COVID-19 Economic Impact Tracker

Freedonia economists and analysts consider the effect of the latest coronavirus.

COVID-19 Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights about the impacts of the COVID-19 coronavirus. This page will feature ongoing updates.

For our most recent take on the economic impact of COVID-19 on the US & Global economies please see: COVID-19 US Economic Impact March 2020 Update and COVID-19 Global Economic Impact March 2020 Update.

Concerns About Coronavirus Transmission Promote Use of Single-Use Plastic Bags

March 26, 2020 - One unintended consequence of the coronavirus outbreak has a been a resurgence in the use of single-use plastic bags. Derided by many due to their perceived negative effects on the environment, many local and state governments across the US – including the key states of California and New York – have banned use of or begun charging fees for single-use bags in recent years, and leading grocery retailers announced plans to stop giving them away at their stores.

However, a growing number of stores are again giving away single-use plastic bags as part of their efforts to reduce the spread of coronavirus. In fact, one state – New Hampshire – has temporarily banned reusable bags, and Maine postponed the implementation of its plastic shopping bag ban. The reason: concerns about the cleanliness of reusable bags. While coronavirus can be removed from plastic surfaces (many plastic shopping bags are made from a high level of recycled plastic content), few shoppers clean their own reusable bags after each use. Thus, to minimize concerns about coronavirus spreading via cross-contamination, retailers are encouraging and again supplying single-use plastic bags.

While the long-term effect of these efforts remain unclear – no one is sure how hygienic practices will change as the virus becomes less of a threat – in the short term, at least, demand for single-use plastic bags is expected to rise.

This presents an opportunity for plastic bag manufacturers to reargue their position that plastic shopping bags – which are readily recyclable (even if the recycling rate remains low) and often made with high post-consumer recycled content – are the more sustainable option compared to polypropylene reusable bags, which are not recyclable. However, now they are adding the hygiene angle. In fact, the Plastics Industry Association has already requested that the US Department of Health and Human Services endorse plastic bags as the safest choice during this pandemic.

To counter that argument and support what had been the increasing consumer habit of carrying reusable bags, the reusable bag industry will need to educate consumers about adequate bag cleaning measures and ensure that the bags are able to withstand frequent cleaning cycles.

For more information, see The Freedonia Group’s Retail Bags report as well as total coverage of the Plastics and Packaging industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Lumberyards & Hardware Stores Declared Essential Businesses

March 26, 2020 - A number of governors – including those of our most populous states – have closed all but “essential” businesses in an attempt to limit the spread of the coronavirus.

Fortunately for the construction industry, most governors have included lumberyards and hardware stores as among those businesses classified as essential. In many cases, owners and industry associations have pushed to keep these business open due to such factors as:

  • the large number of people employed by the industry ­– not only by lumberyards and other retail outlets, but also in the construction industry as a whole
  • the key role lumberyards play in ensuring that construction materials can reach contractors and other construction professionals
  • the broad range of products offered by these stores – many of them carry items essential to health and safety, such as cleaning supplies, waste receptacles, toilet paper, and wipes, as well as items needed to maintain a house, which become more important as consumers are told to stay at home
  • the ability of stores to deliver goods while minimizing contact – such as by limiting hours, arranging for curbside pickup and delivery, or by coordinating deliveries when few people are at job sites

Indeed, as state and local authorities increasingly consider erecting temporary medical facilities or converting existing structures (such as college dormitories) into sites for housing coronavirus patients, demand for building materials is expected to climb: proving that the nation’s lumberyards, hardware stores, and other construction products retailers are “essential”.

For more information, see The Freedonia Group’s extensive research on the construction & building products industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Automation: Positioning Companies for Reshoring & COVID-19

March 24, 2020 - Companies that have embraced a high level of automation are better suited to keep operations flowing in the age of social distancing.

But for most industries, this is not new. In fact, this trend has been underway for quite some time. Some industries have adopted automated processes as a way to produce goods in the US that are more cost competitive with those sourced from Asia, particularly since rising employment costs and trade uncertainties with China had already made goods produced overseas not always the given lower cost alternatives they once were.

More manufacturers are noting another benefit to high-tech operations: flexibility. Greater use of technology allows companies to better operate in a world where uncertainty is a common condition.

Automation also allows manufacturers to develop the next generation of products and to perform more complicated tasks via innovations in advanced software and sensors. These underlying software and sensor improvements are leading to product developments that span capital goods industries.

However, one potential downside to automation at a time like this is that the skilled labor pool capable of servicing this equipment is small. If qualified technicians are out of commission with illness, it would be a lot harder to get replacement personal who can handle these pieces of equipment than it would be to just add more unskilled labor to a more manual manufacturing process.

For more information, see The Freedonia Group’s coverage of industrial components and machinery and equipment industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Pallet Manufacturers Considered To Be Essential to Nation’s Infrastructure

March 24, 2020 - Many US consumers are faced with conflicting messaging – assurances from suppliers that there is sufficient product to meet demand, yet empty shelves at grocery stores and other retail outlets across the US. For a number of goods, the main issue is getting product from the manufacturer to the warehouse to the retail outlet. While there are a number of factors that can delay the shipment of goods, a shortage of pallets – used to safely carry numerous cargoes across the US – would be disastrous to the logistic needs of the nation.

Cognizant of this, the Cybersecurity and Infrastructure Security Agency (CISA) has included pallet manufacturers and distributors on its list of “Essential Critical Infrastructure Workers” that the nation needs to ship food, medical supplies, and other needed goods to consumers across the US. Indeed, as US Food and Drug Administration regulations generally require pharmaceuticals and medical products to be shipped on virgin, or newly made, pallets to minimize the risk of cross-contamination, it is necessary for pallet manufacturers to maintain – if not expand – production over the few weeks as respirators, masks, surgical gowns, and other items are transported across the US.

For more information, see The Freedonia Group’s coverage of the Pallets industry. Freedonia Custom Research is available for questions requiring tailored market intelligence.

What Exactly is “Essential”?

March 23, 2020 - As the COVID-19 crisis continues, state governors are beginning to mandate broad closures of private “non-essential” workplaces. Businesses such as grocery stores and pharmacies are obviously considered necessary to operate and are exempt.  But beyond that, how do you determine what businesses are “essential”?

This week, the American Chemistry Council penned a letter arguing that chemical and plastics manufacturing is an essential business that needs to be maintained throughout the crisis. While this seems questionable on its face, the group has a point – cleaning products and hand sanitizers are products of chemical manufacturing, and plastic materials are used in all sorts of essential medical products.

Additionally, others – like the steel industry – are making the case that manufacturing that would be difficult or costly to restart should be deemed essential. Still, some firms are voluntarily closing when a staff member is found to be infected.

This just goes to show the definition of “essential” is extremely hard to parse, given the interconnectedness of the economy and daily life. But one thing we can hopefully all agree on – despite all the time we are spending at home now, videogame retailers are definitely not essential. Sorry, GameStop.

For more information, see The Freedonia Group’s extensive off-the-shelf industry coverage. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

How Movie Studios Are Reacting to the COVID-19 Pandemic

March 23, 2020 - States are taking a variety of steps to help curb the spread of COVID-19, from limiting the size of public gatherings to shutting down movie theaters and other entertainment spaces. This has caused the nation’s two largest theater chains, Regal Cinemas and AMC Theaters, to temporarily shut down all of their theaters in the US.

Unsurprisingly, theater closures are bad for business for the nation’s movie studios. Theatrical releases are scheduled up to a year in advance, and theaters are the main revenue generator for movies that cost hundreds of millions of dollars to produce and market.

Some studios have opted to delay releasing big-budget films until later in 2020, with the hope that the COVID-19 pandemic will be contained and consumers will feel more comfortable congregating in theaters again. NBCUniversal, however, is taking a slightly different approach. In addition to delaying some its releases, the studio also announced that it would release select movies as a digital rental, priced at $20, at the same time as or recently after its theatrical release.

Granted, the movies that NBCUniversal has selected so far are not among its biggest revenue generators, so the risk of lost sales is not as large. However, for an industry that has long resisted altering its business model even as consumers have changed how they view most of their entertainment, this shift is significant and could have a long-term impact on the theaters that support movie studios’ revenue.

Basically, businesses must address this uncertain environment by considering how they can continue to reach and serve customers, even if they have to use avenues they had previously resisted.

For more information see Freedonia Focus’ Motion Pictures & Video: United States and Recreation: United States reports. Freedonia Custom Research is available for questions requiring tailored market intelligence.

Decline in New Home Construction Can Affect Multiple Industries

March 23, 2020 - Reports that coronavirus will cause a slowdown in new home construction could have a severe impact on a number of construction-related industries across the US. In addition to the economic disruption caused by the temporary layoff of the thousands of employees who erect America’s homes, a steep decline in home building would also affect such industries as:

  • lumber mills that supply the wood products intensively used in home construction across the US
  • plants that supply prefabricated components – such as roof trusses and wall panels – that are increasingly being used to speed up construction
  • fastener manufacturers, many of whom were buffeted by the imposition of tariffs on metal imported from China, when they often used to make nails, screws, bolts, and other fasteners
  • producers of the many items need to finish a home: roofing, siding, flooring, plumbing products, drywall, cabinets, countertops, and wiring
  • landscapers and garden supply firms that provide and lay down the lawns and outdoor spaces cherished by homeowners
  • concrete suppliers who pour the foundations and slabs on which homes are erected

For more information about these industries, see The Freedonia Group’s coverage of the Building and Construction Industries.

FDA Suspends Routine Surveillance Facility Inspections; Quality To Be Maintained

March 20, 2020 - On March 18, the US Food & Drug Administration announced that it would be suspending all domestic routine surveillance facility inspections in order to assist in limiting the spread of the COVID-19 virus. For-cause inspections will be evaluated on an individual basis. Earlier in March, the agency had already postponed most foreign facility inspections through April, keeping only inspections deemed mission-critical, a status that will be considered on a case-by-case basis.

The FDA notes that facilities will still be subject to reporting requirements and should engage in Current Good Manufacturing Practice requirements covering sanitation, processing controls, and controls pertaining to food safety hazards. Facilities will continue to be evaluated on that reporting. The FDA notes that the violation rate on such inspections in the previous fiscal year was only about 5%.

Although 47% of consumers who responded to The Freedonia Group’s National Online Consumer Survey indicate that they worry about foodborne illness, 49% of consumers indicate that they trust that products available for sale are likely to be safe. This attitude shows that consumers tend to place much of the onus of food safety on the corporations and government agencies that regulate the food supply. Food suppliers need to assure consumers that this change will not affect food quality at a time when consumers are particularly aware of their health.

For more information, see The Freedonia Group’s Meat, Poultry, & Seafood Packaging, Global Food Processing Machinery, and Food Safety Products, with additional coverage available from our sister publisher Packaged Facts’ food & beverage industry coverage. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Supply Chain Challenges

March 20, 2020 - Conditions in 2019 and 2020 – from the trade wars and various tariffs applied globally to COVID-19-related workforce reductions, production stoppages, and border closures – have put international supply chains front and center.

30% of companies report considering changes to their supply chains, starting with short-term alternative sourcing options and moving on to relocations, onshoring, supplier diversification, and other more long-term ideas.

The longer the coronavirus crisis lasts, the more companies are likely to consider changes, big and small. The trade war with China got the ball rolling; the coronavirus will provide additional incentives to make adjustments.

For more information, see The Freedonia Group’s catalog of global reports covering machinery and heavy equipment industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Flexibility: That’s the Key for Manufacturers

March 18, 2020 - Manufacturers are seeing supply chain disruptions, changing demand patterns, and staffing crunches due to social distancing and illness.

As a result, some are using available capacity, materials, and skill to redirect. For instance, in the UK, the Department for Health and Social Care sent specifications for how to make ventilators to more than 60 manufacturers, including motor vehicle and aerospace firms such as Rolls-Royce, Airbus, Jaguar Land Rover, Honda, and Ford. Many of these firms had already reduced or curtailed their regular production operations due to reduced demand or challenges accessing key components.

Companies are being asked produce components or to make staff available to assist specialist firms, and to shift their own production capacity, if possible.

The challenge is that these vital pieces of equipment are complex machines that are produced under strict safety regulations. However, specialist manufacturers, engineers, and government agencies are working out a basic, functional version that is cheaper and easier to produce.

It typically takes 2-3 years for a ventilator to pass regulatory muster and be approved for use. However, specialists could work with auto manufacturers and others that have advanced manufacturing facilities to adapt their operations to suit current designs.

Manufacturing firms have long used joint ventures to adapt to changing conditions, improve technological capabilities, and expand production capacities. Companies will need to dive into such operations in more depth. Considering how current capabilities align with the needs of other businesses and how current needs in industry and health align with their operations would be the way to start.

For more information, see The Freedonia Group’s extensive catalog of off-the-shelf research. Each report includes analysis of competitive strategies, including joint ventures and merger and acquisition activity. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Short Term Effects of Coronavirus COVID-19 on the Global Pharmaceutical Industry

March 18, 2020 - The rapid spread of the coronavirus (COVID-19) is projected to continue through the third quarter of 2020 or longer and have a mixed impact on the pharmaceuticals industry. 

During the pandemic, individuals will continue to take prescription and over-the-counter medicines to treat their various health problems and needs. In fact, medication consumption will likely rise, both because of patients taking medications to treat the symptoms of COVID-19 and because the virus imposes pressures on the primary healthcare system and inhibits the access to hospitals and physicians for elective procedures.

However, the supply side faces its own challenges.

  • On March 3, India issued restrictions on the export of 26 active pharmaceutical ingredients (APIs) and the medicines and vitamins made from them, certain antibiotics, the hormone progesterone, and vitamins B12, B1 and B6. This was due to reduced stockpiles of key ingredients sourced from China and the inability to get more. The US and Europe rely on supplies from India.
  • By March 13, suppliers noted that supplies were returning, as import shipments have resumed, with airlifts in the case of high-value ingredients. Still, the restrictions remain in place, with the option to apply for a waiver.
  • China is also a key supplier to the US. US officials are considering ways to increase domestic capacity of such drugs. Others are at least considering ways to diversify supply chains. Still, the need for regulatory oversight makes changes expensive and time consuming.
  • Additionally, US production facilities themselves could be closed or capacity could be temporarily redirected to items crucial to either treating or limiting the spread of COVID-19.

Supply shortages appear to be largely a short-term issue. Though it could encourage production of APIs outside of China, there are a number of issues relating to raw material availability, expertise (or lack thereof), logistics, and government regulation. As a result, changes in supply will have a very slow transition and may not actually shift much in the long run.

For more information, see The Freedonia Group’s Global Pharmaceutical Packaging and US Pharmaceutical Packaging studies, with additional coverage from Freedonia Focus (Pharmaceuticals: United States) and our sister publisher Packaged Facts (Pet Medication in the US). Freedonia Custom Research is also available for questions requiring tailored market intelligence.

What Does It Look Like On the Other Side of “Social Distancing” & Closed Businesses

March 18, 2020 - As we’re all facing or currently operating in conditions of remote work, closed restaurants, limits on large gatherings, and curfews, many start to wonder: what does recovery look like?

The Freedonia Group is based in Ohio, where restaurants and bars closed on Sunday night, K-12 schools closed on Monday, colleges are doing remote learning, the primary election was postponed, and waterparks, movie theaters, and gyms closed as well. Other states are following suit, based on recommendations from the Center for Disease Control.

The Freedonia Group also has an office in Beijing. Reaching out to colleagues there, we find that people are returning to work, but in limited numbers so that people are still not gathered in large groups or in close quarters. Health inspectors make period appearances to ensure that people are not sitting too close together and are wearing the mandated masks.

A number of retail outlets are still closed, as there are few customers out in malls and shopping centers. Reservations are sometimes needed for public transportation to restrict the number of people at given stations.

Some goods – particularly marks – are still in short supply and customers need an appointment to get an opportunity to buy them, kind of like trying to buy tickets for a hot concert. Prices of in-demand goods, including personal electronics like tablets and laptops that enable remote education and work, are up and not likely to see any sales for the foreseeable future.

China is several weeks ahead of the US in terms of development of and recovery from COVID-19, so it seems that the return to normal will likely come in stages and not happen overnight.

For more information, Freedonia Custom Research is available for questions requiring tailored market intelligence.

Industries That Have Grown & Still Present Opportunities in China & Elsewhere Due to the Coronavirus Crisis

March 18, 2020 - Despite closures elsewhere, opportunities for market expansion exist in technology and hygiene:

  1. Online Shopping: In addition to the major online retailers – Taobao and JD – local supermarkets are also starting to operate their own website or apps. They can deliver within two hours, faster than the major retailers because these are often closer to the shoppers’ homes. 
  2. Online Education: Most children didn’t previously take online courses, but now it is all online for the time being. However, parents are concerned about eye strain and the difficulty of learning, as children might be less focused when they don’t have face-to-face contact with teachers. Even subjects like sports, piano, dancing, and drawing – which aren’t considered typical avenues for online learning – are being taught remotely because there is no other option. In many cases, different apps are required for each course, which could lead to greater adoption on a permanent basis, particularly for electives and tutoring that takes place outside of school hours.
  3. Electronic devices (e.g., tablets, laptops, desktop computers) are needed by remote workers and students alike. Families that previously had only one such device to share now find that they need more or versions with larger screens so that the children can study at the same time the parents work.
  4. Online payment: Consumers are encouraged to avoid using cash for the time being because it might carry the coronavirus. Plus, with contact-free deliveries, payment must be made remotely rather than be given to the delivery person. Even older generations are learning how to use these options. This might be the nail in the coffin for cash among many younger people who were already preferring credit/debit cards and mobile payments.
  5. Hygiene Products: Hand soaps, face masks, wipes, hand sanitizers with at least 60% alcohol may see just a short-term increase, but the virus may also cause consumers to develop new habits, as is what happened in areas that were hard hit by SARS.
  6. Medical products, especially forehead/ear thermometers: With increased vigilance, consumers and various businesses and public agencies are checking workers and visitors on a regular basis. These products are more hygienic and faster for testing a lot of people, and are therefore poised to see fast growth.

For more information, see The Freedonia Group’s Industrial & Institutional Cleaning Chemicals, Global Nonwovens, and Global E-Commerce reports, as well as information from our sister published Simba Information (e.g., Electronic Education Report Newsletter). Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Wipes to Clean Your Smartphone & Other Frequently Touched Surfaces

March 11, 2020 - On Monday March 9, Apple issued new guidance for how to clean its devices. The statement notes that 70% isopropyl alcohol wipes or Clorox Disinfecting Wipes can be used on the hard nonporous surfaces (e.g., display, keyboard, and other exterior surfaces). The company cautioned not to submerge the products or allow moisture to get into any openings.

Infection prevention specialists have long noted that smartphones and other such hand-held devices are germ magnets since people carry them with them all the time, pass them among other people, and put them to their faces when making phone calls. As such, wiping down these and other commonly touched surfaces is good practice.

It is reported that wipes and other products that are effective at protecting against colds, flu, and other human coronaviruses are probably helpful against COVID-19 as well. The EPA generated a list of registered antimicrobial products for use against novel coronavirus SAR-CoV-2, the cause of COVID-19. It notes that the registration number, found on the product label, is the more important piece of information to look for when purchasing, since the antimicrobial agent might be used in a variety of products or sold under multiple brand names.

The Freedonia Group National Online Consumer Survey, conducted July-August 2019, found that women were more likely than men to have purchased any type of disposable wipe product at any point in the last 12 months. Women were far more likely to have bought a surface cleaning wipe product, but men had a slight edge on buying antibacterial skin cleaning wipes.  

For more information, see The Freedonia Group’s Wipes, Industrial & Institutional Cleaning Chemicals, Global Disposable Medical Supplies, and US Disposable Medical Supplies reports.

Is the Crude Oil Situation a “Double Punch”, a Two-Sided Coin, or Both?

March 10, 2020 - On Monday March 9, crude oil fell to its worst day since 1991, with the coronavirus hampering demand at the same time OPEC and Russia went into a supply-side trade war. This is the double-punch that hit the energy industry hard and was a big reason for the S&P 500 having its 19th worst one-day drop by percent change and the worst since 2008.

However, there’s a flip side. Crude oil and gas prices are falling, potentially benefiting industrial users and consumers. Not only is industry using less oil as global demand pressures are reduced by curtailed business travel and manufacturer closures in quarantined areas, but Saudi Arabia is increasing supply.

Lower crude oil prices will help chemical producers outside of the US, at least on the raw material side, since there are a number of companies that produce ethylene and other basic chemicals from crude oil instead of from natural gas. However, that will likely not be enough to offset the drop in demand for more chemical end-use products as the effects of canceled events, flights, vacations, etc., ripple their way through the global economy.

Consumers will likely be happy about the lower gas prices. However, with many limiting or delaying travel plans out of real and/or perceived risk of either contracting COVID-19 or being stuck in a quarantine zone in this volatile time, they are not likely taking advantage of it in the way they ordinarily would. A return to higher levels of consumer confidence will be needed for consumers to absorb this higher level of production.

For more information, please see The Freedonia Group’s coverage of Chemicals, Plastics & Other Polymers, and Consumer Goods. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Pallets: An Opportunity

March 10, 2020 - There’s a lot of talk about the risks of transmitting the coronavirus through personal contact, but there exists another method of transmitting the virus. According to disease experts, coronavirus can remain viable on a surface for up to a day after an infected person makes contact with it. While a number of structures and surfaces are being subject to regular disinfection, the pallets on which the vast majority of consumer goods – including the disinfectant wipes and hand sanitizer being used to treat surfaces – are seldom subject to decontamination, and thus are inadvertently potential sources of infection.

This is a matter of concern, given the key role China plays in the global trade market – everyday, millions of pallets enter and leave Chinese ports and warehouses with goods and materials that are shipped around the world. Given this volume of pallet movement, it is not unlikely that pallets can be a source of potential infection.

Whether a real threat exists – the COVID-19 virus only lasts on smooth surfaces for anywhere from a few hours to several days and ocean shipments from China to the US take a month or more – the perceived fear can be enough to drive people to action. While pallets can be disinfected or sterilized, it is more likely that pallets thought to be contaminated will simply be scrapped and removed from pallet stocks. This will have the potential to boost demand for new pallets, as enough pallets could eventually be removed from trade network that pallet stocks erode. Indeed, if government agencies – such as those in China or the European Union – mandate the removal or disinfection of pallets felt to be contaminated, millions of new pallets will be needed to replenish global stocks.

For more information, see The Freedonia Group’s coverage of the Pallets industry.

COVID-19 & US Plastic Resins – Salt In The Industry’s Wounds

March 9, 2020 - In a recent Plastics News article, watchers of the chemical market give a relatively optimistic outlook for the effect of COVID-19 on plastic resin markets. Market disruptions are described as likely to be “temporary” and to even provide some growth opportunities, such as PET for water bottles and polyethylene for cleaning chemical containers. Additionally, China appears to be recovering from its virus-induced economic shutdown.

However, the coronavirus could hardly come at a worse time for US plastic resin producers. The industry is going through a shale gas-driven building boom, with billions of pounds of new resin production capacity opening in the past few years and billions more in the works. Yet sluggishness in the US manufacturing sector during 2019 dried up demand for plastic resin, raising the question of where all the new capacity is going to go. Sustainability pressures – including bans on single-use plastic products – are also on the rise.

Resin producers had hoped for a rebound in 2020, but instead are faced with another economic shock from COVID-19. While the jury is still out on how severe the economic effects of the virus will be, even a “minimal” or “temporary” downturn is not what the US plastics industry was looking for.

For more information, see Freedonia Group’s coverage of the plastics industry.

Chinese Agricultural Drone Company Is Repurposing its Products to Combat the Spread of COVID-19

March 9, 2020 - XAG, a manufacturer of agricultural robots and drones, has pledged 5 million yuan and has repurposed some of its products to fight the spread of COVID-19 in China. The fund will be used to support the nearly 400 professional operators of XAG drones who have joined the disinfection operation.

Drones provide a number of unique advantages when used for human disinfection, including reducing the risk to operators by limiting the potential for exposure to COVID-19 and disinfecting a wider area more accurately and in less time.

XAG’s drones are particularly well suited for disinfecting rural areas – which present little obstruction – but densely populated urban areas are a challenge for UAVs to operate in effectively. In urban areas, XAG’s R80 robotic utility vehicle proves more effective; it can more easily traverse and disinfect urban terrain than drones, and has successfully demonstrated that it can operate both in and out of buildings.

While still in a limited testing phase, XAG’s demonstrations show that the use of automated vehicles can efficiently provide both air and ground coverage while limiting human exposure to COVID-19.

Creative adaptation of existing equipment and technologies will help businesses thrive as problem solvers in this volatile time.

For more information, see The Freedonia Group’s Global Agricultural Equipment.

Instacart Expands from Personal Delivery by Launching “Leave at My Door Delivery” Feature for Groceries

March 9, 2020 - Mimicking the contactless delivery practice that has become not only popularized, but also required, in many parts of China, Instacart has sped up the rollout of its “Leave at My Door Delivery” feature. The feature had been in the testing phase, but Instacart decided on March 5 to launch the drop-off service option more broadly in response to widespread consumer interest, which is growing on the back of consumer fears about the coronavirus.

Under this option, customers have their groceries dropped at their door at a designated time rather than waiting for a representative to hand-deliver the items. Drop-off delivery is a way to limit contact with people who might carry the virus as well as a way to limit the spread from people who are self-quarantined and concerned that they have it.

However, even after the virus outbreak subsides, contactless delivery is likely to remain a popular option because it gives customers more flexibility and reduces the likelihood of missing a delivery altogether. If you are ordering perishables on a warm day, you will still want to time your deliveries carefully so your ice cream won’t melt – but you also won’t miss out on your delivery completely if you end up stuck in traffic.

For more information, see The Freedonia Group’s Global E-Commerce report as well as Global Food E-Commerce and Online Grocery Shopping from Packaged Facts, our sister publication.

Major Conferences – Including SXSW – are Being Canceled; Effects Will Be Widespread for Attendees & Businesses Throughout Host Cities

March 9, 2020 - A growing number of major conferences, conventions, and other events are being canceled as the coronavirus outbreak spreads. A few major tech conferences – such as Google’s I/O developer event – are moving to digital-only formats and canceling the in-person side.

Conference and other event organizers will lose out both on the planned income and – most likely – any money already spent on developing and promoting the event, since most are refunding tickets and admissions. Those who had planned to attend these conferences and conventions will suffer from reduced chances to network, collaborate, make sales, and learn about new products and processes.

Such cancelations have a broader economic impact in host cities, as businesses from hotels and restaurants to local event planners and transportation providers lose revenue opportunities. Cities will also lose out on the bump in tourist activity and the resulting exposure of business people traveling to their city. Organizers of South by Southwest say Austin area businesses took in $335.9 million in business associated with the 2019 edition of the event.

Even when events do take place, attendance will be down given how many major companies are barring or sharply curtailing business travel. Meeting Professionals International, and industry association, is providing additional guidance for planners and suppliers in this changing business environment.

 Freedonia Custom Research is available for questions requiring tailored market intelligence to better understand our changing market conditions.

Coronavirus Concerns Causing Starbucks to Temporarily Eliminate Beverage Service in Reusable Cups

March 5, 2020 - In January 2020, Starbucks announced a new set of sustainability goals through 2030, which included further movement from single-use to reusable packaging. This shift includes cups as the company has been both participating in the NextGen Cup Challenge and giving customers $0.10 discounts if they bring their own cup or request to use a reusable ceramic mug in-store.

However, Starbucks, which is headquartered in Seattle where a virus cluster has resulted in 10 reported deaths related to COVID-19 to date, announced on March 4 that it would be suspending the use of reusable cups as part of its efforts to respond to the public health crisis. This move is framed by Starbucks as temporary, and the reusable cups will be back when the outbreak dissipates.

The impact, although temporary, is not insignificant. This is a speedbump on the path toward getting Starbucks customers – and others – to change their habits, something that is needed for greater adoption of reusable cup policies.

Still, foodservice businesses are expected to increasingly consider more sustainable packaging options (e.g., fiber-based, recyclable, compostable, and reusable products) for cups, lids, and carryout containers in the coming years.

For more information see The Freedonia Group’s Foodservice Single-Use Products report.

Possible Construction Supply Shortages?

March 5, 2020 - Developers are starting to wonder about the impact of COVID-19 on their ability to complete existing projects or to begin new large projects.

US and European contractors rely heavily on Chinese imports for building products ranging from steel to wiring to cabinets. Work stoppages at China’s manufacturing facilities and ports have constrained supplies for building products, leading to delays in the receipt of crucial materials that were not shipped prior to major shutdowns.

Financial fallout for both contractors and customers is expected, although the total impact will vary significantly based on the duration of the outbreak. Although major projects purchase the supplies they need well in advance and therefore may not be effected, others may not be so lucky.

In the meantime, firms are looking for alternate supply channels – both in the US and outside of China – even though they are more expensive. Additionally, contractors may be looking to buy up available supplies in order to have a stock on hand, which would drive prices up even further. Overall, these behaviors drive up prices and shift demand.

As a result, even construction material firms with adequate domestic supplies available to sell might be challenged by unpredictable sales trends that contradict typical seasonal patterns.

For more information, see The Freedonia Group’s extensive collection of reports on the Construction & Building Product industries.

Indoor Air Quality: HVAC Systems & the Coronavirus

March 5, 2020 - The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHARE) has published resources on how building HVAC systems can properly combat airborne infectious diseases, including a dedicated webpage that provides proactive guidelines for building industry professionals concerned about COVID-19. 

Keeping indoor air quality high and having proper air circulation and ventilation are extremely important in reducing a person’s risk of contracting viruses like COVID-19, especially in high-risk areas like healthcare facilities. ASHARE recommends a two-step approach: exhausting air out of the building, and cleaning air within the building with filters and by circulating clean air from outside.

Filtering air, however, is not by itself an effective in reducing the transmission of COVID-19. Many commonly used air filters, such as many types of HEPA filters, are only rated to capture particles 0.3 microns or larger. Coronaviruses, on average, are 0.1 microns in size and may not be captured by an air filtration system. To be effective, any system that incorporates filtration fine enough to capture such small particles will still require additional power to overcome the pressure drop involved in pushing air through smaller pore sizes and to be designed so that air does not leak past the filter.

Furthermore, the virus will continue to live on the surface of the filter for a time, so extra care must be taken by those changing the filters. Which all comes back to the core recommendation: wash your hands often, and do not touch your face!

For further information, see Freedonia’s reports HVAC Equipment, Global HVAC Equipment, Global Filters, and Consumer Air Treatment Systems in the US.

COVID-19 & the US Pet Industry: Initial Reports

March 5, 2020 - Addressing the health of pets and their owners in relation to the novel coronavirus outbreak, the Centers for Disease Control and Prevention (CDC) recommends that those infected with COVID-19 avoid contact with pets and other animals. This position gained force today with news reports that the dog of an infected owner in Hong Kong is “now believed to be the first case of human-to-animal transmission.” 

Nonetheless, and even though COVID-19 “seems to have emerged from an animal source,” the CDC advises that there is no evidence that pets themselves can spread COVID-19 to humans – a point reiterated by the American Veterinary Medical Association (AVMA) in its coronavirus bulletin.

On the pet medications front, according to the FDA’s February 27, 2020, Coronavirus (COVID-19) Supply Chain Update, veterinary pharmaceuticals or pharma ingredients sourced from China “soon could lead to shortages.” 

On the pet food side, there have been reports of in-store signage attributing out-of-stocks to coronavirus-related shipment delays.

For pet products as for many consumer markets, supply chains often link to China. Any disruptions from shutdowns in China are likely to be amplified by pet owners stocking up against shortages. Challenges for the US pet industry may deepen unless suppliers in China return quickly to full capacity operations and supply chains are restored.

See the Packaged Facts website for more information from our sister publishing brand’s extensive coverage of the pet industry.

US Federal Reserve Makes an Early Rate Cut

March 4, 2020 - On March 3, 2020, the US Federal Reserve cut its target interest rate by 0.50% to 1.00%-1.25%. The move was the first to occur outside the regularly scheduled policy meetings that take place every 6 weeks since the 2008 economic crisis. The Fed did not want to wait as concerns about the spread of the coronavirus in the US caused strong volatility in the US stock market. The move signals that the bank will take rapid, significant steps to counter effects of the virus on the economy. If it continues to spread, consumers and companies may limit gatherings and unnecessary interactions, which will reduce consumer activity as well as economic output in the markets they support.

Reduced interest rates could help many sectors. For instance, borrowing funds to buy a house, a car, or other large durable goods will be less expensive. In addition, companies will be able to obtain lower-cost loans to help them through a period of reduced economic activity or supply chain difficulties. However, the lower interest rates might hurt the banking industry, as commercial banks generate a significant portion of their revenues from interest on loans.

For more information on these sectors, see the relevant publications from Freedonia Focus Reports: Air Transport Services: United States, Commercial Banking: United States, Housing: United States, Motor Vehicles: United States, Recreation: United States, Restaurants & Foodservice: United States, and Water Transport Services: United States.

Can More Open International Trade Ease the Impact of COVID-19

March 4, 2020 - Much of the economic impact of the COVID-19 coronavirus deals with its disruption of international trade. Global supply chains are intricately linked, expertly optimized, and – as a result – often inflexible in the face of disruption. These fragile international linkages, key to the modern economy, are the reason why most economists predict that the coronavirus will have a much larger negative impact than the SARS outbreak in 2003.

In an article, Bloomberg Economics looks at the flipside – how can international trade help ease the economic impacts of the coronavirus? Remedies such as reducing tariffs and increasing international coordination would help grease the wheels of trade and mitigate the downside to the virus. But in today’s atmosphere of divisive, confrontational politics, hoping for greater international cooperation and easing of tensions may be a tall order.

Supply Disruptions in the Chemical Industry: China Is Coming Back Online, but What’s Next?

March 3, 2020 - Chemical & Engineering News reports that chemical production in China is beginning to recover from the COVID-19 coronavirus. Many chemical plants that were closed in January and early February have reopened. 

However, most chemical plants are running at reduced capacity, and Western firms are still feeling pressure in their supply chains. The uncertainty mimics a similar situation that occurred in 2017 and 2018, when environmental pressures forced the extended shutdown of numerous plants in China, resulting in shortages and high prices for specialty chemicals such as silicones.

Even if China’s chemical industry is getting back to business, the spread of the virus outside of China is increasing worries that further disruptions could be on the horizon.

For more information, see Freedonia’s Global Silicones, Global Rubber Processing Chemicals, and Global Construction Chemicals reports.

3M & Others Expand Production of N95 Respirators & Related Masks

March 3, 2020 - Surgical masks, exam masks, and N95 respirators are in high demand as ways to limit the spread of COVID-19, the novel coronavirus. However, supplies have been hampered by insufficient production capacity and manufacturing closures in areas that are seeing high incidence of the disease.

However, help is on the way. Businesses in China have already converted their operations to the production of masks. Additionally, key mask suppliers such as 3M are responding by having existing staff work additional shifts as they move from a 5-day week to a 7-day week at some plants, as well as by fast-tracking hiring processes and increasing automation where possible.

Still, the rising need for these items as the disease spreads is going to mean that such measures are unlikely to let up any time soon.

For more information, see Freedonia’s Global Medical Disposable Supplies and Disposable Medical Supplies in the US reports.

Retail Stores Are Starting to See Runs on Emergency Supplies: Who Needs a Mask?

March 2, 2020 - This past weekend, consumers in parts of the US started seeing empty shelves and a lack of stocks in key supplies. Even as the US Surgeon General is reminding people that they do not need a mask and that masks are not as effective as you hope, nervous consumers are willing to ignore that advice for just one more layer of real or perceived security against the COVID-19 novel coronavirus.

The trouble is China – which has seen many businesses close since COVID-19 appeared in December – is the source of nearly 20% of the world’s disposable medical supplies, including masks. Therefore, supplies are not likely to increase rapidly until the need for these products in China and abroad is reduced or domestic suppliers are able to ramp up production sufficiently.

In the meantime, consumers who still want to buy masks will compete for the remaining supplies with professionals – including first responders and medical personnel – who need them for their daily operations.  

For more information, see Freedonia’s Global Medical Disposable Supplies and Disposable Medical Supplies in the US reports.

If You Are Quarantined, Will the Delivery Economy Save You?

March 2, 2020 - As quarantined and other concerned people in China learned, food delivery is a life saver if you can’t – or feel like you shouldn’t – leave your home. This has led to innovations like contactless delivery, where the couriers drop the food at a specific location from which customers then pick it up without ever coming face-to-face, and has even prompted robot deliveries.

With the news that patients infected with the COVID-19 novel coronavirus have been found in US urban areas, including NYC, residents are considering how tech can help them, too. Local public health agencies and companies that employ gig delivery workers are developing guidance for how to maintain worker and public safety in such situations.

Still, if companies have a hard time finding enough healthy workers or if people are too nervous about an encounter with their delivery person, autonomous delivery robot developers such as Starship and Nuro may see rapid acceptance.

For more information, see Freedonia’s Global E-Commerce report as well as Global Food E-Commerce and Online Grocery Shopping from Packaged Facts, our sister publication.

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