75% of U.S. companies facing supply chain disruption

United States
Published:  23 March, 2020

Nearly 75% of companies in the U.S. have reported supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, with more than 80% believing they will experience some impact because of disruptions related to the COVID-19.

The survey, published by the U.S. Institute for Supply Management (ISM) on March 11, revealed the first-round results of a survey focused on coronavirus disease 2019 (COVID-19) business and supply chain impacts. One in six (16%) companies also reported adjusting revenue targets downward an average of 5.6% due to the coronavirus. The primary reported supply chain impacts include 57% of respondents noting longer lead times for tier-1 China-sourced components, with average lead times more than doubling compared to the end of 2019, and more than 44% said to not have a plan in place to address supply disruption from China. “We’re seeing that organisations that diversified their supplier base after experiencing tariff impacts, are potentially more equipped to address the effects of COVID-19 on their supply chains”, said Thomas W. Derry, CEO, ISM. “For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States -- even if they can get orders filled.”

Meanwhile, the U.S. fashion, apparel and footwear industry have jointly called on President Trump to erase the proposed hike in tariffs, expected to be imposed on goods imported from China before April. In a joint letter dated March 18 sent to the U.S. Administration, five industry organisations, which include the American Apparel and Footwear Association (AAFA), Footwear Retailers and Distributors of America (FDRA), and Council of Fashion Designers of America (CFDA), proposed trade and fiscal policy recommendations. The signatories urged the U.S. government “to open a wide range of tools to help apparel, footwear, and travel goods companies and retailers manage their operations during the coronavirus crisis. This should include, but not be limited to, granting tariff relief immediately, providing for access to capital and other monetary resources to assist in challenges to liquidity, and assisting with distressed worker compensation”, and said that “temporary tariff relief, including refunding punitive duties paid already, is an important tool that should be deployed immediately”.