Shenzhen Resumes Production with Technological Tools

February 26, 2020

Shenzhen, known as the “heart of science and technology” in the Guangdong-Hong Kong-Macau Greater Bay Area, has gradually resumed production with the help of digital and telecommunication tools.

While continuing with measures aimed at controlling the Covid-19 epidemic, Shenzhen is using a series of government relief measures to get back to work.

The city’s central business district of Futian has been the preferred place for enterprises to set up their headquarters.

Science and technology enterprises are the core industries in Shenzhen and there has been a push to get them back into production.

Huawei Technologies, a Shenzhen-based company, recently launched an online daily attendance system and a website plus an online quiz about epidemic prevention for its staff. It has also set up special areas for disease-control staff within its production sites.

Huawei has been using new information and communications technology to closely monitor its staff.

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Source: Asia Times

US Business Gauge Tumbles to Lowest Since 2013 on Virus

February 26, 2020

U.S. business activity shrank in February for the first time since 2013 as the coronavirus hit supply chains and made firms hesitant to place orders, a warning sign that the outbreak is starting to dent the world’s largest economy.

The IHS Markit purchasing managers’ index measuring composite output at factories and service providers fell by 3.7 points to 49.6, the lowest level since October 2013, when the U.S. government shut down, according to preliminary figures released on Feb. 21.

The 30-year Treasury yield touched a record low and U.S. stocks extended declines in the minutes following the release. The S&P 500 index was on track to record its first weekly drop this month.

It’s the first major piece of U.S. economic data to show a sizable hit from the coronavirus. Economists see the virus as generally cutting more into Asian countries’ growth. Similar indexes in Japan and Australia also weakened, likely cementing the disease’s economic impact as a key topic at this weekend’s meeting of Group of 20 finance chiefs.

The deterioration “was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions,” IHS Markit economist Chris Williamson said.

The epidemic has so far killed more than 2,200 people, mostly in China, and infected more than 75,000. The spread is accelerating outside of China, whose adjustments to the number of cases have raised questions about the reliability of the data.

The stumble in the IHS Markit survey was led by service providers, whose new orders registered the first contraction in data going back to 2009, while the manufacturing PMI fell to a six-month low of 50.8. Companies in both sectors noted reluctance among clients to place orders amid the global virus scare.

White House economic adviser Larry Kudlow said Friday that the virus is only hitting the U.S. economy in a “small way.”

“So far, it does not look like — whether it be supply chain or other problems — that the U.S. economy is getting hurt in any significant way. In a small way yes, in a significant way no,” Kudlow said in an interview on CNBC He said it does not seem to be a “major blow.”

The Markit composite index showed new exports contracted for a second month and hiring slowed.

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Source: Bloomberg


Coronavirus Shows US Offshored Too Much of Its Supply Chain

February 26, 2020

White House trade adviser Peter Navarro says the coronavirus crisis shows, “not surprisingly,” that the U.S. has offshored too much of its supply chain.

Navarro expressed confidence on Fox’s Sunday Morning Futures, saying the “American economy is exceedingly strong and not particularly vulnerable to what happens in China.”

He emphasized his goal to bring more of the U.S. supply chain home. “A lot of it is in China, some of it is in India, some in Europe, but we’ve got to get that back on shore,” he said.

Navarro said he’s dealing with the immediate issue of face masks, specifying a request coming this week for N95 face masks, which he said China put export restrictions on.

“People need to understand in crises like this, we have no allies,” Navarro said. “Back in 2009 during the swine flu problem, our best friends in Australia, Great Britain and Canada basically denied us what we needed.”

The bottom line, he said, is that “this administration is moving as rapidly as possible in my part of the portfolio to make sure our supply chain is secure and we have what we need.”

For the full story please click HERE

Source: Bloomberg

US Factories in China Are Open, But With ‘Severe’ Worker Shortage

February 20, 2020

Most U.S. factories in China’s manufacturing hub around Shanghai will be back at work this week, but the “severe” shortage of workers due to the coronavirus will hit production and global supply chains, according to the American Chamber of Commerce in Shanghai.

While about 90% of the 109 U.S. manufacturers in the Yangtze River delta expect to resume production this week, 78% of them said they don’t have sufficient staff to run at full speed, according to a survey by AmCham. The biggest reasons for that were travel restrictions on their staff returning from holidays and the requirement to quarantine them for two weeks once they do come back.

“Most factories have a severe shortage of workers, even after they are allowed to open,” Chamber President Ker Gibbs said. “This is going to have a severe impact on global supply chains that is only beginning to show up.”

Almost 60% of the firms expect demand to be lower than normal over the next few months, nearly half said their global supply chain had already been affected by the business shutdown, and about a third of them will consider moving operations out of the country if this continues, according to the survey.

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Source: Bloomberg

Shippers Brace for Capacity Squeeze as Chinese Manufacturing Resumes

February 18, 2020

Export freight volumes are beginning to return to China as the country’s production picks up slowly, with shippers likely to face an increasing squeeze in air and ocean outbound capacity – accompanied by higher rates – in the weeks to come, according to an update yesterday from global freight forwarding and logistics group Agility.

Agility’s latest China coronavirus operational update noted that pressure on capacity was currently affecting inbound air freight and China domestic trucking in particular. And on the production side, it highlighted that “many large exporters, including original equipment manufacturers (OEMs), are not immediately resuming full production either due to manpower shortage, in response to or as a precaution to ensure quarantine measures for returning workers”.

Based on preliminary assessments, it said an estimated 30% of major suppliers remain closed, with major OEMs indicating “the delay to reach full production could last well into March”.

Commenting on the situation for air and ocean freight in greater detail, the update notes that airport and port operations are currently relatively smooth. But Agility expects “possible challenges” at Shanghai Pudong (PVG) Airport as outbound cargo volume picks up, while low manpower is impacting service levels and operating efficiency at certain locations.

“A prime example is PVG, where stringent rules for workers returning from holidays have been implemented,” it noted. Stringent restrictions for carriage into and out of Shanghai Province could further impact cargo flow, particularly affecting PVG airport, it added.

The update goes on to note that the number of flight cancellations and blank sailings is on the rise. There have been almost 7,500 outbound flight cancellations, it estimated, but freighter operations are gradually being resumed.

Ocean carriers have begun implementing extra blank sailings, reducing transpacific eastbound (TPEB) capacity by an estimated 25% and China-EU capacity by as much as 60%.

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Source: Lloyd’s Loading List