Coronavirus Supply Chain Concerns Mount At Ambiente

The show floor at Ambiente in Frankfurt reverberated with mounting concerns about the potential for major supply chain disruption as Chinese factories remained shuttered by China’s massive coronavirus quarantine.

News broke during the show that officials in the Guangdong region critical to housewares manufacturing were extending to March 1 some factory openings that were originally set for this week. Some factories were still planning to reopen this week, according to reports.

Even if most of the Chinese factories were to resume operation by late February, there might be several obstacles to timely production and shipping.

Lower-than-normal productivity levels are expected to begin with as factories cope with reduced labor and administrative staff, as well as the potential for a shortage of raw materials and parts held up during the quarantine.

As many as half the factory workers who had gone home during a Chinese Lunar New Year holiday that was extended by the quarantine, might not return to reopening factories, according to reports. And those that return could be subjected to factory health inspections that could last a couple more weeks before manufacturing lines are running.

Vendors said their customers could expect a 30-day extension to the time it would normally take shipments to arrive because of factory labor shortages, limited trucking flow and port, container and cargo ship disruptions.

The near-term B2B impact of the coronavirus outbreak was evident in the widescale absence of travel-restricted Chinese manufacturing personnel and other trade visitors from the country at Ambiente.

Buyers from across Europe skipped the show, vendors said. Bed Bath & Beyond and TJX were among the U.S. retailers that cancelled trips to a Frankfurt show attended by Williams-Sonoma, Crate & Barrel, Sur La Table, Qurate, Nordstrom and HEB, among other U.S. retailers.

Precautions related to the coronavirus outbreak has spread to other major housewares trade shows. The International Housewares Association announced on the eve of Ambiente that it was cancelling the International Sourcing Pavilion at the forthcoming Inspired Home Show, set for March 14-17 in Chicago; and the Canton Spring Fair, set to begin April 15, has been postponed as part of an indefinite suspension of operations at major Chinese trade centers.

Several vendors in Frankfurt said they already have begun discussions with U.S. retail customers about managing potential near- and long-term Chinese supply shortages.

China-made goods on the water prior to the Chinese Lunar New Year could give retailers a bit of a cushion before an extended Chinese production shutdown could begin to jeopardize spring and summer retail arrivals in the U.S.

Vendors in Frankfurt speculated retailers worried about the potential for empty shelves could turn to goods, where available, made outside of China.

Several Europe-based companies with U.S. distribution touted a renewal of domestic manufacturing capabilities at competitive pricing. Vendors said mainstream retailers beyond the off-price segment might have an increased appetite for slow-selling and closeout goods already sitting in U.S. warehouses.