The Global Supply Chain and the Disruptions of a Pandemic
This week we’re going to be taking a look at global supply chains and the disruptions that are affecting the entire world right now. While I do intend to keep the light tone that I have used for all of these blogs as much as I can because I believe such a tone is far more engaging, this is also a significant issue that required significant research, so I will be citing sources and a bibliography of those sources will be included at the end so you can see that I’m not just making things up. So, with that little disclaimer out of the way, let’s see what’s going on with global shipping.
There are a lot of ways that people learned about the cargo ship, the Ever Given; actually following the news, hearing about the ship that got stuck in the Suez Canal just out in the wild of your life, or even through the barrage of memes that accompanied the Ever Given blocking the Suez Canal. Regardless of how you learned about the Ever Given, one thing is for certain, we are still feeling some of the ripples of one of the world’s primary shipping lanes being blocked for six days. Now, the ship getting stuck in the canal is not the primary reason for shipping delays and issues at this point in time, the ripples are certainly getting smaller from that event. They are even currently doing work to widen the Suez Canal (1), though it is expected to take roughly two years from the start of the project, so maybe a year and a half from this writing. Now, while the blockage of the Suez Canal is no longer causing significant issues, it does allow me to highlight something that is a major cause of concern in the way the world supply line works, and that’s just-in-time shipping.
Just-in-time shipping is where everything is made as close to on demand as possible. Assuming everything goes perfectly according to plan, this is great, you don’t need to have as much inventory on hand. However, the supply chain is an incredibly complex system that has an obscene number of moving parts. It is honestly a miracle that it worked so well for so long. When you keep as little inventory on hand as possible you are leaving yourself incredibly vulnerable to literally any kind of disruption. It has the potential to be an incredibly short sighted way of doing things, because it requires very little to go wrong. In the past two years we have seen how absolutely everything can go wrong, even beyond just the blocking of a major shipping route for nearly a week. There was also everything else going on in the world, such an entire pandemic the likes of which have not been seen in one hundred years.
If it comes as a surprise to you that a pandemic has had massive effects on the global supply chain then I don’t know what to tell you about that, because it really shouldn’t be a surprise. Despite constant warnings that a pandemic was absolutely coming and we should be prepared for it from sources like TIME (2) and honestly just so many other places, some of which are outlined by The Atlantic (3) it seems that our supply chains should have been ready for something on this scale. However, we operate in a system that is only looking at right now. We chase trends and barely plan for what might happen next week, and certainly not for what might happen in a year or five years or whatever. Covid very much exposed a lot of the issues in the way our global supply chain is structured, as shown by the survey by Ernst and Young (4), and there are many plans to increase resilience against such disruptions in the future, and I may write a separate blog detailing some of those, but let’s just touch on some. Moving forward it is likely that many people just aren’t going to return to offices because remote work is largely preferable for a lot of people. We will be accelerating moving forward with automation. There is some talk of on-shoring a lot of critical supplies, such as microchips, in many countries that depend on them. Obviously, there is a lot more that would need to go into preparing for something like Covid happening again, but at least the wheels are starting to turn so that next time, and there will be a next time, it won’t be so bad.
Ocean Container Shipping
Along with disruptions as things shut down because of Covid, there are also a lot of places where things have drastically slowed down. One of the biggest right now is with shipping via ocean containers. Right now there are a lot of ships just docked off the coast waiting for harbors to open up so they can offload their containers. There are nearly half a million containers waiting off the coast of California (5), and this is not an issue that seems like it’s going to be resolved anytime soon. There are a plethora of reasons for this; from mismatched shipping schedules, Europe and Asia are operating on 24/7 schedules, and the US ports are operating on shifts and closed on Sundays; to lack of space along the coasts to store products in warehouses, because warehouses in a just-in-time system are not designed to hold that much, as well as increased demand for all sorts of things being shipped from all over the world; to reduced productivity at the ports, due to hiring difficulties for both truckers and longshoreman for the same reasons related there are labor shortages in every sector. Experts believe that these delays are likely to last well into 2023.
I could conclude this post with five words, two of which are profane, but that doesn’t suit what is a professional blog. Instead I will once again stress that Covid has been the largest disruption of the global supply chain in modern times. Way too many people use the word unprecedented for a pandemic, which is something with immense amounts of historical precedent, but it does actually apply to the disruptions of the global supply chain, because nothing like this had happened after the world at large switched to a global economy. Since there is absolutely no going back from a global economy, for many reasons, but especially because the internet has made the world much smaller than it used to be, these are things that need to be considered and prepared for going forward. Pandemics aren’t exactly on a timeline and they don’t give warning, so we need to be prepared for the next one.
The Suez Canal will be widened by 131 feet to avoid a repeat of the Ever Given chaos, authorities say
Nearly half a million shipping containers are stuck off the coast of Southern California as the ports operate below capacity