The corona virus crisis has reached Swiss consumers. They increasingly stock up with certain products – and feel the consequences of the interrupted supply chains.
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Respiratory masks are missing on the one hand because of the high demand, on the other hand because of the interrupted supply chains.
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Delivery bottlenecks, delays, higher prices: that is the bad news from the first manufacturers and dealers to Migros. The buffer quantities in the non-food segment would partially run out, says a Migros spokesman. Because the flow of goods from China stalls because of the corona virus. The logistics and shipping there are likely to become the bottleneck.
On the other hand, there is still enough food. Migros prioritizes products for an “emergency stock” that are currently in greater demand. Customers’ shopping lists include canned goods, pasta, eggs, cheese and baby food. Reports of consumers standing in front of empty shelves are circulating on social networks. However, the spokesman says there is still no question of buying hamsters.
Which of you hamsters all the shelves here empty? ? pic.twitter.com/KTYDyGoIru
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Anyone visiting the Migros Le Shop online supermarket on Friday will see the following message: «Certain products and delivery times are temporarily unavailable.» Competitor Coop @ home also announces delivery bottlenecks. According to a spokeswoman, the products are not sold out. The logistics were just a little surprised. Lidl, Aldi and Manor are also seeing growing demand for staple foods. As a result, the prices have not yet been increased by a retailer.
Psychology is more important than supply chains
China’s share of global economic output has quadrupled since the Sars crisis in 2003. Today, the country is responsible for 16% of global production. The corona epidemic in China is slowing and disrupting global supply chains. If the factories in the Middle Kingdom are slow to resume production and the transport remains partially interrupted, the whole world will feel it. Specifically, this means that as soon as stocks are exhausted, certain products become scarcer and prices rise.
However, the corona epidemic not only cuts supply chains, it also leads to increasing demand for certain goods. The Sars crisis showed that customers were changing their buying behavior. People increasingly avoided traveling, ate less in restaurants and avoided larger events. At the same time, they were increasingly stocking up on essential staples. This was economically more difficult than the factories being shut down for a while.
Consumer behavior has also changed in Switzerland. Customers are increasingly buying respirators, disinfectants and long-life foods to prepare for the epidemic. The result is temporary shortages in pharmacies and supermarkets. According to the Pharmasuisse Pharmacy Association, the demand for pandemic items is currently “far” outstripping the supply. The Federal Office for Economic Supply (BWL) attributes the shortage of protective masks to the interrupted supply chains.
“Primary care is a big problem”
In addition to masks and disinfectants, medication is also becoming scarce. The BWL mentions antibiotics and generics in particular. Shortages of pharmaceuticals existed before the corona epidemic. Now the scarcity is exacerbated. Switzerland will feel this with a time delay in the third and fourth quarters, says Enea Martinelli. He is the chief pharmacist of the Bernese Oberland hospital group FMI.
But certain active ingredients were already missing, such as the pain and fever drug ibuprofen, says Martinelli. After an explosion in summer 2018 in a plant of the German group BASF in the US state of Texas, there are only two manufacturers who produce ibuprofen. Both are located in China – one of them in Wuhan, where the coronavirus raged worst. The Hubei Province government currently expects the companies to resume production in mid-March. “Basic care is a big problem,” says Martinelli. Because even if patients could switch to other medications, the effort as well as the costs increase.
Delivery problems with the smartphones
China covers over a tenth of the world’s need for electronic components and devices. The Chinese market analyst Trendforce expects an export decline of up to 16% for individual electronic products (see graphic). He estimates that production capacities will not recover until April or May.
Apple therefore has delivery problems with the smartphones. The new iPhone could be delayed on the market. The online retailer Digitec-Galaxus says that a good dozen of the models have been sold out and are currently difficult to obtain. Intermediaries who still have iPhones in stock would have practically increased the prices. However, the devices in the shop have not yet become more expensive. In contrast, the prices for respiratory masks, disinfectants and thermometers have risen.
The corona virus reduces delivery volumes in the technology industry
Estimated decline in global tech delivery in percent for Q1 2020
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According to a media spokesman, the competitor Brack.ch may experience delays in delivery and increased prices. While some manufacturers would soon resume production, other factories and transport routes were still idle.
Interdiscount, Fust and Mediamarkt are therefore examining alternative suppliers. This could be a long-term challenge, because China not only produces a large proportion of high-tech products, but also the associated components such as microchips and printed circuit boards (carriers for electronic components). Every electronic device needs a printed circuit board, and China is the world’s largest and cheapest manufacturer. Production sites outside of China can only ramp up their production to a limited extent.
Textile manufacturers are slowly starting to work again
China is not only an important manufacturer for the technology sector, but also for the textile industry. European fashion companies are estimated to source almost 30% of their goods from the Middle Kingdom. The companies fear delivery bottlenecks and higher purchase prices. They are also trying to switch to manufacturers in other countries. But these can also have delivery problems if they in turn obtain fabrics, threads or buttons from China.
The Zurich discount fashion chain Chicorée says that it still has enough warehouses and is currently in the timeframe for the coming summer, autumn and winter season. Because the orders were placed with the suppliers very early, says the media spokesman. Chicory has identified effective delivery delays of three to four weeks in production in the Chinese region of Wuhan. In contrast, the situation in the Shanghai region is already easing; first companies have resumed production with reduced capacity.
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