Global companies with a significant supply chain presence in China have suspended operations due to Coronavirus fears.
Apple CEO Tim Cook said the American techgiant, estimated to be worth $1.3 trillion, has some suppliers in the Wuhan area, the central location of global health emergency declared by the World Health Organisation (WHO).
“All of the suppliers there are alternate sources and we’re obviously working on mitigation plans to make up any expected production loss,” Cook said on Tuesday on the company’s first quarter earnings call.
“With respect to supply sources that are outside the Wuhan area, the impact is less clear at this time.”
Suppliers are facing major production delays as the region implemented a quarantine limiting travel in and out of the industrial hub.
As of February 6th, there are reported to be over 635 deaths due to the coronavirus worldwide and 30,500 cases of infected people with the virus in China.
Peter Sand, chief shipping analyst at BIMCO, an international shipping association told CNN the closure of ports in China is affecting the shipping industry at large as it’s a vital facilitator of the intra-Asian and global supply chain.
Sand said to CNN that there are reports that there is limited or no demand from Chinese buyers of seaborne commodities, such as coal, crude oil and iron ore.
DHL has suspended deliveries in Hubei province but no other changes have occured to its operations at this stage although they have has severe disruptions to inbound and outbound air cargo shipments, trucking and rail cargo services.
In a report, DHL said the shutdown in China could “have a “major impact on supply chain operations and industrial production” across automotive, pharmaceutical and medical supplies, and high-tech manufacturing industries.
Telsa’s brand new factory in Shanghai will remain closed until further notice. Production for the American electric vehicle company has helped boost the stock over the past few months.
Bernstein analyst Daniel Roeska said although there are orders for people to stay in their houses, it’s difficult to keep factories running.
“Many supply chains are essentially halted, so there’s nothing to transport,” he said.
A spokeswoman at Japanese airline ANA Holdings Inc reported there is a rising demand for medical supplies such as surgical masks although shipments of other goods are delayed.
According to Business Insider, Wuhan is home to nine auto manufacturing plants.
A spokesperson for Ford Motor said they’re planning to resume production on February 10 at its manufacturing facilities in China.
This follows the planned closure of factories across regions in the country. Local governments have extended the Lunar New year holidays shutdown period as a bid to contain the spread of the disease.
According to the United Nations Conference on Trade and Development, China is home to seven of the world’s 10 busiest container ports.
On February 1st the Australian Government’s Department of Health introduced isolation and border recommendations for marine vessels that left China to Australia on or after 1 February 2020.
Ports Australia released a statement warning Australian border workers to minimise risk of infection.
“The necessary measures must be in place to minimise risk and continue the essential role of ports. We’ve been at the forefront of the conversation since the first concern was raised so those measures are guaranteed,” they said.
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