red sea
February 15, 2024

Dealing With Disruption: The Keys to Sidestepping Climate Change, Geopolitics and Other Issues


Amid the missile attacks in the Red Sea, it’s easy to overlook other pressing issues across the supply chain. For example, climate change can be a significant source of disruption. Look no further than how drought conditions around the Panama Canal have affected world trade. In this week’s newsletter, we’ll look at dealing with disruptions related to climate change, as well as provide an update on the Red Sea crisis and other global events influencing the supply chain.

Mitigating Climate-Related Risk

A wave of new technologies has swept into the supply chain and logistics industry in recent years. But, while technology is all around us, some organizations are still resistant to digitalization.

That’s a mistake for several reasons, not least of which is that competitors will eventually pass by any company that fails to embrace new technologies. This article from Retail TouchPoints explores one of the many ways technology can help shippers — by mitigating climate-related supply chain disruptions.

The story specifically mentions that platforms that enhance collaboration can create the visibility needed to “minimize the impact of disruptions and quickly find alternate suppliers while delivering products on time.” Without collaboration- and visibility-enhancing technology in place, BCOs and LSPs may be left to scramble for answers, reacting to issues rather than developing proactive solutions.

U.S. Ports Expecting a Surge in Cargo

The issues in the Red Sea continue as Houthi rebels are still attacking commercial ships in the waterway. This disruption near the Middle East naturally has global implications, one of which is that U.S. container ports are now prepping for a surge in cargo related to the Red Sea attacks.

The Red Sea is just the latest in a stream of supply chain disruptions that have struck in recent years. Rather than searching for a solution to what’s happening in the Red Sea, organizations are looking to adapt their supply chains to be more flexible no matter what unforeseen disruptions emerge. This article mentions the message from the story linked above that investing in “advanced technologies like real-time tracking and monitoring to gain better visibility and early warning capabilities” is essential to creating supply chain operations that can adapt to emerging issues.

Longer Transit Times = Higher Costs

Another outcome of the ongoing crisis in the Red Sea is rising shipping costs. When commercial ships cannot cut through the Suez Canal and are forced to go around Africa, it adds significant time to their journeys. Longer transit times mean higher costs, which eventually trickle down to consumers. Not only do these longer transit times increase costs, but they also erode customer satisfaction.

This is another area where technology can help respond to challenges so BCOs and LSPs can quickly adapt to save money amid supply chain disruptions. The ultimate goal of supply chain participants is to achieve operational efficiency. There’s no way to accomplish that objective in the modern age without embracing the latest and greatest in supply chain tech.

Nearshoring Back in the News

The concept of nearshoring has grown more popular in recent years, primarily because of issues that have made China less reliable as a manufacturing center. The Red Sea crisis is making the case for nearshoring clearer, and a Forbes article recently promoted the act of strategic nearshoring.

The article uses the phrase “supply chain resilience,” which has been trending in recent months, and explores nearshoring as an effective method for sidestepping geopolitical issues. Nearshoring in nations like Mexico may even be less expensive than manufacturing in China, and it also reduces the risk associated with distance.

Red Sea-Related Inflation Peaking?

As noted above, the Red Sea crisis has created a trickle-down effect that is increasing consumer costs. There’s good news on that front, though: New data suggests that Red Sea-related inflation may be peaking.

Americans were already dealing with runaway inflation and increasing costs at grocery stores and other retailers. The Red Sea missile attacks have only exacerbated these existing issues, which makes signs of relief that much more welcome.

Secure Your Single Source of Supply Chain Truth

Technology is the solution to working around disruptions and securing your place in the future of the global supply chain. Cargologik offers a supply chain orchestration platform that supports collaboration, visibility, document management, and other benefits. If you’re searching for a single source of truth rather than a multi-platform solution that creates fragmentation, get started with Cargologik.

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