A statement on the supply chain situation for Protective Gear during the COVID-19 Crisis.
[USPRwire, Fri May 15 2020] John Pappie, The CEO of VX Global Inc., today announced what he feels is an accurate depiction of the supply chain crisis that has engulfed the protective gear market, which is vital to hospitals and governments that are fighting the COVID-19 crisis.
Mr. Pappie, stated the company has been working with supply chain specialists and the finance community in an attempt to deliver resources to various government agencies, hospitals, and clinics. He stated that the current system is damaged for several reasons.
"There have been massive changes in the way international trade works due to the crisis. This has isolated buyers, manufacturers, and intermediaries where viable solutions are weeks or months away, although products are needed now." stated Mr. Pappie.
The company has noted that state, local governments and major buyers are relying upon the traditional “pay on delivery” model (COD or net terms) that have been the universally accepted process for years. VX Global Inc. has cataloged that new terms now require large up-front deposits on materials, with the balance upon shipping.
“In most normal trade situations, the manufacturer would deliver to the dock free of charge, and only get paid via a Trade Letter of Credit, after the product has been inspected and is in the process of being shipped. Any balance remaining would be paid upon receipt of goods or net terms. Now these large deposits and being paid the balance prior to shipping are straining the ability of product to be shipped as defective gear has been sent by some Manufacturers so the risk is now high.” stated Pappie.
“At some point in time, and hopefully soon, all parties will mitigate this situation by negotiating in good faith to create flow through and a return to normal trade processes. Right now we have several options for deposit finance pending and we are in the process of building out a unique funding procedure to address the new normal.” John Pappie stated.
VX Global internal report - Strategically this was a great month as we positioned ourselves with several investment firms to open up "fund management" potential and possibly create some funding programs in consolidation, asset-based high yield, and trade finance. We are proud to report that over 85% of our clients were approved for some type of financing this month. Two clients are still pending approval upon submission of the final month's end documentation.
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