Supply chains are facing major disruption from political strife, persistent environmental threats, labor issues and lack of efficiency. It’s not your imagination if you think you’ve heard this before (you have). This week in the news, the most severe problems surround cargo ships experiencing major delays.
Both the Suez and the Panama Canals are suffering blockages, though the reasons are different: “The Suez’s problems are geopolitical and those in Panama are climate-based, but both are roiling global trade,” reports The Wall Street Journal. The Panama Canal has been facing a severe drought since mid-2023 and attacks by the Houthis in the Red Sea have scared away most commercial vessels from traveling through the region. In fact, cargo volumes through the canals have plunged by more than one-third, with hundreds of vessels being diverted to longer routes, causing delays, higher costs and “economic wreckage for local communities,” per the Journal.
Meanwhile, the threat of a different type of strike has been plaguing ports in the Gulf of Mexico and East Coast of the United States: “The potential for a strike by the largest union of maritime workers in North America, the International Longshoremen’s Association, is beginning to rise on the list of concerns among logistics decision-makers and advisors,” notes CNBC. The ILA’s union members are hoping for an increase in wages and benefits, and they may be hoping for a different compensation structure that doesn’t rely on the amount of cargo moving through the East Coast, as this trade is flowing away from the ports due to Panama Canal restrictions, Red Sea diversions and the threat of strike.
The last thing anyone wants in a situation like this is a chain reaction that rocks suppliers and consumers on a global scale. In a new report from UBS Sustainability and Impact Institute, researchers note that supply chains the world over are facing a profound realignment, driven by intensifying geopolitical tensions, emerging technologies, concerns over their resilience and the eternal search for efficiencies: “The global trading system has seen various waves of globalization and realignment since the late 19th century, driven by geopolitics and technological change, and shaped by commercial priorities,” the report explains. “What makes this time different is the increasing importance of sustainability — both environmental and social — requiring supply chains to be optimized differently.”
Preparing for the worst, hoping for the best
Without significant action that includes a complete reset of the global supply chains, we risk more disruption in the future. But the good news is that ASCM is here to prepare your supply chain for any eventuality. First, an upcoming live streaming event will feature industry experts deciphering the canal chokepoints and how to keep networks functioning amid uncertainty. Stay tuned for more details, coming to your inbox soon.
Second, as building resilience is an ongoing objective, you can gain essential education by earning your ASCM Supply Chain Resilience Certificate. With this industry-leading program, you’ll be better equipped to make data-driven decisions and mitigate disruption using data and strategic planning. Sign up today to better prepare yourself for our ever-uncertain future.
