During the extended — some might say ongoing — supply chain fallout of the COVID-19 pandemic, a new phrase entered the vocabulary of professionals throughout the logistics industry and beyond: ‘the new normal.’ Thoughts and theories swirled around this concept, with experts from across the industry attempting to quantify what this new, post-pandemic reality would look like.
Now, some three years after the worst supply chain impacts of the COVID-19 pandemic, the global logistics industry may finally have a firm understanding of the “new normal.” Looking at our contemporary maritime landscape, it becomes clear that disruption — whether it be global conflict, the impacts of climate change, or any other number of crises — is now the daily reality of those braving the turbulent waters of the global supply chain. For the global supply chain, the “new normal” is this era of disruption.
The question becomes practical: in an era of disruption from an infinite array of sources, how does the global supply chain continue to function? How do supply chain professionals — faced with both disruption and ensuing financial strain within the freight market—manage to create supply chains that are both resilient and efficient?
In this article, we’re diving headlong into these questions, and how shippers, under more pressure than ever, can leverage technology to mitigate supply chain crises in this era of disruption.
Today's Shippers Live in an Era of Disruption
Whether it be the catastrophic impacts of climate change, an increasingly volatile geopolitical landscape, or any number of threats to supply chain stability, today’s shippers are living in an era rife with disruptions. In this section, we’re looking at two key current disruptions wreaking havoc on supply chains and where the next significant disruption may be coming from.
The Drought in the Panama Canal
Since its opening in 1914, the Panama Canal has been an invaluable linchpin in the global transportation industry. It allows vessels to transit between the Atlantic and Pacific oceans without traversing the dangerous waters south of Cape Horn. While the canal has experienced interrupted operations before — most notably due to a 1915 landslide, which halted shipping in the canal for several months — never before has the canal seen such prolonged, significant disruption as is currently caused by the persistent drought plaguing the southern half of Central America.
The drought, which began in 2023, has forced canal officials to slash vessel crossings by 36%, nearly cutting in half the amount of vessels allowed to transit one of the global supply chain’s most vital waterways. “Panama Canal Administrator Ricaurte Vásquez now estimates that dipping water levels could cost them between $500 million and $700 million in 2024,” reports the Associated Press.
According to McKinsey, the ongoing drought profoundly impacts global trade, with the consultancy estimating that the current vessel restrictions will likely impact roughly 100 million tons of cargo in 2024. Impacted shipments must wait for an increasingly rare opportunity to transit the canal, leading to significant delays. While these delays may be mitigated by recent carrier efforts — such as Maersk’s — to cross the canal using the adjacent railway, their impact will undoubtedly be felt across the entire supply chain.
The Crisis in the Red Sea
Following attacks on shipping vessels by Houthi Rebels based in Yemen in October of 2023, major maritime carriers began choosing not to transit the Red Sea. This necessary decision's impact was nothing short of catastrophic for the global supply chain. The Red Sea is an invaluable trade route for the international supply chain, connecting eastern and western markets via the Suez Canal.
While the disruption in the Red Sea has had a significant impact on container rates, drawing attention from professionals throughout the global supply chain, the operational impact will likely be felt for many months to come. Shippers are experiencing delays of up to two weeks on critical shipments as shipments are rerouted around the southern tip of Africa at the Cape of Good Hope. Beyond initial delays, the disruption has a cascading impact on ports and drayage operations: delayed shipments clog ports, creating congestion and impacting shippers’ ability to move goods from ports on time, forcing them to incur costly demurrage and detention fees.
Despite the immense impact of the crisis on the global supply chain, there is little hope of a quick resolution. The ongoing conflict between U.S. forces and the Houthis in Yemen ensures that, for the time being, the disruption in the Red Sea is a permanent fixture of the global supply chain in the era of disruption.
The Next Great Disruption
First, the pandemic. Then the drought in the Panama Canal, followed by the crisis in the Red Sea, and then — what? While it’s unclear where the next great supply chain crisis will come from, it’s evident that in the era of disruption, shippers, carriers, and professionals must be prepared for the worst.
- Global Conflict: As tensions amplify between great powers — whether Russia and the West or China and the U.S. — global conflict will only increase in impact in the coming years. As we’ve seen across the globe, from Ukraine to the Red Sea, conflict and the ensuing disruption profoundly affect the global supply chain.
- Climate Change: While the crisis in the Panama Canal is a landmark example of the impact of climate change on the global supply chain, there are other recent examples of the toll of climate change upon crucial supply chains. Whether it be historic freezes in the U.S., Canadian wildfires, or the increasing strength and regularity of major hurricanes, climate change presents a profound threat to global supply chains. According to Supply Chain Dive, the supply chain consequences of climate change could cost U.S. businesses up to $120B by 2026.
- Labor Conflicts: In 2023, the threat of a U.S. West Coast port strike by the International Longshore and Warehouse Union, or ILWU, occupied the minds of supply chain professionals across the globe. While the U.S. strike never materialized (though ILWU workers did strike in Canada, with significant consequences to operations at major Canadian ports), the supply chain may not be so lucky in 2024. On the U.S. East Coast, an ongoing labor dispute between the International Longshoremens’ Association, or ILA, and an employers organization representing carriers and ports, the United States Maritime Alliance (UMX), has the potential to send 45,000 U.S. port workers to the picket line. While the precise consequences of a strike by the ILA’s members remain unclear, it will undoubtedly bring delay, disruption, and chaos to the U.S. East Coast, with ramifications quickly spreading throughout the global maritime industry and beyond.
In the era of disruption, supply chain professionals need to understand that it’s not a question of if a significant disruption will strike but when a major disruption will hit. Increasingly, shippers are turning to innovative logistics technologies to bolster both resilience and efficiency in the era of disruption.
Ocean Container Tracking: Resilience and Efficiency in the Era of Disruption
In the ever-evolving landscape of global trade, adaptability is paramount. Shippers navigating the era of disruption are turning to advanced technologies, and among them, ocean container tracking emerges as a key player in fostering resilience and efficiency. This section delves into how real-time visibility, automated alerts, and API integration in ocean container tracking contribute to a robust and responsive supply chain strategy.
Real-Time Visibility
In the face of disruptions, information is power. Ocean container tracking provides real-time visibility, allowing stakeholders to monitor their shipments' precise location and status at any given moment. This level of insight becomes invaluable during route alterations and delays. For instance, rerouting vessels due to the Red Sea crisis becomes a well-informed decision when armed with real-time data. Shippers can proactively adjust supply chain plans, manage inventory, and communicate effectively with partners, mitigating the impact of unexpected events.
Automated Alerts
Timely awareness is a linchpin in disruption mitigation. Automated alerts are crucial in keeping supply chain actors informed about critical changes. For instance, receiving immediate alerts on vessel schedule changes due to geopolitical conflicts or weather-related issues empowers shippers to swiftly adjust their plans. Likewise, updates on Last Free Day (LFD) alterations and demurrage scenarios allow for proactive decision-making, preventing unnecessary costs and delays. In the era of disruption, the ability to anticipate and respond promptly is a competitive advantage.
API Integration for Optimization
Integrating Application Programming Interfaces (APIs) within the logistics ecosystem is indispensable in the quest for operational efficiency. API integration enables seamless data exchange between platforms, creating a unified and interconnected logistics infrastructure. This integration is particularly crucial during disruptions, where swift and accurate information flow is imperative. A well-integrated system, facilitated by ocean container tracking, enhances operational efficiency by streamlining processes. For example, in the wake of disruptions like the Red Sea crisis, integrated systems ensure that information about rerouted vessels is seamlessly communicated to all relevant parties. This not only reduces manual workload but also minimizes the risk of errors associated with disjointed data.
In the Era of Disruption, Shippers Turn to Ocean Container Tracking
Ocean container tracking is not merely a technology; it's a strategic asset for shippers navigating the era of disruption. Real-time visibility, automated alerts, and API integration form a triad that empowers supply chain professionals to not only weather the storm of uncertainties but also to optimize and thrive in a dynamic global trade environment. As disruptions become a constant, those with the foresight to leverage these technological capabilities will be the vanguards of a resilient and efficient supply chain landscape.
Ready to build efficient and resilient operations in the era of disruption? Book a demo with OpenTrack today.
