Coronavirus will alter, not destroy, global supply chain — former UN ambassador

The spread of COVID-19 will not reduce the critical role of global supply chains but could trigger dramatic changes in how they operate, Nikki Haley, the former U.S. ambassador to the United Nations, said Monday.

Speaking at the MODEX logistics and supply chain conference in Atlanta, Haley said the coronavirus, which started in China and has since spread worldwide, could lead to a broad rethink of how global companies source, store and distribute goods. It will likely follow the template of the U.S.-China trade war, in which businesses impacted by the Trump administration’s tariffs on Chinese goods began shifting operations to alternate countries like Vietnam and Malaysia, Haley said. She did not comment on the prospects for more “near-shoring” by businesses shipping to U.S. markets.

Haley said the virus, which severely disrupted Chinese manufacturing because major industrial centers were effectively locked down, has been a sobering wake-up call to businesses long reliant on the country as their “factory floor” and on long-distance supply chains as a substitute for nearby inventory held as contingency buffer stock in the event a crisis disrupts their product flow. “Globalization is a good thing until it’s not,” she said.

The coronavirus has sickened approximately 109,000 people and has caused about 3,800 deaths. Nearly 600 cases have so far been identified in the U.S. The virus will make life for Americans and non-Americans alike “more uncomfortable” over the near term, Haley said. “It will pass and we will be fine,” she said.

Haley, who served as U.N. ambassador from January 2017 to December 2018, said the administration is doing everything it can at this time to control the virus’ spread, and that it is communicating its message clearly.

Haley had harsh words for the Chinese government, saying it should have been more upfront with U.S. officials when the virus was first detected, should have been more transparent in its communications with the U.S., and should have been more willing to engage U.S. health experts for assistance. She did laud the Chinese for taking aggressive and productive steps to contain the spread of the virus once they acknowledged the extent of the problem.

Haley advised businesses to speak frankly with employees about the virus’s impact and not to risk spreading false comfort by sugarcoating their comments. Workers need to hear worst-case scenarios so they can understand what all Americans are confronting, she added.

Haley reserved most of her angst for the increasingly problematic issue of cyberterrorism, calling it the “biggest concern that I have” at present. That’s because it can be executed at relatively little cost and can level the playing field between the U.S. and countries whose economies and militaries can’t even begin to measure up. “It is the cheapest form of warfare there is,” she said.

Haley, 48, joined the administration after six years as governor of South Carolina and earned a reputation among supporters as a straight shooter who earned President Donald Trump’s respect. She was also known for having a direct line to the Oval Office and for disagreeing with Trump on matters of substance, while never attempting to change his style. “His style is different than mine,” she said.

Haley said she has frequently been asked how she got through — and out of — the administration without a notorious presidential tweet that often stung other departing officials. “It’s because I told the truth,” she replied. She has been mentioned as presidential timber for 2024 but said she is not thinking past 2020 at this time.

The four-day MODEX show, held every other year, was originally slated to have 35,000 attendees. MHI, the organization that runs the event, will not have a firm number on cancellations until after the show. The no-shows were believed to be mostly from foreign countries. The event is North and South America-centric.

The massive Georgia World Congress Center exhibit hall was mostly full, though some areas were empty. Perhaps the most notable absentee was Dematic, the material handling and logistics giant, which withdrew from the show last week. Dematic typically occupies a prominent and centrally located position on the MODEX exhibit hall floor. Dematic and the North American unit of its parent company, KION North America, retained their booth space to support the organization “in this difficult time.” However, personnel from neither organization are participating in the show or staffing the booth, Dematic said in a March 3 statement.