The Novel Coronavirus: Impact on supply chain operations amid the Lunar New Year

The Novel Coronavirus outbreak threatens to seriously disrupt supply chain operations amid the Lunar New Year holiday period in China

Since January 23, Chinese authorities in Wuhan – a major industrial and transport hub in the inland Chinese province of Hubei – imposed a city-wide quarantine and severe transport restrictions in response to a deadly novel coronavirus outbreak that has already infected more than 6,000 people globally and claimed the lives of at least 130. In addition to halting public transportation, the notice suspended all flights in and out of the city and barred all non-emergency vehicles from entering or leaving the city. As of this writing, a total of 13 Chinese cities have since been put under full or partial lockdown through similar transport bans.

Severe disruptions to inbound and outbound air cargo shipments, trucking and rail cargo services, as well as heavy port congestion for vessels along the Yangtze River near Wuhan will likely persist as the coronavirus crisis unfolds. The regional lockdown has already severely impeded logistics operations that rely on access to highways to carry goods into and out of the region, while severe delays should also be expected on inbound and outbound air cargo shipments. In addition, ships, including gas carriers, have been held back from calling in Wuhan – which is strategically located on the banks of the Yangtze River – as authorities ordered terminals to stop operations in a bid to slow down the outbreak.

As supply chain managers race to assess the potential impact of the virus outbreak on their supply chains, they will need to cope with the propagation of new or the extension of existing city lockdowns and the delayed restart of manufacturing activities in the affected areas and beyond. Should the lockdowns continue beyond the Lunar New Year holidays – a major Chinese festive period from January 24 to January 30 that has been extended to February 2 – it could have a major impact on supply chain operations and industrial production throughout China across industries such automotive, pharmaceutical and medical supplies, and high-tech manufacturing for optoelectronics and semiconductors. Companies and factories in several major cities and provinces – including Beijing, Zhejiang, Jiangsu, Guangdong and Shanghai – have been ordered to halt their operations until at least February 9 with the exception of medical equipment, pharmaceutical companies, supermarkets, utilities and logistics companies in a bid to quell the coronavirus outbreak.

This Resilience360 special report analyses the impact of the Wuhan coronavirus crisis and its impact on supply chain operations in China and globally. It takes a closer look at immediate impact on key logistical routes and manufacturing operations and how the Wuhan coronavirus may compare with other recent global health outbreaks in terms of economic and supply chain implications moving forward.

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