DU supply chain expert warns of global coronavirus disruption

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DENVER (KDVR) — It’s not a matter of if — but when. The Centers for Disease Control and Prevention say more Americans will be infected with the novel coronavirus. As Colorado prepares for a pandemic, economists are warning of up to a $1 trillion hit to the global economy.

Eighty percent of all goods travel over the ocean, according to University of Denver professor Jack Buffington. That travel takes time. Enough time has passed to feel an economic impact from COVID-19. Seven of the world’s top 10 largest ports are in China.

“There’s slight impacts [currently],” Buffington said. “I think the big impacts — you’re going to see in March and April.”

Buffington is a supply chain expert. He says the Chinese region of the coronavirus epicenter represents 50 percent of China’s automotive parts production. He warns of a painful impact as analysts predict the airline freight and passenger industry could drop by $29 billion. For perspective, the overall 2003 SARS impact for every industry was $60 billion, Buffington said.

“So just in one industry, you could have half the impact of the last pandemic,” he said.

China — a player in textile goods — has emerged as an advanced manufacturing country. Computer chips, medical devices and pharmaceutical components all have roots in China. Eighty percent of pharmaceutical components in the United States come from China and India.

“It’s a little bit scarier to look at those things than it is to look at things you can buy in Walmart and Target,” Buffington said.

The current low labor supply chain model is efficient and allows companies to make lots of money, but it’s vulnerable to outbreaks and pandemics.

“How do you create more resilient supply chains that are more localized and more flexible so that, when an event like this happens, you don’t disrupt the world economy?” Buffington said.

COVID-19 could be a lesson learned, creating changes in the way the world’s supply chain works moving forward.

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