The continuing coronavirus crisis has sparked various supply chain contingency plans, including ‘no-deal’ Brexit-style measures being revived in the UK, as prolonged production closures in China threaten shortages of vital stocks.

UK government ministers have ordered a contingency plan to be drawn up to cope with the coronavirus crisis amid fears that China will shut factories and cities for months, according to a report in The Sunday Times. Last week senior UK government ministers discussed the dangers of running short of lifesaving equipment or components for business supply chains.

Civil service officials have been told to revisit plans for a no-deal Brexit and adapt them to secure vital goods, just as they prepared for supplies to be cut off from the EU last year. The Department of Health has been told to ensure the supply of medicines.

Officials at the business department have also reportedly started contacting companies in critical sectors with high exposure to China, urging them to find alternative sources and to tell officials about their level of risk. Among the markets in jeopardy is the fashion industry, which is facing up to the prospect of the autumn season being cancelled.

The report quoted a government source who said: “There is a growing realisation that most things are made in China and that this virus is not going away and that you could see whole factories just closed. The departments involved in the response, like health, are up to speed with it, but some of the others are just waking up to the fact that it could impact supply chains in their sectors.”

Last week, retail experts said the high street chain Next sourced 20% of its products from China, meaning ￡20 million of stock at risk from the virus. Irish fast fashion retailer Primark gets half its clothes from China, a proportion that is still lower than some.

The report also quoted Marc Dench, chief financial officer of the clothing retailer Joules, which has more than 120 shops in the UK, who warned of disruption across the supply chain.

“A large proportion of our spring-summer season was already in our UK warehouse or on boats already,” he said. “There is still a portion of that season which is either at port in China or yet to be manufactured and that does give us cause
for concern.

“Even if you have a factory in Vietnam, the Philippines or Cambodia, a lot of the raw materials will be coming from China. The complexity of modern supply chains means the reality of what is impacted and when is tricky to figure out.”

He claimed that some air freight costs had already increased by between 300% and 400%, noting: “We needed to buy some new tills for a new store we are opening and they come from China, so we couldn’t get them.

“A three- or four-week shutdown is manageable; but when it gets to eight weeks, that will cause broader disruption across the whole supply chain and becomes problematic. If it gets to eight weeks, all of the countries nearby will be shut down as well.”

A fashion industry consultant said workers were unable to travel to Wuhan province. “All these people who have placed their autumn orders are not going to get them, there will potentially be empty stores. The autumn knockback on coronavirus will be massive. It will cause a lot of disruption.”

Source:lloydsloadinglist

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