There are 2 million e-commerce companies in the world, with many of them sourcing their products directly from China. With a sharp drop in cargo space coming out of China due to the coronavirus, these businesses will be badly impacted if they don’t take specific actions around this situation.
If you source/manufacture your products in China, here are Bookairfreight’s insights on how to protect your business.
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Why has the coronavirus had such a big impact on Chinese supply chain?
Starting in China late 2019, the coronavirus (now officially named COVID-19), began spreading through animal and seafood markets. Tens of thousands of people are now sick - it’s a global health crisis.
This virus is highly contagious - it can be spread for weeks before showing any symptoms, and from as far away as 2 meters.
Crowded factories are a very dangerous environment for this virus to spread in, and as a result China’s factories are slow in starting up full-scale production again, weeks after the Lunar New Year has ended.
China factories reopening schedules
Factories opened up Monday, February 10, but depending on the location, the available workforce has been scaled back, meaning production output has taken a hit.
Factories in Hubei are seeing total closures up until February 24th and beyond.
And based on our conversations with local factory owners in China, most of them aren’t able to get their workers back for work. The municipal governments in China also posted strict requirements for factories to re-open. For example, they need to provide masks as basic protection, have regular temperature check for workers, etc.
Most of the factory owners we talked to in Guangzhou and Shenzhen area told us that opening won’t happen until early March 2020.
Freight forwarders reopening schedules
Most of the domestic logistics companies like SF express and Jingdong express are still operational in China, as they are in charge of shipping the medical/food supply.
But international shipping like FedEx and UPS have started limited operations out of China, with more routes to be added as the situation improves.
For regional freight forwarders working with cargo space in commercial flights, the reduced number of flights coming into and going out of China are greatly impacting their ability to ship cargo. United, American, and Delta airlines, just to name a few, have totally stopped issuing flights to China until April.
This impact is being felt across ocean freight as well, with top container lines such as Maersk and CMA CGM all reducing routes into China.
We’ve also contacted international freight partners in China, and most of them can accept bookings. But due to the limited space in air and ocean freight, the transit time will likely be delayed days to weeks.
What can you do to keep your China-manufacturing based business running?
With coronavirus infections continuing to spread, it’s hard to overstate how severe the production and transportation impact will end up being.
Bookairfreight recommends looking into the following:
If you still want to continue manufacturing in China:
- Contact your suppliers to understand the production timeline
If you already have orders, you need to ask them about the timeline. Based on our experience, you’ll need to add 5 – 7 days buff, as production is likely to be delayed.
If you want to cancel your placed order, you’ll need to double check your contractual terms (if any). Your factory is likely to be protected under “Force Majeure”, meaning if any dispute is involved ( which mostly happens in big money orders) you won’t get protected.
- If you are considering a new order, you need to ask your factory about their backlog from Chinese New Years. Some of our factory contacts in the Ningbo area told us they couldn’t take new orders until the end of May.
You can also try different factories, which due to different municipal governments’ policy, may start to re-open earlier and have more capacity.
Once you understand the production timeline, you can make an informed decision on whether to place an order or not.
- Look at your own inventory data, make inventory management accordingly
Once you understand your current inventory status, by looking back at your historical order data (if any), you can plan your inventory/marketing accordingly.
Here are some tips:
- Hunger marketing: Why not use the inventory shortage as an advantage for promoting how popular your products are?
- Pre-sale: If you are not sure how many orders you need to make, this is a way to eliminate your risk for over ordering.
- Up-sell other products: If certain types of products are out of stock, you can invest in promoting other, available products.
- Focus on customer care: Why not use this chance to connect with your customers, and open up communication about the situation? You can also use this opportunity to up-sell other products.
- Bulk Shipping your orders: Since shipping is based on weight of goods, the unit cost could be lowered if you ship by bulk. Check out our instant quotation platform and sample some quotes yourself. By changing the weight of your orders, you get the cost of shipping immediately.
Find cheaper ways to ship out your productions
However you choose to handle the coronavirus situation with your e-commerce company’s China production, you’ll want to move product quickly when you get a chance - it’s the best way to handle future uncertainty.
This could mean shifting existing cargo marked for ocean transport into air.
But instead of reaching out to individual freight forwarders and getting a single quote from each one of them, working with Bookairfreight gives you access to a network of wholesale suppliers, saving you at least 20% and getting you multiple quotes at once to choose from.