COVID-19 and its influence on packaging supply chain

The coronavirus outbreak has already impacted many industries around the world. What is the situation like for packaging industry and supply chains? Here’s a few learnings I have found so far.

The crisis resulting from the outbreak of the coronavirus changes on a day-to-day basis. While doing my research on the topic of COVID-19, I have noticed that:

• there is confusion as to several “myths” and theories concerning the coronavirus and its impact on packaging
• many business owners are terrified of the impact of COVID-19 will have on the economy and supply chain

Note: I am not giving any medical recommendations in this article. While I quoted a few medical sources, they were only used to back up some of the statements in the article. At the same time, I encourage you to study WHO’s recommendations, as well as monitor the information provided by your local authorities.

How coronavirus influences the packaging supply chains?

In order to answer this question, let me firstly analyze the complexity of the situation.

Most Chinese manufacturers halted their production for at least several weeks, right after the outbreak. This caused a huge distraction already. However, it’s only the beginning. While the Chinese companies are getting back on their feet, the several weeks of quarantine have already hit the global economy hard. Freights are delayed, and so are the final deliveries to the customers. Furthermore, the current crisis causes material shortages, as well as human resources issues. Some plants lack workers to operate machines, and therefore the efficiency is much lower.

However, the biggest issue now is that the coronavirus has heavily impacted the European markets, along with the U.S. The announced lockdowns and border controls will cause further delays in deliveries from China, and furthermore — many packaging manufacturers from China stopped their production for weeks, thus causing a huge disruption in the global supply chains. It is now the case of making up for the time lost, and only then the producers will slowly get back to their standard production deadlines.

Due to these reduced capabilities, it could be months before the situation is back to normal. It’s well put by Jonathan Gold, NRF vice president for supply chain and customs policy.

“There are still a lot of unknowns to fully determine the impact of the coronavirus on the supply chain. As factories in China continue to come back online, products are now flowing again. But there are still issues affecting cargo movement, including the availability of truck drivers to move cargo to Chinese ports. Retailers are working with both their suppliers and transportation providers to find paths forward to minimize disruption.”

What to do in the times of such uncertainty?

• Ordering early is better as production and delivery time will be longer. Although China seems to be getting back on its feet, the virus will further influence the European logistics chains. You should expect longer delivery times and that’s why ordering locally will be your best option now.
• City lockdowns. Many countries announced temporary lockdowns of major cities, as well as more strict rules of crossing the borders for foreigners. This will disrupt the delivery chains and is likely to cause shortages too.
• Consider switching to local partners. That refers to all the elements included in your supply chain. While switching to European providers might be more costly, it will likely help to keep your business less vulnerable. It’s going to be easier to deliver products within Europe, rather than shipping from farther countries.
• Monitor the situation in your key markets. Be sure to regularly check information concerning your key markets and cities. Be on alert, and sure to react quickly to changes.
• Think about stocking your products. It might be better to order bigger quantities now, simply because it’s a natural way to secure your business from a sudden shortage of packaging.
• Find alternative sales channels. Try looking for new online platforms, where people might be looking for your product.

What’s going to be the impact of COVID-19 on e-commerce sales?

Honestly, nobody knows.

Given the stock market numbers plummeting, it is likely that the crisis will leave many businesses seriously hit, long after the epidemic’s ended. According to Bloomberg, the U.S. labor market has already witnessed a recession, with more than 221,000 claims for unemployment insurance. This, however, is a number from the first week of March. Experts estimate that the total claims in the U.S. might spike up to 2 million. In comparison, the financial crisis in 2009, the claims reach 669,000. On the one hand, the future isn’t bright.

Due to the way this virus spreads (via respiratory droplets), it is likely that the retail sector will suffer the most. Social distancing, city lockdowns and authorities restricting the opening hours for many businesses, they all heavily influenced the retail sector’s numbers.

However, E-commerce sales are actually expected to rise. And that constitutes an opportunity for many retail brands. In a recent study, 38% US retailers expect that their e-commerce business will grow due to the outbreak. However, that might be a short-term outcome. If the crisis will last for months, then the global economy will likely fall into recession, thus decreasing global sales as a whole.

What can we expect in long-term for e-commerce then?

Various experts claim that the customer preferences and habits will most likely change after the epidemic, and we’ve seen happen before. In an article published on Divante, the author mentioned that e-commerce giants — Alibaba and JD.com — grew exponentially during the SARS outbreak back in 2003.

The time of self-isolation creates an opportunity for many new businesses to emerge, related to e-commerce. First of all, many companies will launch their online versions and therefore boost their presence outside of the retail world. The most visible changes should be noticed in eGroceries, among food delivery companies, but also retail products like cosmetics or apparel.

There’s also the expected changes to consumer behavior that will surely play a significant role. Customers will accept longer delivery if the service will be of high quality. That will also include the more rapid growth of alternatives to courier delivery services, a kind of pick & go ideas. Finally, retail itself will change, and ideas such as Amazon Go are going to get more traction than before the COVID-19 outbreak.

Can you deliver products to cities and countries under a lockdown?

Before I answer this question, let’s clear something out.

The lockdowns were implemented as a tool that’s supposed to reduce the virus spreading. This process is dependent on the physical contacts between people. Limiting those can lead to a drop in the number of new active cases of the virus. This is why WHO strongly believes in social distancing and instructs people to remain in self-isolation for the next weeks. The dropping numbers reported in China serve here as a proof of concept — isolation really works if taken seriously.

Since the packages are not likely to carry the COVID-19 virus for more than 24 hrs (more about it below), it is rather unlikely that deliveries in European countries under lockdown will be completely halted. However, it is best to expect some delays, as it might take more time for freights to reach courier facilities.

How can an online business prepare for this?

• Businesses need to be transparent, that’s for sure. Informing customers about any delays and setbacks builds trust.
• Stocking up will help keep the deliveries going without any unnecessary delays, which are not related to courier partners.
• Prepare a special customer journey for those, whose packages were delayed. Explain the situation and offer them something special to make up for the inconvenience.
• Prepare a more efficient cost strategy. You can increase the prices, which might cost you a few customers, but it will increase the AOV (if it’s an applicable metric for your business) and help you cover unexpected costs related to deliveries.

Can coronavirus be contracted via a package?

The reason why coronavirus spreads so fast is because it’s transmitted by respiratory droplets while coughing or sneezing. This was first confirmed by Chinese experts, and now is the official standpoint of WHO and CDC.

While nobody knows the temperatures that kill the virus yet, and it’s likely that it survives summer heat. A recent study conducted in Italy on more than 300 casualties indicated that the virus attacked, with severe symptoms, people with existing health issues — diabetes and hypertension are among the most common.

There is, however, a lot of confusion as to whether the coronavirus can be contracted by touching a delivered package.

Let’s analyze what various sources indicate.

According to The Journal of Hospital Infection, this type of coronavirus can survive on surfaces up to 9 days, which is long in comparison with a regular flu virus lasting up to 48 hours. The study indicates, that the virus can be inactivated with household disinfectant formulations. This suggests that disinfecting a package upon arrival helps to minimize the risk of infecting.

It is also explained by Elizabeth McGraw, director of the Center for Infectious Disease Dynamics at Pennsylvania State University, in an interview with Business Insider:

“If we had transmission via packages we would have seen immediate global spread out of China early in the outbreak, we did not see that and therefore I think the risk is incredibly low.”

According to McGraw, the virus can survive in higher humidity, moderate temperatures, and on non-porous surfaces. Deliveries are kept away from higher humidity as it might destroy the package. Moreover, many packaging materials — like corrugated cardboard — are far from non-porous surfaces. A higher risk is related to plastic and metal surfaces.

This is also indicated by The New England Journal of Medicine.

In a study of SARS-COV-2, the name of the new virus, experts measured how long the infectious titer remained on various surfaces — the materials used for comparison were copper, cardboard, stainless steel and plastic (aerosols were also used, but I will leave this one out of the discussion in relation to packaging). The conclusion was that the virus titer lasted no longer than 24 hours on cardboard, and up to 48 hours on plastic and stainless steel.

Therefore, in order to further minimize the possible danger of contraction, sanitize the package at the moment of arrival.

I hope that this slightly eases the minds of people afraid of buying from Zalando or other e-commerce brands.

Few words to sum up

These are just some of the things that are related to packaging supply chains and e-commerce, all in the shade of COVID-19 epidemic.

In this form, as of 25th of March, I tried to gather various sources, so that my comments are backed up by actual data and scientific research. Our team at Packhelp will be updating this post as the outbreak evolves. That way, we will help you stay on top of the news regarding the packaging industry and COVID-19.

Take care & stay at home.

Story written by Kajetan Wyrzykowski, Head of Content at Packhelp.