As a result of my article, “Earthquakes, Tsunamis and Supply Chains: A 2020 Update,” I have been asked to provide more detail on the digital commerce, China trade war and COVID-19 earthquakes and resulting tsunamis. This blog will cover the COVID-19 pandemic earthquake and tsunamis. This is the last post in this series covering the three earthquakes and the many ensuing tsunamis that were all happening at the same time during the first half of 2020.
Unlike the posts on the digital commerce and China trade war earthquakes and tsunamis, it is clear exactly when and where the COVID-19 pandemic earthquake happened. The date reported by the Chinese government was December 31, 2019 and it happened in Wuhan, China. On that date, public health officials discovered dozens of cases of pneumonia arising from an unknown cause. On January 7, the first tsunami came ashore as that cause of the illness was identified as viral disease caused by a new coronavirus. Four days later, a second small tsunami came ashore when the first person died from COVID-19 in Wuhan. On January 20, the first sign of the rapid spread of COVID-19 became clear as cases were reported in Japan, South Korea and Thailand. The next day, the first confirmed case was reported in the United States. On January 23, Chinese authorities locked down Wuhan. The largest COVID-19 tsunami to date hit on January 26, when the Chinese celebration of the Lunar New Year began and most Chinese people took a several week vacation to travel to their hometowns, resulting in a massive spread of COVID-19. Then on January 30, a huge tsunami shocked the world when “a public health emergency of international concern” was announced by the World Health Organization and then in less than 24 hours President Trump restricted travel for anyone who had been to China in the last 14 days. At that point on January 31:
- The global death toll was all in China and was just over 200
- The total number of cases in the world was under 10,000
- China began to lock down more than Wuhan and trapped the Lunar New Year travelers in their hometowns
Of course, the public health global tsunamis of COVID-19 continued to have huge impacts around the world as the virus rapidly spread throughout Asia, Europe, Africa, Latin America and the United States and on then on March 11, COVID-19 was declared a pandemic. I did not even know the word pandemic when I heard it on March 11. I learned the word came from the Greek words that translated meant “all people.” The definition I read said that a pandemic is a disease epidemic that spread across a large region, for instance multiple continents or worldwide. Wow! Well as we all know, the public health tsunamis of COVID-19 continue to hit as the virus continues to impact life around the world. But let me stop the discussion of the horrific health crisis of COVID-19 and switch gears here at the end of January to the supply chain and then the economic impacts of COVID-19.
To be clear, the public health impacts of the COVID-19 tsunamis have been terrible and beyond anything that have occurred in our lives. But in addition, there have also been terrible impacts on supply chains around the world and thus the economies around the world. The whole COVID-19 pandemic is terrible, so my taking this blog down the supply chain and economic impacts of COVID-19 is in no way saying the public and mental health issues are not horrific, but rather that what I know is supply chain and the impacts of supply chains on economies and thus that is the direction of the remainder of this article.
So, here we are in early February and China is locked down while people are away from work and they can’t travel back home to their jobs at the end of the Lunar New Year holiday. The digital commerce tsunamis are hitting, the China trade war tsunamis are hitting and now the supply chain tsunamis begin to come ashore. As explained in the last article of this series, the China trade war resulted in China having a huge trade balance over the United States and Europe. This trade balance resulted in China being referred to as the “factory of the world.” Many supply chains across the world depended on manufactured components or finished goods from China. Due to COVID-19 during the month of February, very little manufacturing was exported from China. The China factories in mid-February remained closed after the Lunar New Year as factory workers were locked down in their hometowns. This failure to export in February resulted in a series of supply shortage tsunamis around the world. These tsunamis continued until mid-March due to the following:
- Workers returned to the factories in early March, but the factories did not have raw materials from other Chinese manufacturers
- Workers came back to the material suppliers’ factories, but the truck drivers that deliver materials from manufacturers to the factories were locked down
- Truck drivers returned to work and the factories started manufacturing, but the truck drivers that deliver goods to the port were locked down
- Port truck drivers came back to work, but the ports did not have workers to unload the trucks and load the ships
- Port workers returned from lockdown and ships traveled to their destinations
The supply of material and products began to improve in mid-March, but then a new supply chain problem began as COVID-19 lockdowns in the United States and Europe resulted in huge fluctuations in demand. Never before in all of time has there been a crisis that impacted both global supply and demand. The primary objective of a strong supply chain is to balance supply to demand and here we were entering April with totally unpredictable supply and demand. The global supply chain was broken and therefore so too was the global economy. This resulted in huge product shortages, demand fluctuations, unemployment rates and business failures.
The health impacts of COVID-19 continue to be a major challenge unto themselves, but just as significant are the supply chain, economic and mental health impacts of COVID-19. Of course, of even greater impact are the ongoing tsunamis of digital commerce, the China trade war and COVID-19 all hitting our shores at the same time. In my opinion, 2020 has been the most challenging time in the history of the world. I wish you well as you navigate the earthquakes and tsunamis that are producing chaos around the world and may you persevere as we move onto the next—and more gentle—normal.