Companies have asked us about the risk of COVID-19 transmission on packaging, and what they should tell their customers. Here's what we know so far.
Yesterday evening, California issued the “Safer at Home" order, enforcing further restrictions on movements and gatherings of more than 10 people. In the order, Governor Gavin Newsom stated, "The supply chain must continue."
As part of the supply chain, packaging factories are considered essential and are remaining open in California until further notice. We have not been notified of any closures as of this writing.
This order is likely to ripple out to other states. Consider contingencies with factory redundancy across Lumi regions. The Lumi Network covers factories across every US region. We're here to help you set up load balancing or alternate factories.
If your distribution centers have closed and you are unable to receive product, please let us know and we can work with you to find alternative storage.
Contact your Lumi team or create a Project.
A new COVID-19 survey has been sent this morning to manufacturers. Factories in the Lumi Network across US and China are still reporting operational. We will continue to update this page as data comes in. Our recommendations from March 12th still apply.
US manufacturing
China manufacturing
Recommendations on how to mitigate the ripple effects of COVID-19 on your packaging supply chain are on our blog.
The unpredictable spread of COVID-19 has caused delays across supply chains globally. The impact on packaging for Lumi members so far has been localized in China.
As of this writing, all of the factories in the Lumi network are operational, however some factories in China are experiencing 1-3 week delays as they catch up to the backlog from Lunar New Year and the coronavirus closures.
We surveyed 24 manufacturers in the Lumi network including 12 in the US and 12 in China, between March 5th and 9th 2020, to gather information about how exactly your packaging supply chain is being impacted. Find more details in our webinar recorded earlier today.
China manufacturing
Manufacturers in China are taking greater precautions than in the United States. These include all employees wearing face masks, adding more wash stations, cleaning surfaces more frequently, and monitoring body temperature.
Some manufacturers are reporting 5-10% personnel shortages due to quarantine measures, but have stated that this has not affected production capacity.
China logistics
Air freight costs from China are still high — up to $1/KG increase from end of February to first week of March.
Some of the biggest delays may come from lack of air space, due to flight cancellations. There's also an increase of expedited orders being air freighted out of China to account for delays. This all results in a major cut in cargo space. Order early to avoid air freight and mitigate costs.
US manufacturing
All US manufacturers in the Lumi network are operating at full capacity. Prevention among US manufacturers is less strict right now. Only hand washing and safety training were consistently reported.
With the rapidly increasing number of cases, the biggest risk reported by US manufacturers is a personnel shortage.
Wednesday March 11th at 10AM PST, we will be hosting a webinar to discuss the impacts of the coronavirus (COVID-19) on the Lumi factory network and packaging supply chain more broadly. Sign up here.
You’ve no doubt heard about the coronavirus (COVID-19) outbreak in China, specifically the Hubei province. While there are no factories in the Lumi network within the Hubei province, the outbreak could soon prompt factory shutdowns in neighboring provinces that may cause delays.
As of this writing, no lead times have been affected by the outbreak, but should shutdowns continue, you may see delays in order lead times, preproduction sample lead times, and quoting from factories in the these areas.
Before the outbreak, we forecasted shutdowns for Lunar New Year throughout early February. We are keeping in close contact with manufacturers in China and will update you should shutdowns be extended past those dates.
An increase from the 25% tariffs implemented on May 10, 2019 to 30% has been delayed several times, and was suspended today. This tariff increase would affect the majority of packaging products shipped from China, including plastic bags, cotton bags and corrugated boxes.
The previously announced tariffs scheduled for September 1, 2019 have been increased from 10% to 15%. The affected categories available through Lumi fall under HTS categories 4901 and 4902 which covers publications (magazines, newspapers, booklets, books). These products have strong coverage across the Lumi Network, if you need help moving production to navigate these tariffs please reach out to your Lumi team.
A new 10% tariff is due to take effect on September 1, 2019. The list of affected products has been updated on August 13th by the USTR. As of this writing, the affected categories available through Lumi fall under HTS categories 4901 and 4902 which covers publications (magazines, newspapers, booklets, books).
