webinar on the impacts of the covid-19 on …...20/03/2020 6 connecting worlds. agenda •current...
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Webinar on the Impacts of the COVID-19 on Logistics and Supply Chains
Supported by:
SpeakersGlenn BaiManaging Director ChinaMilitzer & Muench International Freight Forwarding
Jing WangBusiness Development Manager, Sustainability ServicesSGS-CSTC Standards Technical Services
Supported by:
Chen Liu [Moderator]Vice-President & Nat. representative,SwissCham Shanghai
Managing Director ChinaWeidmann Electrical Technology
Corona Virus Disrupting Logistics & Supply Chains
Supported by:
Glenn BaiManaging Director ChinaMilitzer & Muench International Freight Forwarding
Militzer & Münch: Connecting worlds.
Corona Virus
Disrupting Logistics & Supply Chains
March 20, 2020
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Agenda
• Current impact on domestic and international logistics and supply chain
• Alternative solutions & strategies
• Case study
• Forecast
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Current Impact: Sea Freight
• Permits to resume the work
• Port storage charges (containers stuck)
• Port congestion fees US$1000-1500 per reefer container
• Voyage cancellations
• Entire Asia – Europe / USA route cancellations
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Current Impact: Air Freight
• Many passenger flights cancelled
• Freighter flights reduced (low demand)
• A lot of charter flights cancelled
• Capacity drop of approx. 65% vs 2019
• Limited staff on duty (40-50%)
• Large rate increases
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Current Impact: Rail
More favorable but still:
•Overbooked capacity, long waiting time
• GRI increase to 300 USD per 40’
• Wuhan closed as a departure platform
• Lower departure frequencies
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Current Impact: Trucking
• Whole province locked (Hubei)• Severe delays & backlogs (limited
trucking, permits, quarantine for drivers)• Overall working better again• Domestic express services fairly
uninterrupted (again)• Rate increases especially across
provinces
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Alternative Solutions and Strategies
Shortage of inland trucking:
• Inland rail • Inland river barges
Shortage of international sea and air freight:
• International rail• Hubs for receiving and distribution• Air (part) Charters• Multiple gateways (PEK, PVG, SZX/HKG) for diversification
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Case Study
•Automotive spare-parts company export from China via air & ocean freight•Urgent shipments go with air freight (to be avoided due to high costs); “regular shipment” via ocean freight (LCL & FCL 20” container)•Disruption and high costs in air and ocean freight lead to using rail freight with approx. CN-EU 19 days transit time•Adjust delivery time (trucking) of spare parts from supplier to rail platform, balancing of cargo in container•Consolidation of not-so urgent spare parts as 40” container for rail freight only•Pre-pare documentation required for customs clearance•Implement SOP (responsibility & escalation, operations, documentation & reporting) •Use GPS tracking device to benchmark transit times & other data during transport
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Forecast
•China seems to be currently relatively in a better position but only part of global supply chains•With EU and US in lock-down mode more interruptions in global supply chains expected•Likely large back-logs at ocean ports•Lack of capacity on CN-EU rail freight•Logistics costs will likely continue to rise •Major fall-out of airlines possible depending length Covid-19 crisis •Rethinking of global supply chains in the future or back to old ways when the
crisis is over ???
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Let us talk!
Build a sustainable and resilient supply chain
Supported by:
Jing WangBusiness Development Manager, Sustainability ServicesSGS
Build a sustainable and resilient supply chain
CERTIFICATION
INTELLIGENCE
ACTIVATION
SGS
Jing Wang 2020.03.20
2
CONTENTS
Various disruptions to supply chain
Short-term solution and Mid/Long-term strategies
Case Study
Forecast
01Di r p ion from
Till Feb 21
Issued
3325Certificates
Contract value:
270BillionCNY
COVID-19
6
HOW COVID-19 IMPACT SUPPLY CHAIN
Materials Labor
Supply shortages of materials or finished goods coming from or routed through logistical hubs in impacted areas
White- and blue-collar labor may not be available due to quarantine guidelines or illness.
Established hubs and supply networks may experience limitations in capacity and availability
Consumers may be more cautious in their purchasing habits due to fears about being in public and potential exposure to the virus
Travel may be restricted to certain areas, limiting the ability to discover, qualify and certify new business or programs and to transact business.
LogisticsSourcing Consumers
9
GLOBAL SUPPLY CHAIN IN CHINA
94%Tier 2 supplier
16%Tier 1 supplier
Have Tier 1 supplier in China
163 companies
Have Tier 2 supplier in China
938 companies
Among Fortune 1000,
10© SGS SA 2017 ALL RIGHTS RESERVED
2019 TOP 10 SUPPLY CHAIN RISKS
11
CONTENTS
Various disruptions to supply chain
Short-term solution and Mid/Long-term strategies
Case Study
Forecast
12
01Fight or Flight?
29
• Provide legal news alert, information and trends on China's laws and regulations, requirements and inspection of local authorities caused by accidents, etc.
• Online training
• Digital supply chain management
👈 Legal Alert
Online class👈
MID-LONG TERM: ESTABLISH RISK ALERT AND TRAINING SYSTEM
16
CONTENTS
Various disruptions to supply chain
Short-term solution and Mid/Long-term strategies
Case study
Forecast
20
CONTENTS
Various disruptions to supply chain
Short-term solution and Mid/Long-term strategies
Case study
Forecast
21
FORECAST
Q&AGlenn BaiManaging Director ChinaMilitzer & Muench International Freight Forwarding
Jing WangBusiness Development Manager, Sustainability ServicesSGS
Supported by:
Chen Liu [Moderator]Vice-President & Nat. representative,SwissCham Shanghai
Managing DirectorWeidmann Electrical Technlogy
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