Logistics News

Production resumes in China despite Covid-19

Hiatus seen coming to an end but there’s a local Supply chain hole here right now


If there is light at the end of the coronavirus logistics tunnel, it’s in China, with many of the most productive provinces reported to be back at work.

This is especially so in the east, but being hampered by staff and trucking firms still affected by travel restrictions.

Freight & Trade Alliance’s (FTA’s) most recent update notes that the Chinese government is “encouraging use of trains to carry containers rather than rely on trucks between cities and provinces

“Most provinces have reduced their control restriction from level one to level two, this means other provinces’ workers if healthy are able to travel into most of the provinces.

“It is also understood that there are reasonable stocks of export goods in storage that should be able to enter the supply chain immediately those places open back up.”

It also sees most nationally owned manufacturers are at 80 per cent productivity and logistics companies back to running around 95 per cent.

Pressure on transport customers

Meanwhile, supply chain consulting firm Logistics Bureau’s CEO, Rob O’Byrne, fails to see how supermarkets will be able to stock many common imported items consistently.

“We’re really only just starting to see the effects of significant supply chain disruption globally,” O’Byrne says.

“Local Australian companies are reporting that reduced supply, and hence lower local stock levels, will start to cause major customer service impacts by mid- to late-March.

“This would seem to be in line with reports globally.

He sees two main likely short and medium terms impacts within Australia:

  • short-term, empty shelves of many consumer goods, though food staples should not be impacted as Australia produces more than 90 per cent locally. These will only be affected if population and transport movement come under restrictions.
  • medium-term impact on local businesses could however be much more severe. The effect of a supply chain ‘Bull Whip’ will be to substantially reduce local demand and then as the virus becomes controlled, consumer demand will be slow to return.

“The overall effect on local businesses that don’t have the financial foundations to weather this Coronavirus ‘Bull Whip’ could be devastating,” O’Byrne says.

Read about the coronavirus view for transport operators, here

At the smaller enterprises end, the Council of Small Business Organisations Australia (COSBOA) has held a crisis meeting in Canberra to discuss a response to the crisis.

“We all agreed that this is a problem that is not just for government to confront. All business – big, medium and small – must take action where necessary and all governments – federal, state and local – have to also take their full share of responsibility,” COSBOA CEO Peter Strong says.

The participants expressed confidence in our members and in our governments to respond as necessary.

“We do not expect a perfect response to a disease of such contagion, but people should be confident that the business community will work closely with government to manage impacts and the economy.

Participants came from sectors including newsagents, hairdressing, pharmacy, the professions, accountants, traditional medicines, retail, financial services, sole traders and service stations.

There were also participants and observers from the Australian Banking Association.

“The meeting investigated various scenarios that may impact Australian small businesses.

The deliberations included scenarios where a high level of illness creates a shortage of workers; where geographic areas are impacted heavily for short periods, creating low trade and poor consumer activity with a resulting lack of business and loss of jobs across that small economy; the forced closure of public transport which creates a crisis for small business; and where employees and/or business owners are forced into quarantine, affecting the viability of the business.

The communique points can be found here.


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