The impact of panic buying is affecting supply chains around the world - Coronavirus COVID-19

March 19, 2020

Why is everyone buying toilet paper? 

Around the world, it has been widely reported that panic buying is emptying shelves in stores. Due to the impact of the Coronavirus COVID-19 and potential quarantine periods, consumers, heavily weighing in with anxiety, have begun to stockpile and hoard essential items for their household. The self-isolation period for people who may have been exposed to the COVID-19 virus is currently recommended to be fourteen days at home with no external contact, including trips to the local supermarkets. Lockdown has already begun in some countries including Spain, France, Italy and the United Kingdom, and panic buying of essential food and supplies has been noted to be escalating. With the increase in Coronavirus cases in the United States of America, we see further panic buying developing into a major problem, as households prepare to be home, children home schooling and adults working from home for an extended period of time.

Considered by many as an overreaction to the current Coronavirus epidemic, panic buying has led to mass shortages of essential food and products on shelves, hoarding of essential supplies such as medicines and toilet paper has been widely reported in the news. Food supplies are being limited by many convenience stores, supermarkets, grocery stores, pharmacies and home delivery is also coming to a halt. The impact of panic buying has created long queues at stores, which only intensifies the perception that shortages will occur. Business processes are being tested by this unforeseen demand and it is impacting the whole supply chain for some organizations. 

How does panic buying impact the supply chain?

Empty shelves due to panic buyingSome retailers are already struggling with regular sourcing of supplies from manufacturers, notably China, due to the factory shutdowns that occurred over the extended lunar new year holidays, even though factories are reportedly now back to normal levels. The time-lapse for the transportation of goods from China has hit retailers recently as stocks have not yet been replenished to full inventory levels. It may take several weeks before essential goods and products are back to normal levels. Logistics management will be a key focus area and leveling out the 'bullwhip' effect of high consumer demand will take time. Predicting demand flows of products in these unprecedented times is proving difficult.

The increase in demand for essential items, due to anxious panic buying and people panicking, is putting further pressure on inventory levels. Efficient supply chains won't leave shelves empty for extended periods, but the strain on supply chains is evident as non-forecasted levels of demand continue to rise and shortages are becoming apparent to the end consumer. 

How long will panic buying last?

That is the question that many supply chain managers are contemplating. It is unknown how long the Coronavirus will continue to spread, and every day different countries are reporting scenarios that remain uncertain for the time being, with differing approaches to contain the virus. However, in the majority of cases, smart supply chains can cope with fluctuating supply and demand. With intelligent supply chain visibility tools, gaps in inventory can easily be identified. The question, however, is how quickly can supply shortages be fulfilled and will transportation be available to get products in the right place at the right time for the right price?

As quarantine periods and self-isolation continue, will other parts of the world have issues such as truck driver shortage or limited air freight capacity as we have previously seen in China?

Supply chain resilience will continue to be tested over the forthcoming months during this period of uncertainty. Second waves of Coronavirus are possible, consumers may well revert to panic buying in the case there is an increase in COVID-19 that resurfaces. 

At this time, Crane Worldwide Logistics continues to work in partnership with our clients offering air freightocean freight, and rail freight services (China - Europe) to minimize additional costs in the supply chain. We recognize that space is a priority and charters are also available to ensure additional capacity is available for our clients when they need it the most, reach out if we can help! Around the world, we are supporting the life sciences and retail supply chains to ensure support at this more about the vital role that we are playing as part of the critical infrastructure support at this time here.

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