China’s Coronavirus Closures and the Consequences on Consumers in the USA

This post spotlights the implications of China factory closures and the deep impact on the industry and consumer goods in the USA.

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Our livelihood and dependence on China are only starting to be seen and felt amidst the Coronavirus outbreak. With no new shipments inbound to the USA from China during this time, to re-stock inventory, parts and goods, there is no trade and therefore, there are no new goods.

Companies in the USA are well aware of Chinese New Year closures. It’s a closure that’s planned well ahead of the two-week holiday, which usually fall in January or February. As the largest human migration, nothing happens during that time. With the Coronavirus happening during this period, it has lead to a nearly two month shut down.

If these closures go on for another one month period, USA shelves could start looking bare, and goods prices could begin unceasingly. That is unless the government steps in to help.

Things We Rely on China for the Most

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Source Market Watch and US. Census

We rely on China for a little bit of everything. Besides finished consumer products like toys, smartphones, clothing, and household goods, it also includes electronic components and materials integral for making US-made things like vehicles.

Why This Lull in Shipping Time Matters

As a company that has shipped hundreds of thousands of dollars worth of goods to the USA, I’ll tell why this timing is integral.

The majority of goods shipped between China and the USA are sent by ship over the sea. It’s much cheaper than sending it by air. The only caveat is it takes much more time. By air, shipments can take as quick as 4–7 days, including customs time. By sea, shipments typically take 28–35 days.

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Image via https://cargofromchina.com/sea-freight

Unfortunately, I don’t have any data on the number of shipments current inbound from China since pre-CNY and pre-Coronavirus. For logical reasons, you can’t track cargo shipments like you can flights. Pirates would love that way too much.

That said, since CNY and the Coronavirus, these canceled shipments and failing volumes are reaching $350 million a week according to a story by The Wall Street Journal.

Countdown Down to a Shopping Apocalypse

Now back to how the economy is impacted. If China stays closed for one to two more months? Businesses are currently relying on shipments that are currently on the water, having left pre-Chinese New Year and pre-Coronavirus.

Vendors pre-plan months ahead based on sea shipping schedules. Goods are ordered knowing it’s going to take at least a month to arrive.

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Relying on Current Inventory —> Inbound Inventory
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Relying on New Goods — > No New Inbound Goods
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Now that the closure has been on for about a month, that means no new goods are being made or on the way.

Rumors

There are rumors that some large-scale China factories opened this past week, and many more will be opening this week. Based on this, there will still be a lull in USA goods. Namely:

Production Time: Dependent on goods by other companies

Shipping Schedule: The Earliest time it can get on a ship, now backlogged

Goods Arriving: Goods on the water arrive in 35 days from the ship date.

Thinking Ahead

Long story short, China shutting down for any means has much bigger implications on the USA than we’re being told or discussing. The implications are the lack of new goods, the lack of parts to fix existing goods, no materials to make the goods we manufacture in the USA. This can lead to a disparity in supply and demand means we the customers are the ones who pay the price, aka prices rise. Just look at gas prices.

Prayers to all the people our there fighting the virus, locked in quarantine, or feeling the repercussions of mandatory closures. Hang in there!

Want to discuss? Reach me at ashley@chicktech.com

Strategic alliances (haptics & magnetics) at http://Nanoport.io. Founding team @Nanodots. Writes about VR, tech, startups, and autocross.

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