What's Happening?
We are currently seeing air freight delays from China of 2-3 weeks due to COVID-19. We are also seeing delays in domestic (European) and American shipments due to the increased demand of logistics and home shipments to populations placed on lockdown. For our supply chain, this mostly impacts bare printed circuit boards (PCBs), which we source in large quantities from China. Some deliveries get through while others don't. Confirmed delivery dates given in tracking numbers have become unreliable in the past two weeks. All parcel delivery service companies and air freight carriers are affected. European suppliers of electronic components are also reporting delays in deliveries of electronic components, so this ultimately also affects material sourcing as well. About half of the world's electronic components are produced in China.
What We're Doing
Since March 18th, we have been working from home, working in divided production teams in the factory, and following strict social distancing and hygiene recommendations to remain fully operational. We are ordering all PCBs and components needed in the next 6 weeks for delivery as soon as possible. We are placing critical, express orders at European PCB suppliers (but this option is not available for every order). We are constantly monitoring delivery dates and tracking information in order to update production planning and inform customers about new delivery dates as soon as possible.
What Customers Can Do
We urge customers to place orders immediately and well in advance of desired delivery date. Customers should expect some delivery delays in the next weeks to months due to disrupted supply chains. For urgently needed express orders, European suppliers for PCBs are available at low capacity and high prices. Please also note that lead times have been quickly increasing for electronic components and another allocation is expected this year. It is essential to plan accordingly.
Why This is Happening
Demand for air freight has increased dramatically due to the worldwide spread of COVID-19. There is also increased demand for freight shipments because China has been ramping up its production capacity to make up for low production volume during Chinese New Year and the factory closures during the February/March quarantine. Half of the world's air freight capacity is delivered by freight planes, the other half is delivered by passenger planes. Passenger flights have largely been cancelled, so there is a significant drop in global transport capacity. Airlines such as Lufthansa have started sending empty passenger planes to China, where freight is loaded into the cargo bays but also onto passenger seats and overhead compartments. Available air freight capacity is prioritized for urgently needed medical supplies such as face masks, respirator masks, medical gowns and pharmaceuticals (most of which are also produced in China). As a consequence, air freight is completely overbooked worldwide and freight prices have more than doubled from 2.5 USD to over $5.00-$10.00 per kilogram. Lockdowns in many countries further complicate and disrupt the logistics business.
We are monitoring the situation continuously and will notify customers if there are any foreseen delays for current orders. We are doing our best to deliver on time and find flexible solutions to get through this challenging time together.