The effect of COVID-19 on global supply chains [Article]

Just like the swift and unexpected collapse of the Berlin Wall, the novel Coronavirus (COVID-19) has brought the world to a standstill, crippling it with no help in sight.

This virus has spread across several continents, infecting a large number of people. It shattered dreams, killed businesses, devastated our sense of social connectedness and affected our  physical and financial safety. The virus has abruptly halted global supply chains and reduced the movement of people and goods.

However, the negative impact of COVID-19 on global supply chains can be easily mitigated by organisations wiling to adapt their processes to meet the challenges the virus poses. Some organisations could even change their business models to suit the current situation. For companies which cannot easily adapt or find new business models, they may have to fold up as the virus continues to spread across the world like a wild fire with over 165,000 deaths out of the 2.4 million cases worldwide, according to the New York Times.

A critical question which should be of concern to most Supply Chain experts and enthusiasts is what happens to the various modes of transport (Air, Land and Sea) during the lockdown periods? This article will examine the operations of a few logistics and supply chain companies around the world and how they are coping with the coronavirus pandemic. Air Transport/Air Cargo, according to Bansard International, a French company of third party Logistics and Freight Forwarding which serves Europe, North Africa, Middle East, Asia and North America and offering multimodal transportation service flights to/from Europe, China and the US have been cancelled or reduced drastically. Freight business (Cargo Planes) are still operational and allowed to travel between countries whereas sea freight, road and other activities are subjected to government decisions.

They also stated that in most of their areas of operation (ie. between countries) 50% of their staff were on the grounds working while practising social distancing with appropriate protective equipment. The other 50% of the staff, however, work remotely from home. According to Seabury Consulting, now part of Accenture, which offers a unique range of expertise specific to the Aviation Industry, the global capacity for cargo has dwindled to 22% and an additional decline is expected to happen soon. Global belly capacity (cargo stored underneath a passenger aircraft) on aircraft is declining due to air travel restrictions but on the plus side, although there is an increase in freight capacity, it is insufficient to offset the loss of the belly capacity.

Ocean Freight Prosperity within the cargo freight industry and shipping lines has for a long time been largely tied to China. From the onset of the Coronavirus pandemic in China, many companies thought the virus would only affect China and did not put in place contingency plans in case it spreads to other countries. The Coronavirus has caused demand to fall lower than usual in less than a year.

Although China has started recovering slowly, after it was hit by a nationwide shutdown on all non-essential travel, the reduction of the workforce due to social distancing has slowed down production of ships. In Ghana’s case, all the borders were closed (Air, Sea and Land) on 22nd March 2020 and an inter-agency committee was set up by the Ghana Ports and Harbours Authority to apply certain Standard Operating Procedures (SOPs) at the ports of Takoradi and Tema.

As at 1st April 2020, the ports were operational, but with strict hygiene and security measures in place.

Only vessels carrying fuel, foodstuffs and medicines were permitted to dock and offload goods at the Tema port. In the case of the Takoradi port, all goods were allowed and operations were ongoing with the SOPs applied.

In Europe, ports and shipping companies are still operating but under difficult conditions. Most shipping lines are adding surcharges such as Peak Season Surcharges (PSS). These charges are added for the base rate when there is an increase in demand for carrier space during specific seasons, but in every port TC Haulage, LTL pickup/delivery, multimodal warehouses are fully operational though there are delays, slow processing by customs authorities and border bottlenecks.

However, there are considerably less space and fewer containers available in all countries trading with China. Road Freight Transport Ghana’s borders were closed for two weeks on Sunday March 22nd for passenger travels to and fro as part of other measures put in place by the government to further curb the spread of COVID-19. As at Sunday, April 5, there was an extension of the period to another two weeks in order to give room for major bodies working on the cases recorded to almost complete surveillance and testing of samples collected in the country.

Although the country is under partial lockdown with affected areas being Accra, Tema and Kumasi, cargo transport is still ongoing but delays in lead time is inevitable as only food, medicines and items deemed to be essential are allowed to be transported. The case of Europe is not any different and even when road transport is maintained, it is subjected to disruption and slowdowns due to the increase in border control, security and sanitary measures.

Member states of the European Union were invited to designate border crossing points that are located on the Trans-European Transport Network (TEN-T) as GREEN LANES for transportation of goods without delays according to the European Commission on March 23rd 2020, and member states were also encouraged to ensure that at least one of their airports is operational for repatriation and international aid operations.

In conclusion, global supply chain is active and fairly working despite delays in lead time hence instructions are dictated by appropriate authorities around the world to contain the spread of the novel coronavirus. As the days go by our worries and anxiety is accompanied by uncertainties but various supply chain industries have had their fair share of this pandemic. Agility of your supply chain system is what will determine how you bounce back during the recession period. Understand the value your supply chain provides to your customers and whatever need that aren’t met, keep an eye on new technologies that will help you meet those needs.

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