April 2021
How Cargo Insurance Benefits You
Because you are in the import/export industry, the idea of the supply chain and supply chain disruption is nothing new. Due to recent events in the news, though, even laypeople are a bit more familiar with these concepts than they were previously. Following the blockage and subsequent reopening of the Suez Canal in Egypt, one thing is clear.
All it takes is one ship and some serious wind to cause unimaginable supply chain disruptions.
When the dust settles, likely many years from now, Egypt is probably looking at about a billion dollars in damages. The ship blocking the canal, called the Ever Given, was lodged there for six days, but experts in the maritime industry expect that the backlog it caused could take several weeks to clear. Needless to say, this has an unfathomable impact on those waiting for the goods onboard those vessels—meaning professionals like you.
What Happened in the Suez Canal?
The Suez Canal in Egypt is a major international shipping passage. 120 miles long, the man made canal has served as a hub for global trade since opening in 1869. More than 150 years later, it took just one 1,300 foot ship to bring the canal and 350+ other ships grinding to a halt. And as far as anyone can ascertain at this point, there is nothing more than strong wind to blame.
Yes, wind. Not a major mechanical malfunction. Not reckless navigation. Just wind. And the scariest part about that is accepting that we have absolutely no control over the weather. When you add in everything that we saw this past year, with Covid-19’s impact on our global supply chains, one thing is clear. Importers and exporters need to be paying more attention to their supply chains, and looking for signs of potential disruptions coming.
What’s the Impact of the Blockage?
At this point, just a couple of weeks out from the ship being freed, it is difficult to see the full scope of the blockage’s impact. We know that nearly 370 vessels were waiting behind the Ever Given, and that some of them were rerouted around the Cape of Good Horn (southern Africa). This added weeks to those ship’s journeys, and experts estimate that the blockage delayed nearly $10 billion in trade for every single day that it lasted.
Among the shipments delayed in this disaster were global and oil gas deliveries. The effects of this delay may be felt around the world. Because the Ever Given is a Japanese-owned ship, operated by a Taiwanese shipper, and is flagged in Panama while stuck in Egypt, we can say for certain that assigning blame will be complex. Yes, importers and exporters suffering losses due to delayed shipments may be reimbursed, but are likely looking at years of litigation before anything is really done about it monetarily.
What’s on the Horizon in 2021?
To summarize very quickly? A lot of headaches for importers and exporters in terms of supply chain disruptions, that’s what. There has been so much going on in the world, between the coronavirus, container shortages, the Suez Canal blockage, factory fires, and more, that there doesn’t seem to be much room for optimism.
But that in and of itself is good news, in a way.
Not the mess that is global logistics, of course, but the fact that importers and exporters like you are more acutely aware of these issues than ever before. This allows you to keep an eye on the supply chains most relevant to you, and that allows you to plan. One area we’re watching closely is the plastics supply chain, for example.
What’s Going on With Plastics?
There are a lot of supply issues surrounding the raw materials in plastic right now. These include polyethylene, polypropylene, and monoethylene. Don’t worry—there’s no quiz at the end of this article.
If you can think of a plastic product, then chances are that these materials are used in its production. From the food service industry to appliances, automotive parts, phones, and pretty much everything else with plastic components, the effects of these shortages are wide-reaching.
This shortage would be bad in and of itself, but as the US starts to reopen and consumers are ready to spend their stimulus checks, the added demand could lead to further shortages, spikes in pricing, and other issues. When problems like this arise, it is important to learn from them.
What Can I Do to Prepare for Supply Chain Disruptions?
Honestly? Pay attention. It sounds obvious now that the supply chain is on everyone in the industry’s mind, but that hasn’t historically been the case. Importers and exporters have been complacent for some time now, and that is a major issue. If the past year has taught us anything, it’s that we cannot work under the assumption that the supply chain will always be stable, whatever our particular industries may be.
JF Moran offers worldwide logistics services. This includes supply chain management. Work with us for detailed, up-to-date data regarding your supply chain and its shipments. We give you everything you need to make the most informed decisions possible. Leave nothing to chance.
Not after the year we’ve had.
Contact JF Moran for world-class supply chain management.
We’re not alarmists here at JF Moran. This was not a doom and gloom type of article. But you do need to be aware of the different challenges that you can expect to encounter in the importing/exporting industries. Things are only getting more complex.
We look forward to helping you to manage your supply chain effectively and successfully. It’s not impossible, but it does require a level of expertise that most importers and exporters do not have themselves. Our team, on the other hand, lives and breathes this every day. Give us a call to take advantage of that expertise.
Would you welcome improved visibility of your shipments?
If your answer is “yes” to having key knowledge about your shipments, we have the solution for you. It’s our Supply Chain At-A-Glance Report. Learn more about this and what it can do for you – and then request yours.