Coronavirus to cost Europe's retailers $4 billion in lost sales: study

By Jonathan Saul
People walk along the Galleria Vittorio Emanuele II shopping mall, as a coronavirus outbreak in northern Italy continues to grow, in Milan

By Jonathan Saul

LONDON (Reuters) - Supply disruptions caused by the coronavirus is expected to lead to 3.26 billion pounds ($4.24 billion) in missed sales for retailers in Europe in the six weeks to April 20, with China still struggling to resume full production, a study showed on Friday.

The rapid spread of coronavirus is raising fears of a pandemic, with five countries reporting their first cases on Friday, the World Health Organization warning it could go global and Switzerland cancelling the Geneva car show.

The epidemic that started in China late last year has already hit container shipping flows - the main transporter of retail goods from China to buyers in Europe and around the world, with goods stuck and costs mounting.

Research carried out by UK headquartered digital freight forwarder Zencargo estimated the cumulative impact of lost sales for retailers from March 9 to April 20 in Germany would be over 728 million pounds, in France over 445 million pounds and 253 million pounds in Britain, with an overall loss in the UK and the EU seen at 3.264 billion pounds.

Electronics, clothing and furniture are the top three categories of goods most affected by supply chain issues, Zencargo said.

"The chief limiting factors so far has been diminished production capacity (in China) as factories struggle with worker shortages and new regulation. However, as regions approach 85% production capacity, we’re now seeing the knock on effects of transportation disruption," Zencargo's chief commercial officer Richard Fattal told Reuters.

"Due to the lack of manpower in warehousing and transportation, containers are now backing up on the docks all over the country, both inbound and outbound. Until shipping lines return to normal rotation and clear dockside exports, we foresee further disruption over coming months." 

Zencargo based its estimates on the expected loss from out-of-stock items caused by production and transport shortages.

Ratings agency Moody's said a pandemic - usually taken to mean a disease spreading quickly in different places - would trigger global and U.S. recessions in the first half of the year.

The world's biggest container line Maersk <MAERSKb.CO> warned last week the coronavirus outbreak would weigh on earnings this year, adding to pressure on a sector already hit by trade wars and an economic slowdown.



(Reporting by Jonathan Saul; Editing by Mark Potter)