Business, Freight News, Logistics

Virus shakes up global supply chain

[ April 6, 2020   //   ]

The coronavirus has shone a light on the fragility of global supply chains, and businesses around the world will probably diversify their operations after the crisis, says Dr Kerstin Braun, president of London and New York international trade finance provider, Stenn Group.

Dr Braun, commented: “2020 is a tough year for not just businesses but entire industries and economies. Trump may have suspended some tariffs for 90 days but firms are still dealing with the impact of the trade war, likely costing in the billions. Mid-sized firms, the drivers of the economy, were already suffering from weak fundamentals such as high debt levels, leaving them ill-prepared for the trade shutdown caused by COVID-19.

The Asian Development Bank has suggested the global cost of the pandemic could be as high as $4.1trillion, or almost 5% of global GDP, while unemployment in the US alone is at its highest since the Great Depression, with economists warning job losses could rise further.

He added: “Global trade has been hit by a demand shock. Importers, particularly in the apparel sector, are cancelling orders and delaying payments, which will likely cause bankruptcies. We’ve already seen the manufacturing sector knocked sideways into contraction territory, travel and hospitality are understandably struggling, non-food retail is effectively dead, essential goods such as food and pharmaceuticals are undergoing live stress tests, and it’s almost impossible for any global industry to escape the effects of the virus in some way shape or form.”