AMLU Update on the Potential Effects of 2019-nCoV on Overall Supply Chain
Dear Valued Customers and Business Partners:
As all of you probably know by now, the outbreak of the Novel Corona Virus in China has been spreading steadily throughout China and, creating a plethora of extraneous issues and unknowns. Although the hardest hit areas are situated near the epicentre of Wuhan, the PRC has taken many drastic measures to try and contain this virus in surrounding Provinces as well. The PRC has already mandated that the CNY holidays be extended until Feb. 9 for the majority of Chinese provinces, which means that the advent of returning to work for all factories, mills, suppliers, contractors and businesses in general, has already been postponed for an additional week. This is one less week of output for raw material suppliers which means that we can foresee delays with the delivery of raw materials.
Although we have been trying to get in touch with all of our fabric and trims suppliers this past week it has been quite difficult, since many of them are still not back to work yet. However, we have made it of utmost importance to contact our suppliers as early as possible, in order to be able to obtain a clearer picture as to what kinds of impacts the 2019-nCoV outbreak will have on the supply of raw materials. We also feel that it is only fair to inform all of our valuable customers and business partners that there are still many unknowns at this point in time in terms of what kinds of specific delays we can expect since the entire supply chain will be affected. Despite all of this, we have managed to summarize everything that we DO KNOW right now.
Therefore, based on what we currently know:
Currently, our factories in China have not been placed under quarantine by the China Government. That is, the cities in which our factories are located are currently not under lock-down by the China Government.
As of now, we have not received any notification from any of our factory staff that anyone has been infected by the nCo-virus at either location.
For the time being, transportation to and from our factories is currently still in operation and has not been stopped at either location.
Our factories are scheduled to commence work on Feb. 10, 2020 which is 1 week later than what we had originally planned, which was mandated by the authorities in China.
Preventative Measures have already been planned and will be instigated when the factories resume their operations.
We are currently assessing the impact that will affect our deliveries but, we are unable to get a full picture as many of our fabric and trims suppliers are currently still not back to work so we are unable to ascertain if there will be any delays to our production caused by late deliveries of fabrics, materials and trims.
However, we do anticipate that there will most likely been some degree of delays from fabric mills and trims suppliers although it is not certain to what extent the delays are going to be at this point in time.
Please note that the above information is based solely on what we know as of “today” and does not reflect any future changes that may occur. We will try our best to provide more updates as things progress.
Nonetheless, it would be safe to assume that any delays affecting the raw material supply chain will also cause a delay in our factories’ ability to complete finished goods as we will not be able to manufacture any goods without having the necessary raw materials on hand. Based on the 1 week extension of the CNY holidays, we already anticipate that this will translate to a delay in the completion of finished goods by 2-3 weeks. Although we will be doing everything in our power to help alleviate delays that may result from this stress on the supply chain, we hope you can understand our predicament as we try to manage the risks we are faced with.
We also anticipate that the far reaching effects of this phenomena will most likely also affect the production schedules of our overseas (Non China) factories as well, since most of the required raw materials originate from China. Hence, if there are going to be delays affecting the supply chain in China, it will undoubtedly also affect the production schedules at all of our other facilities that are located outside of China. The foreseeable impacts would may be more severe as there is going to be logistical implications involved, especially with the inclusion of the necessary shipping times between China and our overseas locations. Therefore, it is imperative to take into account of the variations in not only the voyage time of raw materials but, also to account for potential delays with customs clearance both out of China, as well as into the destination country. Countries that may be affected by the potential disruption of the supply chain include: Cambodia, Bangladesh and Myanmar.
Despite these potential impacts, we will be working very closely with all of our raw material suppliers and manufacturing locations to hopefully reduce the as much of the impact as possible. In the meantime, we sincerely hope you can empathize with our situation as we strive to obtain more information from our raw material suppliers. Again, we would like to thank you for your continued support during this rather chaotic time as we take the necessary step to obtain the necessary information needed.
Thanks & best regards,
AML UNITED LTD