Medical Supplies Stuck in China With Airlines Grounding Planes

Michael Einhorn’s Chinese suppliers of masks and surgical gowns have finally restarted production. His challenge now is to find cargo space to get them to his U.S. customers fast enough.

Einhorn, president of Brooklyn, New York-based Dealmed-Park Surgical, says the small quantities of critical medical supplies he has procured are sitting in warehouses for more than a week before they can get on cargo planes.

“We have to wait in line behind the yoga mat guy to get things shipped,” he said. “The highest priority for shipping should be to get medical equipment out--but it’s not.”

A worker drives a forklift at a Dealmed-Park Surgical supply facility in Lakewood, New Jersey.

Photographer: Victor J. Blue/Bloomberg

As the global coronavirus death toll crosses 10,000, countries are enacting emergency policies to get critical medical supplies, and many have desperately turned to China. The bottlenecks in production and cargo shipments are forcing governments and businesses to rethink their reliance on the country.

READ: The Global Mask Shortage Is About to Get Much Worse

Einhorn says some of his Chinese suppliers have only begun ramping up production in recent days as factories came back online. The company is paying as much as $4,000 for a small pallet to be flown on commercial freight carriers such as DHL Worldwide Express, but it has been told products won’t get to the U.S. for as long as 10 days because of limited space.

“We have major health-care systems calling us, desperate to get supplies, and we have to tell them it’s going to be a long wait,” said Einhorn. “That’s contributing to the panic.”

Air-cargo capacity in China fell 40% from a year earlier between early February and early March, FedEx Corp. Chief Marketing Officer Brie Carere said this week. Since then, the company has seen a week-over-week rebound in air freight and its planes are flying full, she said, adding “we believe demand will stay elevated.” United Parcel Service Inc.declined to comment on its China operations.

Air cargo shipments have faced delays and limited capacity for weeks, according to Ker Gibbs, president of the American Chamber of Commerce in Shanghai. The suspension of commercial flights to China as the deadly coronavirus spread around the world also halted cargo transportation.

“When passengers flights are canceled, that also cancels the cargo those planes would have carried,” said Gibbs. “There is a bottleneck and limited capacity right now.”

Grounded Flights

Cathay Pacific Airways Ltd. said on Friday that it will cut passenger capacity by 96% in coming months. That follows major airlines grounding planes. Europe’s biggest carrier Deutsche Lufthansa AG will idle 700 aircraft and 95% of seats, while American Airlines Group Inc. will park 450 aircraft.

Some airlines are weighing freight-only flights. British Airways owner IAG SA said that with passenger services severely restricted, it is operating a global network of cargo flights on passenger aircraft to keep vital supplies flowing.

Face masks sit at a Dealmed-Park Surgical supply facility in Lakewood, New Jersey.

Photographer: Victor J. Blue/Bloomberg

For critical equipment like ventilators, governments are chartering planes or sending military aircraft. On Monday, Italy -- which has had the most number of fatalities from the pandemic -- sent a military plane to China to pick up the critical machines, said Wu Chuanpu, director of supply chain at Vedeng.com, one of the main Chinese platforms connecting medical equipment suppliers and buyers.

To alleviate shortages, governments are turning to extreme measures, including export bans and hoarding of critical equipment.

The European Union is restricting exports of essential medical supplies. U.S. President Donald Trump invoked the Defense Production Act this week that gives the government more latitude in emergencies to direct industrial production.

The Federal Drug Administration warned of a shortage of masks and gowns, and urged health care providers to put strategies in place to conserve their use -- including the reuse of surgical masks where possible.

In New York, the shortages have made Einhorn rethink his own supply chain. Dealmed is planning to relocate some production of masks to the U.S. and is looking into ordering equipment.

For now, he’s considering chartering a private cargo plane, and wishes the U.S. government would do more to help.

“They should look into how they get these supplies out of China,” said Einhorn. “Demand is crazy, and hospitals and doctors need them now.”

--With assistance from Jinshan Hong, Siddharth Philip and Thomas Black.

To contact the reporter on this story:
K. Oanh Ha in Hong Kong at oha3@bloomberg.net

To contact the editors responsible for this story:
Rachel Chang at wchang98@bloomberg.net

Vidya Root, Anthony Palazzo

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