Good day,
Fears over the spread of coronavirus have led Americans to hoard grocery and emergency supplies, cleaning out aisles of retail stores and leading to a spike in online orders. Supply chains face an obvious problem – this means a sudden increase in the demand for essentials at a time when production centers also run the risk of not operating at full capacity due to the virus. Though companies are trying hard to meet growing demands, it needs to also be understood that the sales will eventually tip. Once the panic of the outbreak dies down, people will stop hoarding supplies, and the already stocked-up supplies may mean lower shopping for a time – perhaps sinking sales volumes of companies now producing more to meet demand.
Did you know?
January marked the tenth consecutive month of year-on-year declines in global air cargo volumes. In January, total market available cargo tonne kilometers (ACTKs) decreased 0.9%, down from 3.8% in December. Meanwhile, load factors fell by 1.9 percentage points compared with a year ago to 45%.
Quotable
“The Chinese players are facing significant challenges in fulfilling their contracts because they are not able to operate at full capacity after the Lunar New Year holiday.”
– said China State Shipbuilding Corporation, after it sold so-called “coronavirus bonds” to raise 5 billion yuan (~$718 million) to stabilize operations depleted by the virus attack.
In other news
OPEC reportedly agrees on massive oil supply cut to offset virus impact
OPEC, led by Saudi Arabia, has reportedly decided to cut production by 1.5 million barrels per day. The deal is believed to be conditional on approval from Russia. (CNBC)
Waymo’s next-generation self-driving system can ‘see’ a stop sign 500 meters away
Waymo unveiled its fifth-generation self-driving system, which the company claims can see farther and more accurately than its previous four versions. (The Verge)
Oman Shipping Co beefs up in ultramax sector with two bulker buys
The Middle Eastern shipping major takes advantage of falling bulker values to buy more ships. (TradeWinds)
Curbed by coronavirus, China’s truckers can’t wait to get on the road again
Millions of truck drivers are being kept off the road, hampering efforts to get the world’s factory moving again. (WSJ)
GM’s new electric car battery tops Tesla’s
General Motors announced it has created a new electric vehicle battery that offers up to 400 miles of range and will be cheaper to produce than today’s batteries. (CNN Business)
Final Thoughts
Swedish clothing major H&M will be opening up its global supply chain to other clothing brands in an attempt to push for more sustainability within the fashion ecosystem. Smaller clothing companies can now leverage H&M’s massive network for all their business needs – including product development and sourcing to production and logistics.
H&M’s new CEO, Helena Helmersson, has acknowledged that to future-proof the fashion industry, it is critical for the company to help transform the supply chain by helping others find value through its system. Though known for fast-fashion that is claimed to fuel rampant consumerism, H&M has taken its sustainability initiative seriously and seeks to become carbon-neutral by 2030 through the increased use of renewables for energy and as raw materials.
Hammer down everyone!