Industrial Automation Magazine India

Concerns about Supply Chain Disruption due to Coronavirus

Published on : Friday 13-03-2020

Mr Sunil Rallan, Chairman and Managing Director, J Matadee Free Trade Zone Pvt Ltd, on supply chain disruption.

 

The coronavirus pandemic is greatly impacting supply chains across the world. The first phase was the shutdown of Chinese manufacturing for an extended period early in the year. This represented one-third of global production being effectively switched off overnight. It is difficult to quantify on a global scale but from Chennai port alone, import cargo volume was down by 60%. We have experienced a dip in trade volumes through Chennai Free Trade Zone as well.

 

The impact on the Logistics sector is also significant, due to the massive disruption in trade and

freight, shipping container availability has become an increasing problem and logistic costs have

increased substantially.

 

The second phase will be a demand problem.  As coronavirus is proliferating in the western countries and decreasing in China, the supply and demand problem shifts to the other extreme. Manufacturing capability will increase just as consumption is decreasing. This too will cause significant strain on the logistics sector. This situation has exposed a known weakness in the global supply chain. Manufacturing was too centralised to one region.

 

Phase three will be to de-risk global supply chains. It is vital to diversify the location of manufacturing across the world and India is in a unique position to accelerate make in India to a global audience looking for solutions.