Analysis: our intricate, modern supply chains are vulnerable to natural disasters, geopolitical tensions, and infrastructure failures
In today's interconnected world, global supply chains form the backbone of international trade, facilitating the seamless movement of goods across continents. Almost everything you interact with, the phone in your hand, the jeans you're wearing, the chair you’re sitting on, came through part of these chains. However, recent events continue to underscore the inherent fragility of these intricate networks. Last week’s Baltimore bridge strike by the container ship Dali serves as a reminder of the vulnerabilities that lie within our supply chains, exposing the ripple effects of disruptions that can reverberate across industries and economies worldwide.
The Port of Baltimore is among the top 20 ports in the US by tonnage and number of containers handled, and a major hub for the import and export of motorised vehicles. Initial reports suggest that the Sri Lanka bound ship lost power and its ability to manoeuvre as it sailed down the Patapsco River, crashing into a support pylon of the Francis Scott Key Bridge. Given the ports relative scale (approximately 4% of overall East Coast Trade) and availability of additional capacity in alternative East Coast ports, the immediate supply chain disruptions will likely be localised to particular industries and short lived.
Beyond this immediate impact lies a deeper narrative, one that highlights the fragility of our global supply chains. At its heart is our reliance on interconnected infrastructure to facilitate the movement of goods. The interconnected nature of modern supply chains means that disruptions in one part of the world can have far-reaching consequences. A manufacturing plant halfway across the globe may rely on components sourced from multiple countries, assembled in yet another location, and then transported via complex logistics networks to reach its final destination. Any disruption along this intricate journey can lead to delays, shortages, and increased costs.
"No single entity can address the myriad of challenges posed by global supply chain fragility."
To highlight one such case in point, at the outset of the Covid-19 pandemic Jaguar Land Rover resorted to flying key fob parts out of China in suitcases as it raced to prevent its UK plants from closing in February 2020. Key fobs, although small in stature are essential components for vehicle operation and security. The incident underscored the complex dependencies within the automotive supply chain, highlighting the vulnerability of relying on a single source for critical components.
From a logistics perspective there have been many recent examples of disruptions that have made international headlines. Tales of the Ever Given stuck in the Suez Canal began to reverberate across social media in 2021. The canal routes ships between Europe and Asia directly linking the Red Sea to the Mediterranean Sea. Nearly 15% of global shipping traffic passes through the canal each year.
The Ever Given, one of the largest container ships ever built got stuck in the canal for six days in March 2021, blocking worldwide shipping. Data from Lloyd's List showed that the stranded ship was holding up an estimated $9.6bn of trade along the waterway each day. That equates to $400m and 3.3 million tonnes of cargo an hour.
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From RTÉ Radio 1's Today with Claire Byrne, the fate of the giant cargo ship Ever Given
More recently, the Suez Canal is being disrupted by militant attacks and the worlds other leading transit route, the Panama Canal is suffering from water shortages. The Panama Canal connects ships traveling between the Pacific and Atlantic oceans, reducing shipping around South America by approximately 15,000 km. In 2023, there was more than 14,000 vessel transits on this pathway between the seas.
Dropping water levels in the Gatún Lake forced authorities to impose restrictions on the number of ships that can pass through the canal, dropping from the normal 38 down to 24 a day in November 2023, 22 in December, 20 in January, 2024 and 18 in February, 2024. This marks the first time the Canal has ever had to restrict transits causing long queues at nearby ports as ships wait their turn to pass.
Incidents such as these highlight the impact of supply chain vulnerabilities and challenge supply chain design assumptions. While globalisation has undoubtedly brought about numerous benefits, including increased efficiency and access to global markets, it has also introduced new vulnerabilities. The concentration of production in certain regions, coupled with just-in-time inventory practices, has left supply chains susceptible to disruptions, whether they be natural disasters, geopolitical tensions, or infrastructure failures.
From CBS News, How Panama Canal's drought is threatening global shipping traffic
To combat supply chain disruption organisations should be reviewing their supply chain resilience strategies. These strategies should be designed around flexibility and adaptability to ensure continuity of operations even in the face of unforeseen events. By spreading production facilities, sourcing locations, procurement strategies and transportation routes across multiple regions, businesses can mitigate the impact of localised disruptions.
Technology has a crucial role to play in enhancing supply chain resilience. Advancements in data analytics, artificial intelligence, and the Internet of Things enable greater visibility and control over supply chain operations. Real-time monitoring and predictive analytics can help businesses identify potential disruptions early on and take proactive measures to mitigate their impact.
No single entity can address the myriad of challenges posed by global supply chain fragility alone. Instead, businesses, governments, educational providers and industry stakeholders must work together to identify vulnerabilities, develop contingency plans, and share best practices. Otherwise, incidents like the collapse of the Francis Scott Key bridge will continue to have outsized impacts for us all.
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The views expressed here are those of the author and do not represent or reflect the views of RTÉ
