How The CARES Act Will Impact The Supply Chain

The effects of the coronavirus on the economy are already apparent. The U.S. Congress responded in late March by passing the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was signed immediately by President Trump.

This relief package assists hard-hit individuals and businesses while preserving jobs and supporting state and local governments. Here's a look at some changes the CARES Act may bring about in the supply chain. 

(Photo credit: Jim Allen/FreightWaves)

1. It helps fleets and truckers keep working

The coronavirus pandemic caused country and state leaders to urge people to work from home if possible. If a person owns a trucking fleet or makes their living as a driver, staying at home is impossible. COVID-19 also affects the supply chain in various ways. Whereas some goods are in exceptionally high demand, others are no longer needed as businesses have been closed and people adjust to a new way of life. 

If trucking company owners fear coronavirus shutdowns may force layoffs, they may qualify for U.S. Small Business Administration (SBA) loans for enterprises with fewer than 500 employees. Such assistance falls under a part of the CARES Act called the Paycheck Protection Plan (PPP). The total amount of a PPP loan can be up to 250% of an employer's monthly payroll – not exceeding $10 million. 

(Photo credit: Jim Allen/FreightWaves)

U.S. Secretary of Transportation Elaine Chao also recently recognized the essential roles truckers play in helping people get the goods they need. While profiling some of the things the Department of Transportation (DOT) did to help truckers during the crisis, she also clarified how many trucking companies are small businesses, and the CARES Act could help them continue operating.

Many supply chain professionals will also find the individual stimulus payments to Americans especially welcome. The coronavirus affects their work in a wide assortment of ways. Some employees – such as those transporting equipment for conventions and concerts – find things drying up as most large-scale events are cancelled. However, truckers carrying items like foods and household goods may find they transport more products than ever as stores struggle to restock. 

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2. It aims to reduce medical-related supply chain shortages

The coronavirus shutdowns around the globe urged more people to shop online. People who chose to keep buying in stores found that many goods they could purchase without issue before, like cleaning products, toilet paper and non-perishable consumables, remain out of stock for weeks or are strictly rationed. That's a mere inconvenience for most consumers, but the situation becomes dire if the supply chain shortages restrict the availability of medical products. 

The CARES Act includes several medical provisions, including more than $100 million distributed to hospitals and healthcare facilities. There are supply chain specifics for medical supplies, too. The U.S. has a Strategic National Stockpile containing essential medical supplies. When public health crises deplete locally available products, the stockpile ensures continued access. The CARES Act added personal protective equipment (PPE) and swabs to the stockpile's contents.

Moreover, stipulations in the CARES Act authorize the U.S. Food and Drug Administration (FDA) to encourage the manufacture of drugs in short supply. It also urges domestic production of medications' finished dosage forms and their active pharmaceutical ingredients (APIs). Manufacturers experiencing shortages must report them to the FDA, plus carry out risk assessments to determine which factors could trigger future supply chain management issues.

Some manufacturers may have difficulty adhering to these new requirements and want professional guidance. Another part of the CARES Act enables the U.S. Department of Commerce's National Institute of Standards and Technology (NIST) to help. The assistance concerns NIST's Manufacturing Extension Partnership (MEP) Centers. 

There is nearly $50 million available to MEP Centers. Successful applicants can use the funds to advise manufacturers about supply chain management problems, including overcoming shortages or remedying other weaknesses that are particularly prominent as the COVID-19 crisis continues. 

(Photo credit: Jim Allen/FreightWaves)

3. It lets states issue overweight carriage permits in some cases

The CARES Act does not mention truck weights, specifically. However, the DOT now allows states to issue weight exemptions or overweight carriage permits for truckers carrying COVID-19 relief supplies. That difference supports the information above, whereby the CARES Act attempts to stop medical supply outages. The specifics vary at the state level, so trucking professionals should verify them before transporting products. 

Many manufacturers pivoted their operations to create much-needed supplies like ventilators and masks. Their efforts highlight the collective push to help the world weather this unprecedented situation. Now, once the goods are ready to go, truck drivers can transport more of them at once, thereby streamlining the supply chain. 

The CARES Act supports supply chain management and operation

Coronavirus shutdowns and restrictions cause inconveniences and hardships for people all over the world. However, the CARES Act contains numerous segments to assist the supply chain sector in reducing those as much as possible.