PPE is a clothing and equipment designed to protect the wearer from injury or spread of infection. Key PPE items – including N95 masks, surgical masks, gowns, and goggles – are essential for healthcare workers. Most of the raw materials and inputs used to produce PPE are outsourced to low-cost suppliers. Production of these items often requires imports of raw materials such as cotton fibre, polyester, and polyamide produced by different manufacturers around the world. These are processed by protective clothing manufacturers for sale to end users.

Starting as a health crisis, COVID-19, now poses serious threats to the global economy, trade, and finance, with the estimated economic impacts to range between $2 trillion and $4.1 trillion globally according to an initial estimate of ADB. The pandemic is even rapidly spreading across countries and regions, causing huge impact on people’s lives and communities. Surging demand, partly joined with panic buying, hoarding, and misuse of PPE, is disrupting global supplies and putting lives at risk. Demand has surged overwhelming global production capacity. The dramatic rise in demand for surgical masks, goggles, gloves, and gowns has depleted stockpiles, prompted significant price increases, and led to production backlogs of 4-6 months in fulfilling orders. Ensuring those critical PPE products has become the most significant challenge.

The WHO has estimated that 89 million medical masks are required for the COVID-19 response each month along with 76 million examination gloves and 1.6 million medical goggles. The organization itself has so far shipped nearly half a million sets of PPE to 47 countries, but the supplies are depleting rapidly. To meet the rising global demand, WHO estimates that industry must increase manufacturing by 40 per cent and has urged governments to act quickly to boost supply.

In the latest publication of ADB titled “Global Shortage of Personal Protective Equipment amid COVID-19: Supply Chains, Bottlenecks, and Policy Implications”, it is said that supply chain disruption for PPE are particularly risky for medical personnel as COVID-19 rapidly spreads. If not adequately protected, healthcare workers who are the frontline defense against coronavirus can infect patients or colleagues, and the need to be quarantined after exposure quickly depletes the health workforce. Medical supply chains are essential elements of a well-functioning health system. To respond to infectious disease outbreaks effectively, health supply systems should be designed to swiftly and reliably source and deliver essential health commodities, including vaccines, medicines, and PPE for healthcare workers, which are needed during outbreaks, epidemics, and pandemics.

The ongoing coronavirus pandemic exposes the vulnerabilities of supply chains across many industries. In the recent years countries have opted for offshore PPE and other equipment. For example, the United States imports 95 per cent of surgical masks and 70 per cent of respirators from overseas. Amid the COVID-19 outbreak in China, factory shutdowns and bans on travel and PPE exports have put significant strain on PPE supply chains, while the evolving pandemic nature of the disease leads to political and technical constraints in supplying the market. The just-in-time-system evolved in the last few years to improve inventory management efficiency has created overall reduction in national stocks. Since this contrasts with the idea of pandemic planning and stockpiling, it has caused PPE stocks to be insufficient to meet the surge in demand for PPE during disease outbreaks.

Abrupt large supply disruptions from China, as the major supplier in the trade network, will have spillover impact throughout the world. Trade restrictions and export bans also exacerbate the stresses in PPE production and supplies. There are limited regional capacities of production in other parts of the world. For example, Europe has its own regional capacity that may help the region withstand to an extent the supply shock originating from Asia. However, production capacity in Europe is unlikely to meet a demand surge associated with the rapid spread of COVID-19. The US also depends heavily on overseas production and is expected to face a critical shortage of PPE.

There are thus significant and critical supply chain bottlenecks because the supply chain has not been properly functioning to meet a surge in demand due to the constraints in production and logistics. Prices have risen dramatically since the beginning of the outbreak in the first week of December 2019 – a six-fold increase for surgical masks, threefold for respirators, and a doubling in the price of gowns. On the one hand there is a backlog of 4-6 months for supply orders globally, and on the other the raw materials are running short. Export bans for PPE and key materials are being implemented in many economies.

A surge in demand for N-95 masks has led to a shortage of the key component, nonwoven polypropylene. The shortage of melt-blown fabric is China is a serious bottleneck in downstream process for making high-level N95 masks. There is a bottleneck of melt-blown production lines, and building the production line also takes time. For example, it takes about half a year at least to assemble a single machine production line to make a melt-blown fabric. China had capacity to produce 20 million units of masks before the outbreak, but its capacity has considerably suffered due to quarantine needs of their workers leading to manufacturer shutdowns. Roadblocks as quarantine measures, transport and shipping constraints, hoarding, profiteering, and limited workforce capacity due to illness also contribute to shortage.

Governments all over the world are working to ease supply chain disruption and bottlenecks. Several policy decisions are made to augment production and supply. However, all are time consuming and need to be sufficiently financed to overcome the COVID-19 crisis. In the meantime, we need to tread carefully because experts recognize that procurement of supply is a bigger challenge than financing. (IPA Service)