's worst outbreak said “Patients look fine, feel fine, then you turn around and they're unresponsive," said. "I'm paranoid, scared to walk out of their room."
Virus news in brief
- Bill Gates (known for his philanthropy in medicine in general and vaccines in particular) believes things may not fully return to normal until autumn/fall next year (CNBC link).
- The forced closure of businesses across the United States and surge in unemployment due to the coronavirus pandemic will force U.S. growth to contract by 30% in the second quarter and 5% overall in 2020 according to a high profile investment management company. (Reuters link)
- Major media companies being hit by significant drops in advertising revenue, a key revenue stream that’s critical for their ongoing viability. Forecasts for global advertising growth this year have been revised down by $20 billion since March 12, according to market research firm eMarketer. It estimates ad spending growth of just 8.4% in China, where the outbreak began, the slowest since 2011. Total local advertising in the United States could decline by up to 30% this year, or $38 billion, according to media research firm Borrell Associates. (Reuters link)
- GM, Philips to supply 73,000 U.S. ventilators in $1.1 billion effort - Reuters says the U.S. Health and Human Services Department (HHS) on Wednesday awarded two contracts worth more than $1 billion to make ventilators and plans to announce five additional contracts later this week. Ventec Life Systems and General Motors Co (GM.N) has won a contract for $489 million to produce 30,000 ventilators (6,132 by 1st June, the rest by end of August), while Philips has won a $646.7 million contract to produce 43,000 ventilators by year end, including 2,500 ventilators by the end of May.
Supply chain news in depth
Levi’s adjusts its supply chain approach to account for impacts from the virus - Supplychaindive reports that order reductions, ship-from-store capability and supply chain visibility will help Levi's "emerge from the storm strong or stronger than going into it," CEO Chip Bergh said on a Tuesday earnings call. The company also became the latest to withdraw any financial projections whilst 70% of its 565 stores are closed due to the coronavirus pandemic. Levi's will ship some e-commerce orders from stores starting next week to move inventory trapped in closed stores and hedge against any changes in local regulations that could shut down fulfillment centers not shipping essential goods, Bergh said. Direct to consumer e-commerce accounts for more than 40% of the company's sales total sales, he added.
Time is running out to lift travel restrictions on seafarers and keep global trade moving - In a bid to stop the spread of coronavirus, ports around the world continue to restrict when crew can disembark, while the collapse in passenger flights has drastically reduced the options for repatriating seafarers, preventing the normal frequency of crew changes. Wilhelmsen Ship Management is among the many shipowners and managers to defer crew changes, and CEO Carl Schou said it was with “a heavy heart” that he made the announcement last week. “We have bought ourselves a time window – for now,” said Mr Schou. “We should not have to ask the crew for another deferral. This is unacceptable… The authorities must make travel ban exemptions for seafarers.” (Loadstar link). Supplypro.ca reports a similar story in Canada; Canadian crews aboard most Canadian-flagged cargo vessels have agreed not to leave their ships when they arrive at their destinations, which means they can be restricted to their vessels for up to three months at a time. The crews on some foreign-flagged ships, meanwhile, are being told they’ll be stuck on their ships — without shore leave — for up to nine months. “It’s a real stressful situation,” Jim Given, president of the Seafarers’ International Union of Canada, said in an interview Wednesday. “That outside contact is being lost for those seafarers. As a maritime community, we’re going to have to figure out how we handle this. Everybody is trying their best, but it’s very difficult.” The charity is trying to support foreign crew members, most of whom are desperate for a sim card to facilitate overseas calling to talk to family members.
The Loadstar reports on Deutsche Post DHL’s latest financial numbers - the group (seen as a bellwether in the supply chain industry) says it’s getting hit hard in all its divisions but they are all continuing to make a profit. As has happened with Levi’s (see above), the group has nevertheless abandoned all profit guidance for the year. DHL Global Forwarding and Freight saw revenue decline by around €30m, year on year, in the quarter and posted a divisional ebit of €70m. Supply Chain also saw sales decline €30m, but its performance was more varied as it posted an ebit of €100m. The breadth of DHL’s capabilities and interests has insulated it to a degree from the worst effects. “The development in contract logistics differs with regards to regions and sectors. While fashion and automotive recognized negative effects due to suspended production and reduced demand, the retail grocery segment as well as the healthcare industry showed positive effects,” the company said. However, there are improved prospects for its Post & Parcel and E-commerce divisions, where it said “due to the shutdown of stationary retail stores, the e-commerce business and the corresponding parcel volumes grew dynamically”.
SCMP editorial: Why the coronavirus crisis won’t weaken China’s position in the global supply chain - An editorial by a Chinese professor (link) has been published in the South China Morning Post. He argues that
- US President Donald Trump’s administration has seemed more interested in reminding the public that the virus first emerged in China than in taking strong action to manage it which has severely undermined the willingness and ability of the world’s largest economies to mount a coordinated response.
- The US is wrong to disregard China’s potential to contribute to resolving the Covid-19 crisis. It is also wrong to expect that the pandemic will weaken China’s position in global supply chains.
- Even if more regionalised and diversified supply chains would reduce risks, China retains considerable competitive advantages in many areas, such as electronics, and machinery and equipment manufacturing. It cannot be replaced, at least not in the near term.
- A large number of low-value-added manufacturing jobs being transferred to neighbouring countries but far from weakening China’s position, this has enabled the country to climb the value-added ladder. The Yangtze River Delta and Guangdong province – regions that used to produce garments and shoes, and assemble electronics – have become hubs for hi-tech innovation.
- Major infrastructure investments in the country (5G, more high speed rail, ultra high voltage grids etc) will help China to build on recent progress in even more hi-tech sectors, including big data, artificial intelligence, the internet of things and the industrial internet. This will deepen China’s integration into the global technological supply chain. Not even a Sino-American decoupling will stop technological exchanges between China and the rest of the world.
Supply chain news in brief
- U.S. Customs and Border Protection will start to seize exports of personal protective equipment facing shortages amid a spike in demand due to the Covid-19 pandemic, according to a joint statement from CBP and the Federal Emergency Management Agency. PPE subject to seizure under this policy includes N95 respirators, air-purifying respirators, surgical masks, surgical gloves as well as other types of respirators. FEMA will determine whether the equipment should be returned for use in the U.S., purchased by the U.S. government or exported. (CNBC link)
- The LA Times goes further on the same topic; Although President Trump has directed states and hospitals to secure what supplies they can, the federal government is quietly seizing orders, leaving medical providers across the country in the dark about where the material is going and how they can get what they need to deal with the coronavirus pandemic. FEMA is not publicly reporting the acquisitions, despite the outlay of millions of dollars of taxpayer money, nor has the administration detailed how it decides which supplies to seize and where to reroute them. Officials who’ve had materials seized also say they’ve received no guidance from the government about how or if they will get access to the supplies they ordered. That has stoked concerns about how public funds are being spent and whether the Trump administration is fairly distributing scarce medical supplies. “We can’t get any answers,” said a California hospital official who asked not to be identified for fear of retaliation from the White House. In Florida, a large medical system saw an order for thermometers taken away. And officials at a system in Massachusetts were unable to determine where its order of masks went.
- Brazil says it’s failing to successfully place orders for ventilators for manufacture in China due to being outbid and will instead turn to its domestic industry for help in making them according to Reuters (link).
- A report published yesterday by the World Trade Organisation (WTO) says that world trade is expected to fall by up to 32% this year due to the disruption of economic activity caused by the Covid-19 pandemic. WTO economists predict the decline, which it says will range anywhere from 13% to 32%, will most likely be greater than the slump in trade during the global financial crisis of 2008. While the WTO expects a recovery in 2021, the strength of the recovery is uncertain and outcomes will depend largely on the duration of the outbreak and the effectiveness of the policy responses. Splash247 has more (link).
- The Indian government appears to be starting to warm towards ecommerce with delivery drivers reporting its becoming easier to get around making deliveries (Reuters link).
- Forwarders, good morning, this is for you FREE: Covid-19 transport updates by country, freight needs and offerings and the blank sailings report. (Loadstar link)
- Korean Airlines is laying off 70% of its staff for 6 months due to the collapse in passenger traffic. (CNN Link)
- Air Canada has clarified what it’s doing during the Covid-19 crisis (Loadstar link). The TLDR; Cargo capacity is available on scheduled widebody flights operating on routes between Canada, Europe and Asia. Ad-hoc all-cargo flights on Boeing 777 and 787-9 aircraft are available on demand to almost anywhere in the world. See this Air Canada link for more.
- Air cargo prices have got so high (and delays so lengthy) that even mainstream media like CNN have noticed (link).
- American Airlines has started making face masks for its own employees at DFW International Airport and other hubs after looking unsuccessfully for personal protective equipment on the open market says Dallas News (blocked to EU IP addresses but link is here). Tammy Spence, a customer service manager for American at DFW, showed up to work yesterday with a sewing machine with plans to make masks out of old promotional T-shirts. American management got behind the effort and sent workers to Walmart to find fabric. Spence said by the end of Tuesday, there were a few dozen workers cutting fabric. By Wednesday, employees had brought more than a dozen sewing machines and began finishing the first batch of masks. So far, about 100 employees have stopped by to volunteer. Since only about 20 people at a time can work in a conference room turned into a sewing center, they have been working in shifts spread out roughly six feet apart to follow social distancing guidelines. By midday Wednesday, American Airlines workers had produced about 500 masks of varying prints, including polka dots and a wolf-themed hunting camo print.
- Container ship operators starting to offer express services to hoover up overspill from air cargo; LoadStar is reporting that to offer a faster maritime link across the Pacific, less-than-container load (LCL) consolidator ECU Worldwide launched Xlerate between Shanghai and Los Angeles, - it provides a 10-day transit between the two ports and ECU claims this is the fastest port-to-port time on the route. The traffic is unloaded in Los Angeles at the company’s bonded container station, 24 hours after its arrival, and moved on ECU’s bonded express truck service to eight inland container stations. LoadStar reports that CMA CGM has set up similar service offerings called SeaPriority Go and also that the market demand for air-sea modal mixes remains strong (where some of the journey is by plane, some by sea).
- The container crane quay at Busan port in South Korea that had a crane collapse and several others derail this week after a ship hit it will be out of action for several months due to necessary recovery and repair work. The driver of the crane that collapsed hurt his ankle and was sent to hospital, having leapt five metres to safety as the ship made contact with the quayside. (Splash247 link).
- The sudden massive volume of blanked sailings announced in recent days is set to create new records in terms of the inactive containership fleet, which analysts at Alphaliner are now saying will breach the 3m teu mark for the first time meaning some 13% of the entire global box fleet will be out of work. (Splash247 link)
- Waffle House sells out of its waffle mix in four hours - Forcibly closed due to the virus, the US fast food restaurant chain (which is famous for its hurricane preparedness - supply chain students might want to read about that in more detail) decided to sell bags of its waffle mix - and sold out in four hours flat. The chain says it’ll be selling the mix again in about a week. Loadstar has more (they’re not the only chain taking this approach).
- For anyone interested in the US food supply chain the National Farmers Union wrote a thread on the topic here, the TLDR of which is 1) there’s no food supply problem, it’s a distribution problem instead 2) it’s very hard to switch food packing from b2b to b2c at zero notice (this is the same reason why it’s so hard to find flour in the UK at present) 3) a lot of dairy products are being dumped because b2b demand has disappeared and b2c demand can’t be adapted to fast enough 4) ethanol demand has plummeted due to people staying at home resulting in the loss of hundreds of jobs 5) most importantly - they are echoing other warnings about a lack of migrant worker supply for planting and harvesting which may cause noticeable food shortages and price rises later in 2020 6) it’s difficult to predict long term impacts due to so much uncertainty.
- Brazil startup CargoX, which helps match cargo with trucks available to transport it, has raised $80 million in a Series E round led by investor LGT Lightstone, the company said in a statement on Tuesday. CargoX, which is sometimes referred to as the Brazilian Uber for cargo, is one of the country's largest startups. It said in a statement that it currently connects 20,000 companies with 400,000 truck drivers. (Yahoo Finance link)
- People are using many different modes of transportation to combat disruption caused by the pandemic - in this example from USA Today, one local in Maine is using her husky dogs to help transport supplies for local vulnerable people.
Good news section
Boris Johnson (UK Prime Minister) is continuing to recover from the virus and is now out of intensive care (multiple sources). (I'm not a fan of his politics at all but it's neverthless good news to see he's recovering).
Several asked if they can send me $/£/€ via Patreon (in some cases because I've saved them time or money, others for no reason at all). I don't need the cash (that's lovely though) but food bank charities are getting really hit hard with all this panic buying. Please consider giving whatever you'd have given me to a foodbank charity instead:
Thanks in advance for any donations you give. If there's foodbank charities in your country and it's not listed above, please suggest it and I will include it going forward.