US Companies Face ‘Logistics Nightmare’ as Pandemic Creates Freight Bottlenecks

March 23, 2020 Updated: March 23, 2020
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WASHINGTON—U.S. businesses are grappling with supply chain disruptions from plant closures in China because of the CCP virus pandemic.

Although most Chinese factories are back in operation, delays in moving goods have exacerbated the supply crisis for companies that are heavily dependent on goods and parts from China.

For a majority of U.S. businesses, lead times between the placement of order and delivery have doubled, according to a survey by the Institute for Supply Management, conducted Feb. 22 to March 5 among more than 600 U.S. companies.

Almost one-half of companies reported delays in moving goods within China, and 46 percent reported delays in loading goods due to severe congestion at Chinese ports, the survey found.

Chinese factories are reopened and running at 90 percent of capacity, according to experts. However, due to shipping backlogs, companies can’t bring products to the United States fast enough.

“There’s a logistics nightmare,” said Michael Einhorn, president of Dealmed Medical Supplies, a New York-based medical supply distributor.

“We have products coming from several different factories and several different sources. And we’re trying to fly them in. And with DHL, it’s going to take us seven days just to fly it.”

Dealmed imports personal protective equipment (PPE) such as facemasks and gowns, along with thousands of other medical products from China.

“We’re waiting in line behind the guy that’s selling furniture, because the guy who’s selling furniture called DHL first and now, he gets to go first, even though these [PPE] products are literally life and death,” Einhorn said.

Medical professionals across the country are experiencing a lack of protective equipment such as masks, respirators, surgical gowns, and gloves that are currently in high demand due to the outbreak.

The Epoch Times refers to the novel coronavirus, which causes the disease COVID-19, as the CCP virus because the Chinese Communist Party’s coverup and mismanagement allowed the virus to spread throughout China and create a global pandemic.

UPS announced that it has resumed services in most areas of mainland China, except for Wuhan City.

Significant Backlogs

Frederick Smith, chairman and CEO of FedEx, told CBS on Mar. 22 that his business has increased because of the pandemic.

“Just last week, for instance, we flew 246 flights in and out of China,” he said.

Passenger planes, which carry a lot of cargo in the underbelly, are grounded, he noted.

“So, with the shutdown of the passenger operations across the Pacific, we have significant backlogs coming into this country and a significant amount of traffic going back to China,” he said. “More recently, the same thing’s true across the Atlantic.”

FedEx employees “are working very heavily on both the business-to-business side, moving things for hospitals and diagnostic labs, picking up specimens and getting them into the various locations where they can be tested,” Smith added.

In order to help ease freight bottlenecks, American Airlines announced March 19 that it would use its grounded passenger planes to move cargo between the United States and Europe.

The company said in a statement that its first cargo-only flight since 1984 would fly between Dallas and Frankfurt, Germany, starting March 20, operating two round trips over the course of four days.

The passenger plane can carry more than 100,000 pounds and will transport medical supplies, mail for active U.S. military, telecom equipment and electronics, and e-commerce packages, the airline said.

Other carriers including Delta Air Lines, Korean Air, and Qantas also running passenger aircraft to move cargo in certain lanes.

Hard Lessons

U.S. businesses are learning hard lessons from the rapid spread of the virus, which has caused supply disruptions across the globe.

“I think that U.S. companies are waking up to a new understanding of supply chain risk,” Daren Samuels, practice director at Patina Solutions, a supply chain consultancy told The Epoch Times.

“It feels like a time of instability,” he said, adding that this instability will push the U.S. companies to carefully examine their global sourcing strategies and set up more flexible supply chains.

Samuels says many clients have been talking about pulling out of China and moving to the United States and Mexico after the escalation of the trade war with Beijing last year.

He said it’s especially challenging for U.S. companies to have Chinese supply chains, if they have high-mix, low-volume production, meaning a large variety of products in small quantities.

Many companies are considering moving their production to Taiwan, Han-Ching Lee, marketing manager at TechDesign told The Epoch Times.

The Taiwan based company was founded in 2015 to provide a supplier-matching platform for electronic hardware companies.

“We have received many project inquiries looking at the possibility of moving production—either partially or entirely—from current suppliers in China to new ones in Taiwan, due to both the U.S.–China trade war and coronavirus fears,” she said.

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