The Impact of COVID-19 on the Global Supply Chain

The advent of the Corona Virus Pandemic caused a major scaling down of all transport carriers including air and seaports, causing a freight bottleneck worldwide. Many retailers are concerned about the products shortages coming up to Christmas.

The effects of COVID-19 on the global supply chains and economy worldwide are rapidly unfolding and have had wide ranging impacts on Australian businesses and the logistics industry.

In December 2019 the advent of Coronavirus (or COVID-19) from Wuhan in China threw the world and many businesses into panic. As the effects of COVID-19 spread throughout Asia through Europe, North America and Australia, the effect of global supply was quickly felt worldwide.

Short and Long Term Impacts on the Global Supply Chain

Very soon after the news of COVID-19 became known throughout the world, business experts and researchers began to estimate and assess the impact on the global supply chain.
Key manufacturing zones such as South Korea and Wuhan have been heavily affected by factory closures, quarantines and disruptions to logistics. Prior to 2020 many Australian businesses have dealt with manufacturing centres in these regions to reduce supply chain costs.

While the shock of COVID-19 has resulted in short term changes to supply chains, there is a likelihood that the advent of the pandemic will lead to structural shifts in the industry that are sound and long lasting. Other emerging markets in global supply networks such as Mexico, Brazil and other South East Asian countries may replace Chinese logistical supply chains.

Increased Freight Charges

The costs of shipping goods has increased by up to 300% with the Corona Virus pandemic and Brexit. Shipping firms have increased the rate of freighting goods.
During the past six months there has been an imbalance of imports to exports of around 45,000 TEU. This has only compounded a previous problem. Prior to Christmas in 2019, before COVID and Australian industrial actions in the shipping industry the imbalance was 15,000 plus TEU.

Localised Shipping

Worldwide, countries are using supply companies that are closer to home. The United States has realigned with firms in countries in South America such as Mexico and has diversified by relocating to countries such as Indonesia, Vietnam, Taiwan, Malaysia and Thailand.

Impact on Consumers

The coronavirus has meant an increase in spending for consumers online throughout most countries of the world. There has been panic buying worldwide on consumables such as toilet paper, cleaning products, handwash and baby products. Due to lockdowns there was an influx of buying of household equipment such as televisions and electronic goods, as well as home fitness equipment and technology, desks and furniture that easily allowed people to work from home.

The effects that this has had on logistics and global supply has been huge. While products were generally ordered locally, these items were manufactured overseas and retailers have needed to import in more of these goods.

Consumers have been impacted by rationing, shortages, reduction of goods and the need to prioritise purchases.

Effects on Logistics Companies

The main problem with the COVID-19 pandemic is its unpredictability. This is an unknown territory, and it is not known when the associated issues will come to an end. Despite problems with global supply, most supply chains have returned to normal.

C2C Logistics are monitoring the global situation carefully to ensure minimal disruption to their clients and suppliers. With over 30 years experience in international logistics, transport, customs brokerage, and supply chain management our team is committed to bringing you the best logistical solutions possible.

We have the knowledge and experience and contacts to provide you the best logistics solutions long term. Contact us for further information.