As the coronavirus crisis worsens in the U.S., hospital stocks of personal protective equipment (PPE) are running dangerously low and risk being depleted altogether. Without proper PPE, frontline medical workers cannot meet the daily needs of the U.S. health care system—let alone effectively mitigate the COVID-19 threat.
The current supply chain cannot handle a demand shock of this magnitude. This market failure must be addressed immediately or we will face disastrous consequences.
The good news is that the PPE shortage can be solved. All of the necessary resources to make up the gap exist, but those resources have to be rapidly reconfigured to meet unprecedented demand.
Flexport helps companies with international shipping and customs brokerage. It could benefit financially if some of the steps proposed in this article are carried out.
It is time to leverage our country’s connections with the outside world to secure the necessary supplies in the event that domestic production and restocking of PPE do not solve the crisis quickly enough. Securing a backup stream of supplies from international sources is a problem of logistics, and the U.S. has the largest, most sophisticated public and private logistics network on the planet.
Hospitals are desperately asking their distributors for more supplies. Because their needs aren’t being met, hospital administrators are resorting to extreme measures, asking procurement teams to buy foreign-made PPE on open markets, cutting corners on standards, quality inspections, and other protocols that exist during “peacetime” procurement. They’re even asking staff to use improved PPE such as homemade masks, which conform to no standards at all. At the same time, traditional medical distribution giants continue to follow peacetime procedures: asking potential suppliers of PPE for product samples and putting them through the standard compliance protocols.
Thus the dilemma: Existing major distributors are not set up to move quickly enough to solve this crisis. And hospital administrators lack the purchasing power, capital, and logistical access to keep up with rapidly rising demand in a manner that meets minimum safety requirements.
That problem is compounded by a few other factors: Down payment requirements from manufacturers have increased dramatically amid economic uncertainty; it’s become increasingly difficult to verify the rapidly growing number of potential suppliers; and new entrants to the market are unprepared to handle complex international shipping and customs procedures.
With hospitals reaching capacity and administrators stretched thin, federal agencies—in particular the Federal Emergency Management Agency (FEMA), Department of Health and Human Services (HHS), and Food and Drug Administration (FDA)—have intervened and taken a number of crucial steps in the right direction.
On March 29, FEMA expedited the delivery of millions of units of PPE from suppliers in Shanghai to the U.S., per a Reuters report. A day later, FEMA and HHS launched the Supply Chain Stabilization Task Force, which, among other responsibilities, aims to coordinate the national allocation of PPE resources. In addition, the FDA has moved quickly to ease restrictions on gowns, gloves, and other apparel not intended for use in medical settings.
Every American should be grateful for the phenomenal work that has been accomplished so far. These are important signs of progress in the national mobilization against COVID-19—progress made by dedicated civil servants who have worked tirelessly to get us this far.
Still, there’s much more that must be done.
First, as some members of Congress have suggested, the Trump administration should deputize a highly qualified individual as PPE czar with the authority to procure PPE from suppliers anywhere in the world.
Next, Washington should immediately make available a multibillion-dollar credit line for bonafide U.S. companies that it reasonably believes can deliver PPE. Down payments will be required given extreme demand, and payments must be able to flow to potential suppliers without delay. While the newly signed Coronavirus Aid, Relief, and Economic Security (CARES) Act does provide loans for small- and medium-sized businesses and funds for the purchase of PPE, there are no provisions specific to aiding PPE manufacturers.
Finally, the administration should secure commitments from major banks to provide upfront payment for any government purchase order, regardless of what vendors the payments are going to. Regulators should consider loosening Know Your Customer regulations for PPE shipments to allow payments to be made quickly.
We know the U.S. government is capable of acting swiftly in the face of a serious threat. Just in late March we witnessed the FDA move with remarkable speed to issue emergency authorization for the use of antimalarial drugs in coronavirus care—reducing a potentially years-long process to a matter of weeks.
It’s time to apply that same urgency to the procurement and distribution of PPE. America’s logistics companies are ready to mobilize and meet this unprecedented threat.
Ryan Petersen is CEO of Flexport.
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