SARS threatens logistics operations, industry executives say
Some shippers and retailers are worried the Chinese government's reaction to SARS could slow down production for the peak U.S. shopping season this fall, according to transportation professionals at a Bear Stearns investment conference in New York.
So far the potentially deadly respiratory disease has not affected trade flows. But a new concern among shippers such as Wal-Mart is that the government might soon stop the migration of people to manufacturing centers as part of a policy to help curb the spread of SARS, which has claimed hundreds of lives.
Many manufacturing plants count on an influx of farm labor after the growing season is over.
'The question is will the government allow that movement if they are trying to quarantine things,' Paul Bergant, who heads the intermodal division at national truckload carrier J.B. Hunt Transport, told American Shipper.
Transportation consultant Satish Jindel agreed that if China expands restrictions on labor movement logistics operations could be affected.
In an interview, Jindel also said the seeds of a holiday season shipping shortfall in the second half of the year are being planted now as product designers and buyers from U.S. companies cancel travel to China and other offshore production facilities. That means production of some new model designs will get postponed and could affect overall retail sales, he said.
'If the buyers are not able to travel for one or two months it will have shortened their fulfillment time, which will cause some products that have traditionally gone by ocean to go by air freight,' Jindel added.
China, which at first tried to keep news of SARS quiet, has since been up front about disseminating information about the disease or else be perceived as a country with too much risk for foreign businesses, Jindel and other logistics executives said. Such confidence building measures are essential if trade is to continue as the engine of the Chinese economy.
'The Chinese recognize that they have to be very open and transparent and responsive in their interaction with the global marketplace,' said Roger McFarlane, chief executive of freight forwarder UTi Worldwide.
