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Tech & Science 'Supply chain issues are starting to emerge': These are the Australian businesses most affected by the coronavirus outbreak

23:30  26 february  2020
23:30  26 february  2020 Source:   businessinsider.com.au

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Coronavirus is disrupting supply chains , impacting Australian businesses and leading to some As more cases are confirmed overseas, and cities in Italy are locked down, further disruptions can be The coronavirus is the business shock no one saw coming. Since its outbreak from Wuhan in

“ This is the worst supply chain disruption I've ever seen in my life,” he told Yahoo Finance’s “On the Move.” The deadly coronavirus has killed more than 2,600 people in China, and also slowed manufacturing output. Many Chinese factories have completely stopped production as businesses

a group of people walking down a street: Shortages have already affected businesses and stocks in Hong Kong. (Photo by Miguel Candela Poblacion, Anadolu Agency via Getty Images) Shortages have already affected businesses and stocks in Hong Kong. (Photo by Miguel Candela Poblacion, Anadolu Agency via Getty Images)

The coronavirus is the business shock no one saw coming.

Since its outbreak from Wuhan in China's Hubei province, the virus has spread across China and around the world, popping up in Australia, the US, South Korea, Italy, Iran, Iraq and elsewhere. With more than 77,000 confirmed cases and upwards of 2,500 deaths, it's difficult to quantify just how far it may spread. The hit to businesses and their customers, however, is already being felt, according to supply chain software company Unleashed.

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Apple is rerouting supply chains . Ikea is closing its stores and paying staff members to stay home. The Coronavirus Outbreak . What do you need to know? Start here. Updated Feb. But with the outbreak showing no signs of slowing, many companies are already preparing for a longer slowdown.

The coronavirus that has devastated China is also hurting the small businesses that shape Wedding dresses are in shorter supply because of coronavirus . So you have fabric mills, you have trucking, you have air freight -- all of these issues are impacted in the entire supply chains ," he told

"Some of our customers have found they can't get a hold of their suppliers if [their goods] are coming out of China. In some instances, they've found they can get some things delivered but not the whole set of goods they originally ordered," Unleashed Australia manager Danielle Dadello told Business Insider Australia. "Japan, South Korea now look like they might be put underneath restrictions over the next month, so disruption could increase."

Twelve Italian towns and cities have already been locked down after new cases of coronavirus were discovered there. Closer to home, Dadello says she's already been in contact with some businesses in Australia and New Zealand that are suffering stock shortages.

"Businesses are unsure of whether they can get their goods or when they might be able to get them, or when some of these restrictions might pass," she said. "If they're not able to get it out of China, then the freight is going to reach a bit of a bottleneck and the prices might rise which could hurt businesses' bottom line and see prices rise."

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Reuters | Feb 26, 2020 06:11 AM ET. Be the first to comment. TOKYO (Reuters) - Toyota Motor Corp (T:7203) on Wednesday said that operations at its plants in Japan may be affected by supply chain issues linked to the new coronavirus outbreak in the coming weeks, as the global outbreak gathers

Toyota said that operations at its plants in Japan may be affected by supply chain issues linked to the new coronavirus outbreak in the coming weeks. The automaker said that it would decide on how to continue operations at its domestic plants from the week of March 9, after keeping output normal

It follows that the greater a company's exposure to China, the greater the risk the coronavirus poses to its bottom line. However, decades into the globalisation project, and given China's status as both the world's foremost manufacturer and one of its largest economies, its tendrils spread far and wide, making the coronavirus' impact more difficult to contain.

Tech companies which are notoriously dependent on Asian supply chains overseas, have struggled sourcing parts. Apple has warned the outbreak may cause a shortage of iPhones and delay the release of its new iPad Pro, with its stock falling 10% this week, alongside Microsoft. Closer to home, Australian tech company WiseTech saw its stock price plunge close to 37%, as Chinese manufacturing slowed.

Supermarket chain Coles has reported a shortage of hand sanitisers, stationary, electrical goods and clothing due to Chinese shutdowns.

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As the coronavirus outbreak continues to spread across China, a flurry of early research is drawing The scale of an outbreak depends on how quickly and easily a virus is transmitted from person to This is one of the most important factors in how damaging the outbreak will be , and one of the least

People were thinking at how to protect these supply chains that are heavily reliant on China . And even then it was very difficult story. Ali Taqi, the head of equities at Rasmala Investment Bank Ltd. in Dubai, discusses how the coronavirus outbreak is affecting Middle East economies and markets.

"Supply chain issues are starting to emerge – these are manageable short-term for the next month or two, but may see component price inflation and availability issues spike if the outbreak continues unabated," AMP Capital portfolio manager Dermot Ryan said in a note issued to Business Insider Australia, adding he expected it to surpass the 2002 SARS outbreak.

"We expect a recovery may take longer with past forms of stimulus harder to deploy given population lockdowns. SARS is also not a relevant benchmark because it was less contagious, had a shorter incubation period and thus had a quick resolution, and thus we think the market so far has been complacent in pricing in adverse outcomes when it was clear early last week that this virus was out of China."

It's played out right across different markets and geographies, and while Ryan expects the coronavirus to pass, there's more pain ahead.

"We think the market is late on this outbreak which has been clearly spreading across borders for over a week, there may be another leg down for markets," he said. "We would be amazed if developed markets of Western Europe and North America aren’t preparing to contain localised outbreaks and will move quickly with lockdowns."

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Further restrictions and lockdowns will likely only make more difficult the task of doing business and lead to further selling. The outbreak has already pushed a whole stock of cash-strapped Chinese companies to the brink as their operations flounder. Growth forecasts for this year are being downgraded across the board, and fear sends markets on a rollercoaster.

Beyond supply chain issues, the virus outbreak has played havoc on markets. The energy sector has been whacked by a sinking oil price. During the month of February alone, heavyweights Woodside Petroleum is down more than 12% and Santos over 8% as oil slips.

The outbreak has not been without its surprises however. Iron ore producers were expected to get smacked by sinking Chinese demand, but have in fact fared reasonably well as the spot price remains steady at around $90.

Treasury Wine Estates, which sells much of its wine to China, has been smashed since late January. Its stock price has fallen off a cliff, dropping by more than 37%, as it admits the Chinese aren't spending much time in bottle shops right now.

There are also clear economic risks posed to Australia's education and tourism sector, with their significant reliance on Chinese students and visitors. Those in-flows are now greatly reduced by virtue of a Chinese group travel ban, various international restrictions, and a growing proclivity to stay home rather than risk exposure.

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Consequently, these groups are expected to spend far less on hotels, airlines, and travel agents. Sydney Airport stock has fallen around 10% since mid-January, as spending contracts, while Flight Centre and Webjet stock prices have both nosedived nearly 20%. Qantas has fallen 17%, as it and its budget airline Jetstar cancel a slew of flights to Asia, and suspend flights to Shanghai altogether.

Retail shopping giant Vicinity, which operates Chadstone in Melbourne and DFO Brisbane among other centres, alongside Scentre Group, owner of Westfield, are trading at their lowest points in years.

Gaming giants Crown and Star stock prices have been on the slide as it grapples with the prospect of less Chinese visitors gambling in their casinos and staying in their hotels. For Crown, it's been enough to shave a third off its VIP turnover.

With no one sure how long the coronavirus will last, or how long it will continue playing havoc, the list of businesses affected may only grow.

Pictures: COVID-19 Outbreak

Are H&M, Zara more vulnerable to coronavirus? .
H&M and Zara topped a list of European retailers most at risk from the new outbreak of coronavirus.Last month, UBS sent a research note to clients looking at the European retailers at greatest risk from the new strain of coronavirus. Topping the list were H&M, Inditex, and British home-furnishings retailer Dunelm. UBS based its analysis on the company’s share of sales from China, the total value of products it manufactures in the country, and how quickly inventory turns over, weighting each according to its potential impact to produce the index below.

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