Two years ago Industry Today was covering supply chain issues caused by the COVID-10 pandemic. As pointed out in Supply Chain Disruption Continues to Steer M&A, “The COVID-19 pandemic led to a series of border shutdowns, resulting in challenges for markets heavily reliant on imports and exports of materials and products. As the global economy slowly began to recover from the after-effects of the pandemic, geopolitical tensions loomed in some regions, resulting in businesses grappling with severe supply chain issues.”
A geopolitical tension in particular is the Israel-Hamas conflict and its effects on Red Sea trade routes. According to a World Economic Forum report, some 30% of the world’s container traffic, accounting for over $1trillion in annual movement, passes through the Suez canal and the Red Sea channel. Houthi forces in Yemen have to date attacked 33 ships in the Red Sea, with 16 experiencing direct hits from missiles or drones. Despite efforts by US, UK, and European allied forces to stabilize the region, this vital choke point in global shipping remains vulnerable.
The report also notes that, “The Red Sea crisis has highlighted the critical need for resilience within global supply chains. To navigate this turbulent landscape, companies must excel in real-time monitoring of global events, grasp the implications of these developments and rapidly deploy alternative operational strategies. Cultivating such resilience serves as a bulwark against imminent disruptions and fortifies long-term business sustainability in a global marketplace characterized by its increasing unpredictability.”
Heidi Benko, VP of Strategy for Infor Nexus, points out in Supply Chain Reacts to the Red Seathat shippers seemed to have learned their lessons after COVID. “The short-term impact on the global supply chain seems to—surprisingly—fall short of ‘crises’ level. Shippers are coping with the challenges despite uncertainty on how long the hostilities will last or how far reaching the ripple effects will be…The ‘new norm’ of ongoing disruptions has caused supply chain professionals to be more alert, proactive, and ready to make timely decisions, rather than take a ‘hope it resolves it itself’ approach to response planning. Professionals in the industry have also learned the value of modern software solutions and process improvements…With smart strategies in place, no matter what disruption may be around the corner— or beyond the strait—the modern supply chain organization can respond with agility.”
Is your organization affected by supply chain issues due to disruptions in the Red Sea? How are you managing any bottlenecks? To share your experiences, please see our editorial guidelines.
Susan Poeton 