The impact of the Covid-19 pandemic has reverberated across global supply chains. There has been considerable debate about a retraction of globalization. Will governments and businesses favour resilience over efficiency in their supply chains and will this change the shape of global supply networks?

While the long term impact still remains to be seen – focus still being quite correctly on handling the overwhelming impact of the crisis – for many businesses there are more pressing supply chain issues to address.


In February Asian supply chains were heavily affected. Shipping lines reacted to the decline in demand by blanking sailings, reducing the number of vessels transporting containers from South-East Asia to Northern Europe.  At the peak of the disruption, capacity on the Asia-Europe Westbound trade was down by 50%. 

This caused chaos for in Europe for two main sets of companies:

  • Manufacturers with Just-in-Time supply chains, dependent on Asia for regular product shipments. There were concerns of European auto manufacturing grinding to a halt
  • Retailers sourcing finished goods from Asian origins running out of stock

Fortunately there were still three weeks of stock on the water to keep Europe supplied in most instances.

Source: commissioned research 2020


Recently Asian supply chains have begun to bounce back. Resupply to export customers has ramped up, providing them with the inventories they were crying out for. Shipping lines reinstated container capacity to meet demand, with few blank sailings in March. 


The issue now is not supply – but demand.

The closure of non-essential retail across Europe has driven an unprecedented slowdown in non-food sales.  Unsold inventory of materials and finished goods are accumulating fast, and any remaining warehousing space is rapidly being snapped up.  Demand for the goods that are on the water has dried up. 

Shipping lines scrambled to pull capacity and implementing policies to slow goods in transit. 

Despite these measures, and others enacted by shipping lines, an average of 220,000 TEUs (twenty-foot container equivalent) is arriving weekly from Asia (in addition to any transshipments). With little indication of near-term demand recovery, storage capacity is becoming a critical issue across Northern Europe.

For businesses this presents a number of challenging questions:

The immediate issue will be a storage.  Is stock blocking the warehouses? Can inbound deliveries still be made? Is there sufficient space for a supply chain to operate even if the business is not importing?

Next will come speed. The supply chain will likely run slow for a while. How should a business adapt? What will this mean for inventory levels, S&OP process, timings of commitments to suppliers? What impact will this have on cash flow?

Will this be a new normal? What is the impact on operating models if the global supply chain continues to run slow?