The Supply Chain Matters blog provides a bi-weekly summary capsule of news reports that have implications for various industry supply chains.

With COVID-19 coronavirus news once again on the rise, we provide this feature to assist our readers in their efforts to keep updated on noteworthy developments. For reference, our previous capsule update was published on October 2.

Companies, institutions and product categories included in this update include:

COVID-19 Industry Supply Chain News

Johns Hopkins- Coronavirus Global Wide Status

3M CEO Indicates More N95 Face Masks Being Produced Than Ever

Amazon Air Expanding Rapidly

Asia Pacific Commercial Aircraft Parking Lot in the Middle of Nowhere

Airbus Prepares Plans for Some Ramp-Up in Production of A320 Aircraft

Supplyframe Study of Medical Device Supply Chain Professionals

British Government Extends Brexit Preparations Blame Among UK Businesses

 

Global Deaths Attributed to COVID-19 Coronavirus Nearing 1.6 Million

According to the Johns Hopkins Coronavirus Resource Center, the global death toll attributed to this virus is now nearing 1.6 million victims with the United States clearly trending upwards. The top five countries with reported deaths include:

  1. United States- 225,739
  2. Brazil- 157,397
  3. India- 119,502
  4. Mexico- 89,171
  5. United Kingdom- 45,088

As of this week, since the first data was recorded by Johns Hopkins earlier this year, over 43 million positive cases have been recorded and the actual rate of infection is likely higher in certain regions such as the United States. Indeed as the Northern Hemisphere nations begin their transition from the summer to the fall and winter months when more people reside indoors, there are increased concerns for added outbreaks in the coming months. Thus far, efforts to test various vaccines that can immunize people from the virus are ongoing, but widespread distribution and administration is not likely until sometime in 2021.

The ranking of the top five countries with positive case rates now indicates:

  1. United States- Surpassing 8.7 million cases
  2. India- Surpassing 7.9 million cases
  3. Brazil- Surpassing 5.4 million cases
  4. Russia- Surpassing 1,5 million cases
  5. France- Surpassing 1.2 million cases

Here in the United States, the previous infections involving U.S. President Trump, First Lady Melania Trump, along with certain members of the White House staff testing positive for the virus have now been followed this week by reports of three close aides to Vice President Mike Pence testing positive and under quarantine.  It remains unclear as to how many other people who might have interacted with the Vice President have been exposed.

As the U.S. Presidential election reaches its last week of campaigning, the COVID-19 coronavirus infection rate that is now accelerating has become a key issue among the two candidates. COVID related hospitalizations are rising among 36 U.S. States as the country hit another record level of average new daily cases which are now approaching 70,000 new cases on a daily basis.

 

3M CEO Indicates More N95 Face Masks Being Produced Than Ever

Today, 3M Chairman and CEO Mike Roman indicated in in interview with Global Business Broadcast Network CNBC indicated that the manufacturer is now producing more N95 respirator masks than ever.

The medical grade masks which are widely viewed as a high quality option for healthcare providers on the front lines of this pandemic continue to be in high demand according to Roman. He told the network that 3M is on-track to produce 2 billion masks globally this year, about half of which to supply U.S. needs. That stated, the masks remain on allocation specifically for purchase only by government and healthcare institutions.

With the U.S. leading the world in infect rate the issue of adequate supply is taking on added significance. Roman further stressed that the company is working directly with health authorities to insure that supplies are allocated to “hot spots.”

The report indicates that the company has filed more than a dozen lawsuits in response to fraudulent supply of termed N95 masks as well as price gouging during the ongoing pandemic. Reportedly, as of mid-October, upwards of 3.5 million fake respirators have been seized by law enforcement.

Roman indicated efforts to work in partnership with the U.S. Department of Defense to provide supplies for a second wave of the virus.

 

Report That Amazon Air is Expanding Rapidly

Global Business Broadcasting Network CNBC, quoting data issued by DePaul University’s Chaddick Institute of Metropolitan Development, reports that “Amazon Air expanded rapidly during summer 2020, a period otherwise marked by sharp year-over-year declines in air cargo traffic.”

Amazon Air now includes upwards of 70 aircraft and is expected to grow to more than 80 aircraft by 2021. That number is up from 50 aircraft reported in service in February 2019. While Amazon’s aircraft fleet has grown this year, it remains much smaller than rival parcel carriers. FedEx operates with a fleet of 463 aircraft while UPS operates with a fleet of 263 aircraft.

Air freight industry sources further indicate that Amazon has further shown active interest in re-purposing older aircraft that many international air carriers are now shedding from their operational fleets as a result of significantly reduced international air travel levels brought on by the pandemic.

The DePaul report indicates that Amazon’s massive investment being made at the Cincinnati/Northern Kentucky International Airport could change everything since it will represent the lynchpin for efforts to deploy a comprehensive array of domestic delivery services across the United States.

 

Asia Pacific Aircraft Parking Lot in the Middle of Nowhere

Bloomberg reports this week that an aircraft storage facility in Alice Springs, located smack in the middle of rural Australia has never been busier.

With the coronavirus pandemic continuing to impact international air travel, the need for longer-term storage of deemed excess idle aircraft continues. Last month, The International Air Transport Association downgraded its forecast for 2020 to reflect a weaker recovery in international air travel. The agency now expects full-year traffic to decline by 66 percent versus 2019 levels, more than the prior forecast of a 63 percent decline.

For the Australia based Asia Pacific Aircraft Storage Facility (APAS) located in Alice Springs where the annual climate features dry, desert air and cool nights make for what is considered to be near perfect storage conditions.  The facility which includes both an airport able to handle takeoffs and landings of wide body aircraft as well as flat land storage, demand has never been more robust. According to the report, upwards of 100 aircraft are currently in longer-term storage, possibly after the pandemic is over. This facility is about to submit plans for a fourth expansion, making total storage capacity between 250 and 300 aircraft. The facility’s Managing Director expects aircraft parked to eventually settle to upwards of 200 aircraft. That is a lot of desert real estate.

The report further points out that aircraft storage requires constant services.

Facility support staff, now upwards of 80 workers, must initially prepare each aircraft induction storage. Reportedly, it takes a team of a dozen workers up to five days in draining fluids from engines, taping and covering aircraft critical engine and system components specified by individual aircraft manufacturers. The report notes that between 40 and 50 rolls of tape are required and that facility consumes a pallet of tape every two weeks. The goal is to ensure that every vulnerable gap or crevice is sealed from dust and insects.

Once inducted into storage, each aircraft requires a rolling schedule of 30- and 90-day maintenance checks that typically include inspecting desiccant applied to engine bays, rotating tires and inspecting brake systems. Similarly, preparing an aircraft to be return to operational service requires a reverse number of activities on the part of facility workers.

Beyond the notion of the logistics required to store idle aircraft, let’s not lose the perspective that each of these aircraft represented significant employment for aircraft crews, airline service, maintenance and airport infrastructure and services workforces.

 

Airbus Prepares Plans for Some Ramp-Up in Production of A320 Aircraft

Bloomberg and other aviation European business focused publications report that commercial aircraft producer Airbus is readying plans to once again ramp-up output of new A320neo aircraft. However, the aircraft manufacturer indicates that no final decisions have been made regarding this planned ramp-up.

Reportedly, after re-assessing the commercial aircraft market after this summer period, suppliers have been asked to be ready to support a monthly production rate of 47 Airbus A320neo family aircraft in the second half of 2021. Airbus indicates that it will continue to maintain a production rate of 40 aircraft monthly until the summer of 2021, while requesting the supply chain to be able to support the 47 monthly aircraft level when the market is expected to recover.

Before the pandemic impact occurred across the global airline industry, the manufacturer had plans to produce a monthly production rate of 63 aircraft, ramping to 67 aircraft monthly by the year 2023. The market effects of the pandemic has caused Airbus to slash upwards of 15,000 jobs globally.

Airbus has reportedly managed to avoid significant order cancellations of booked aircraft orders, unlike rival Boeing that is still dealing with efforts to return the beleaguered Boeing 737 MAX single aisle aircraft back into operational service. The European aviation safety agency  has recently provided the approval to return the 737 MAX to operational service which is expected late this year and the first half of 2021.

 

Supplyframe Study of Medical Device Supply Chain Provides Interesting Data

High tech electronics Design-to-Source Intelligence Cloud platform provider Supplyframe indicates that in a recent survey conducted among medical device supply chain professionals, nearly a third believe it will take 6 to 12 months for the global supply chain to be back to full capacity following the disruptions from the pandemic. A fifth of the respondents indicate it will take 12 months to two years for the global supply chain to return to full capacity, while 26 percent indicate it could take up to five years.  Yet the same research indicates that 66 percent of respondents believe that if a vaccine is approved for use in the U.S., the necessary medical equipment will be available to produce and distribute that vaccine at scale within one year.

This survey that consisted of a population of upwards of 200 responses among supply chain professionals among medical device companies based in North America, which was conducted between August and September of this year.

Other indicated findings indicate  that as the pandemic drags on, a fair share of survey participants expressed concern about the pace of vaccine development. Nearly a fifth (19 percent) said they don’t think the U.S. will produce a vaccine fast enough, and 16% said vaccine distribution in America is too onerous.

Many supply chain professionals had expressed concern about a COVID-19 resurgence and its potential impact on medical device production; 15 percent of survey participants said they expect to see supply shortages in the event of a continued resurgence of the virus. Nearly as many (12 percent) said there will be a delay in medical device production in the event of a resurgence.

At the same time, 82 percent of survey respondents said they worry about how tariffs on China will impact personal protective equipment (PPE) and medical devices.

 

  • 30 percent indicate U.S. manufacturing capacity needs to grow
  • More than a quarter (26 percent) said such medical gear will be harder to source
  • 20 percent expect that there will be continued product shortages

 

A further indicator that should be a concern is that nearly a quarter (24 percent) of the survey group feel that testing supplies are or will be running low, limiting test coverage.

An overwhelming 92 percent of survey participants emphasized the importance of accurate COVID-19 case data to correctly forecast demand requirements and inform manufacturing efforts. Yet 84 percent expressed worries about how COVID-19 case data is being collected and reported in the U.S., with 44 percent indicating they have concerns around inaccuracies from testing data.

Readers can review the study findings along with summary infographics at this Supplyframe web page.

 

British Government Extends Blame with U.K Businesses Over Brexit Preparations

Bloomberg reports that last week, British Prime Minister Boris Johnson conducted a conference call with U.K. business leaders to urge businesses to get ready for Brexit to occur at the end of this year.

According to the report, some executives were on the view that the Prime Minister was accruing them of being apathetic and dragging their feet should an exit upheaval were to occur. According to this report:

After a year in which many companies have struggled to cope with economic damage wrought by the coronavirus, the suggestion they aren’t paying attention to the EU relationship hit a raw nerve. It also left some executives worried that Johnson’s government is gearing up to blame them if the end of the transition period on Dec. 31 brings chaos to the border.”

The report notes that the building tensions among the government and business comes at a critical time for both, with the British economy facing a double impact of the new potential population lockdowns as a result of raised virus infection rates and of a potential of hard Brexit changes. There are indications that the pandemic has consumed the energy of businesses possibly at the expense of Brexit preparations.

The report indicates that privately, business leaders indicate that the Prime Minister should have helped by extending the transition period yet again.

Earlier in October, government minister Theodore Agnew reportedly accused some businesses of taking a “head in the sand” approach toward the year-end Brexit deadline.

According to the deputy chief economist at the Confederation of British Industry, the largest business lobbying group in the UK, just 17 percent of companies are “fully” prepared for Brexit.

Meanwhile, ongoing talks among the EU and the UK negotiating teams continue with some signs of added optimism on both sides. Last week, head EU negotiator Michel Barnier indicated that an agreement is within reach. However, the two thorniest issues related to nation sovereignty and mutual fishing rights remain unsolved, and without an agreement by the middle of November, adequate preparations cannot likely be made.

 

This concludes our October 27, 2020 COVID-19 Industry Supply Chain News Capsule.

 

As the news cycle warrants we will continue such updates initially on a bi-weekly cycle.

 

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