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Impact of the Coronavirus in logistics

Impact of the Coronavirus in logistics

Coronavirus: Delivery delays of 20 days on average in the fashion industry

  • Forecast predicts delayed deliveries of up to 50 days.
  • Spot market freight rates for air cargo more than quintupled in some cases.
Container ship on the sea: At present, full containers got stuck in some Chinese ports for the transport to Europe. (Photo: Adobe.Stock)

(Bochum, Germany, March 17, 2020) The rapid spread of the Coronavirus is already having an impact on the German fashion industry. Setlog, a German company specializing in supply chain management software, has made an analysis using OSCA (Online Supply Chain Accelerator) finding that deliveries of goods from Asia are currently on average about 20 days delayed. And the peak has not yet been reached. The experts from Bochum forecast delays of up to 50 days for the summer months. As things are at present, the situation for companies that are supplied from China or purchase raw materials from there for their productions will be particularly tight from July onwards.

According to information from Setlog, many companies in China were unable to start production after the end of the Chinese New Year holidays on February 11, as they normally would.  One of the reasons for this was that sub-suppliers of Chinese manufacturers were unable to supply raw materials such as fabrics or buttons due to the effects of the pandemic. Another reason for supply bottlenecks: In some Chinese ports there is a shortage of workers and drivers due to the viral disease, which means that containers are not moved and cannot be transported. As a result, both raw materials and finished goods cannot be shipped to other Asian production countries or to Europe.

For the analysis Setlog evaluated the supply chains of more than 100 fashion brands and their supply chain partners. The analysis is dated March 12.

According to Setlog, after Chinese New Year 2019, deliveries at the end of February were back to normal levels. At present, the level is 70 percent of the previous year. The situation is only slowly recovering. The Bochum supply chain experts also observed delays in production orders in Southeast Europe. In some cases, suppliers from Turkey, Romania and Italy reported that production is taking place later than originally planned. Due to the particularly critical situation in Italy, no deliveries were recorded in the OSCA Setlog system for the week from March 9 to 15.

The Setlog experts also report that some German companies have switched modes from sea to air freight for deliveries from China. Due to the strong demand for air cargo, fashion companies sometimes had to pay more than five times as much as in the previous year. It is not only the increased freight costs that are currently giving many fashion retailers a hard time, but also the declining demand. Consumers are staying at home and tend to buy food rather than shirts and trousers, many suppliers are suffering from declining sales.

“We fear that other problems could arise once the disease situation in China eases. As soon as factories start ramping up capacity, there is a danger that not everyone will pay attention to standards in the area of quality and corporate social responsibility,” says Ralf Duester, President and CEO Setlog Corp. He also anticipates that there will be a shortage of transport capacities, first in China and later in other Asian countries. “It is important that companies book transports as early as possible in the weeks that are considered to be particularly critical,” says Duester.

The SCM expert is currently observing a lively use of OSCA: “Now it is becoming clear how important professional supply chain management is. After all, transparent supply chains are the basic prerequisite for companies to remain agile and capable of action in the event of unexpected interruptions to the supply chains – whether due to pandemics, strikes, accidents or environmental disasters,” emphasizes Duester. Only with the help of a digital platform to which all partners are connected can changes in production or transport be implemented quickly and in a way that is comprehensible to all those involved. “And if someone is absent due to illness, colleagues can easily take over the work because they have an overview of all processes. They don’t have to search for information in old e-mails”.

Contact

Nora Breuker, Marketing Lead

Setlog GmbH, Alleestraße 80, 44793 Bochum, Germany

P +49 234 720 285 78, n.breuker@setlog.com, setlog.com

About Setlog

Setlog Holding is a provider of tailor-made Supply Chain Management (SCM) software solutions. The central product is the cloud-based SCM software OSCA®, which is used by over 150 brands in the apparel, electronics, food, consumer goods and hardware sectors. With the help of OSCA®, companies connect their customers with suppliers and service providers to optimally coordinate their supply chain, accelerate processes and manage supply chains efficiently. Setlog GmbH is a wholly owned subsidiary of Setlog Holding AG. Founded in 2001, the company is now a leading provider of SCM software with over 40,000 users in 92 countries. The software company employs 60 people between Bochum (headquarters), Cologne and New York. www.setlog.com