COVID-19 and supply chain: As worries increase, will governments intervene?

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With hospitals sounding the alarm about medical equipment shortages and consumers unable to find grocery staples, some lawmakers are calling for stepped-up government intervention in supply chains.

In the US, Senate Minority Leader Chuck Schumer (D-NY) has called on President Donald Trump to invoke the Defense Production Act to put a military leader in charge of producing and distributing medical equipment in the pandemic crisis.

By taking over factory supply chains, a military “czar” could ensure hospitals and healthcare providers get masks, ventilators, and other critical equipment, Schumer says, arguing that Trump’s appointees aren’t doing enough to streamline the US supply chain.

COVID-19 supply chain: Struggles as pandemic rages

A survey of 323 hospitals across the country by the US Department of Health and Human Services Office of Inspector General found that many face severe shortages of testing supplies and that they believe widespread shortages of personal protective equipment (PPE) puts staff and patients at risk.

“To secure the necessary PPE, equipment (including ventilators), and supplies for their staff, hospital administrators reported turning to new, sometimes un-vetted, and non-traditional sources of supplies and medical equipment,” the agency wrote.

New York Governor Andrew Cuomo has asked private and public hospitals across New York to share staff and medical equipment in order for the state to optimize its pandemic response.

The state has experienced severe equipment shortages as it battles the virus, which so far has killed 5,489 in N.Y., the most of any state in the US.

Some legal experts argue that Trump needs to wield more of the power available to him under the DPA to ensure the nation’s hospitals and medical professionals have enough equipment. Under DPA, he could order private companies to produce and expedite production of critical medical supplies, and also to allocate the items, they argue.

British Columbia steps in to control supply chains

In British Columbia, lawmakers have implemented measures to address shortages of grocery staples and medical equipment by allowing the government to take over supply chains.

Premier John Hogan told reporters that the Canadian province’s emergency management will take a more active role in coordinating essential goods and services movement by land, air, marine, and rail, and is identifying warehouses it could take over to house supplies and resources, according to The Globe and Mail.

Supply chain government intervention

There are ways government and international regulatory agencies can help supply chains become more resilient, according to Goker Aydin, an operations management expert at the John Hopkins Carey Business School.

In an interview published by John Hopkins University, Aydin said removing export restrictions helps goods to flow freely. In order to expedite shipping something like medical supplies by plane instead of ocean, international agencies would need to agree on funding protocols, he said.

Aydin also noted that empty shelves at grocery stores is due to consumers stocking up on packaged food products and cleaners rather than a shortage in the food supply chain. “There is no fundamentally broken piece of the food supply chain,” he said.

However, while the world isn’t close to running out of food, anxiety about the global supply chain is sending prices of some staples such as rice and wheat soaring, according to a Bloomberg report.

Global efforts

At the global level, some governments are responding to the pandemic crisis by taking steps to maintain the free flow of essential goods.

Last week, the European Commission agreed to wave custom duties and taxes on medical devices and protective equipment imported from countries outside the EU, in order to reduce the cost of much-needed medical equipment.

In a joint ministerial statement, Australia, Brunei Darussalam, Canada, Chile, the Republic of the Union of Myanmar, New Zealand, and Singapore pledged commitment to “maintaining open and connected supply chains.”

They also committed to refraining from the imposition of export controls, tariffs, and other trade restrictions on medical supplies and other essentials during the crisis.

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Marcia Savage

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