coronavirus impacts on global supply chain logistics

Over the past several weeks, we have provided multiple updates focused on known and potential supply chain impacts due to the coronavirus (COVID-19). We expect that this information will continue to develop in the coming days and weeks, and we will continue to work diligently to provide our customers, vendors, and employee-owners with the most current and accurate information available. While the situation is fluid and continues to evolve more and more quickly, below is an update based on the latest information we have today.

coronavirus impacts on global supply chain logistics

As of this update, 38 states, 48 counties and 14 cities are under state, county or city shelter-in-place mandates, which includes over 80% of the U.S. population. At this time, many of our branch locations fall within these mandates; however, based on the Presidential Policy Directive 21 (PPD-21), our company remains essential to supporting critical infrastructure customers in all markets we serve. With this designation, all Border States locations continue to operate.   

 Market Indicator Updates 

COVID-19 continues to have a major impact on the markets and commodities pricing. A few updates on key indicators we’ve been watching: 

  • Markets closed on Tuesday to cap one of the worst quarters in history with the Dow and S&P indexes down 20% for the quarter.  
  • Copper pricing remains depressed, trading below $2.20/pound this week. This is down over 20% from the beginning of the year and 25% compared to this time last year.  
  • Crude oil pricing continues to hover at $25/barrel, still down from $65/barrel at the beginning of this year. Ongoing negotiations are occurring between Saudi Arabia and Russia to resolve the pricing war, but the situation remains highly volatile. 
  • Chinese manufacturing continues to return, but many Chinese companies are now facing significant demand decreases and canceled orders due to the global crisis. Logistics remains a major concern in the country due to continued travel restrictions and canceled or reduced sea cargo sailings due to reduced global demand. 

 

 Freight Updates 

We continue to stay in close contact with major third-party carriers. Freight carriers are also considered an essential service, so they will — in most cases — continue to operate under PPD-21. On March 13, a national emergency declaration was issued to provide hours of service relief to carriers transporting emergency relief products including medical supplies, PPE equipment, food and beverage items, and emergency services materials. Due to the pandemic and increased demand, we have started to see constraints in securing Drivers and trucks in certain parts of the country.  

 With 85% of the international air cargo space into the United States suspended, some larger carriers announced additional surcharges this week on international shipments to and from the U.S. due to the reduced capacity. Imposed restrictions in India have made cargo capacity out of the country nearly impossible at this time. 

 Air cargo out of China also remains a challenge with restrictions on commercial travel in and out of the country. 

   

Vendor and Supplier Updates 

We are staying in daily contact with our strategic vendor partners due to the fluidity of the situation. Our outreach is focused on supply and business continuity should our vendors’ facilities be impacted through mandates or quarantine. Border States continues to adjust our inventory and supply strategies proactively on specific categories where known constraints exist and more broadly, to mitigate potential risks for our customers of plan closures or logistics constraints.     

Most of our suppliers also qualify as essential under PPD-21, but we have seen different interpretations or actions based on their states of operation. Domestically, there are situations where suppliers’ facilities in hot zones (particularly the Northeast and on the West coast) are operating at less than full capacity or have closed due to employee safety. We are seeing increased frequency of situations where our vendors’ distribution or production facilities are issuing temporary closures due to community spread in their facilities.   

This week, Mexico issued a national health emergency resulting in stricter regulations and forcing closure of some of our vendors’ facilities. Additionally, the Mexican government has mandated anyone 60 years old or with underlying health conditions to observe stay-at-home recommendations. We do have suppliers that will have workforce or entire operations impacted by this mandate. We continue to work closely with these vendors to minimize disruption for our customers as these situations unfold. 

 

Product Updates 

Personal Protective Equipment (PPE) and safety products continue to be where the most significant supply disruption is occurring. As in previous updates, specific products seeing the most severe impacts include: 

  • Respirators 
  • Nitrile and latex gloves 
  • Hand sanitizer and wipes 
  • Goggles and protective eyewear 
  • Protective coveralls  
  • Bottled water   

 Most manufacturers have shifted nearly all capacity to medical and first responder orders. Filtering Facepiece Respirators (FFR), most specifically the N95 respirator mask, are one of the most significant constraints. We continue to work daily with our suppliers to maintain supply flow for customers designated as critical infrastructure. We are evaluating alternate respirator masks such as a KN95 mask and will work closely with customers in these situations to ensure FDA and CDC guidelines are followed.  

We are also working on alternate sources of supply for hand sanitizer, including working closely with distilleries, where many have converted to manufacturing the product, and bottle and container suppliers. 

 

Additional Safety Updates 

Border States continues to monitor the Centers for Disease Control and Prevention (CDC) for additional information and around safety, social distancing guidance and travel restrictions, which will continue to create some impacts on the supply chain.   

Our number one priority remains the health and safety of our customers, vendors and employeeowners. We have business continuity plans in place to maintain operations for our customers should our branch operations be impacted.  

We have closed our counter operations, and are asking our customers to order material ahead of time for Will Call or curbside pickup. We have also implemented a No Contact Delivery policy for all drivers. Additional information on this and other safety measures in place is available on our website. 

If you have any questions, please reach out to your Border States Account Manager for additional information or contact us online. 

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