There are growing concerns that the recent outbreak of a novel coronavirus, SARS-CoV-2, which causes “coronavirus disease 2019” (abbreviated as COVID-19), will have a serious negative impact on the global economy. U.S. businesses who depend on Chinese suppliers may soon be facing product shortages and supply chain disruptions. This client update (i) addresses whether U.S. businesses need to be concerned about possible exposure to the virus from goods imported from China, and (ii) identifies contractual considerations to help companies manage potential supply chain risks based on their relationships with Chinese suppliers, customers and transportation providers.
- The risk of coronavirus transmission from imported goods is currently considered highly unlikely.
- U.S. businesses should engage in contingency planning, including evaluating alternative sourcing and the potential future need for increased transportation capacity.
- Disruptions may affect contracts between U.S. businesses and Chinese suppliers, and U.S. businesses and buyers of finished goods.
- Transportation contracts should be reviewed for minimum volume commitments and capacity protections.