Missile attacks in the Red Sea have completely “upended” global shipping, creating the largest diversion of international trade that’s been seen in decades. As the fallout from this significant supply chain disruption continues to mount, ocean shipping rates are surging, and the Red Sea issue could even increase geopolitical tensions in other parts of the world (like reviving Russia and Saudi Arabia’s disagreements over oil).
As you continue to work around the issues emerging from the Red Sea, here are the latest headlines on potential solutions if you operate in the supply chain and logistics field.
Data as the Foundation for Your Supply Chain
The old way of managing supply chain operations included manual tasks and analog tools. The new way of managing supply chain operations includes a high level of automation powered by digital tools.
But data serves as the foundation of everything you want to do in supply chain management. Technology alone is not enough. A recent MIT Technology Review article reinforced this point. Data creates a firm foundation that allows you to use technology to respond to disruptions and make confident decisions to keep your supply chain moving forward.
How to Achieve Resilience in 2024
Resilience is already a common buzzword in 2024, mostly because of how the crisis in the Red Sea is reshaping supply chain operations early in the year. But what does supply chain resilience look like in 2024?
That question was asked and answered by the Business Continuity Institute. The solutions offered include embracing technological advancements like artificial intelligence and the Internet of Things, as well as getting ahead of coming sustainability and ESG regulations. The article also suggests that “collaboration, information sharing and, where possible, joint training and exercising with supply chain partners” can increase resilience.
Could the Red Sea Accelerate Nearshoring?
In response to rising tensions between China and the United States in 2023, many firms started to look at nearshoring their manufacturing to avoid delays and disruptions. That trend continues in 2024, according to Supply & Demand Executive. The Loadstar adds that the diversification of sourcing locations continues to be popular as organizations look to mitigate supply chain-related risk.
What’s happening in the Red Sea could further motivate organizations to explore manufacturing hubs closer to distribution centers — which would help derisk their supply chain, even if manufacturing costs might increase.
A Tale of Two Canals
The Suez and Panama canals are two of the most important waterways in the world, allowing maritime vessels to cut through continents rather than going around them. These waterways have both become unreliable in recent years. The Suez Canal experienced the Ever Given blockage in 2021, and drought conditions have made access to the Panama Canal unreliable. Now, the Suez Canal has been rendered unusable due to missile attacks in the Red Sea, which sits on the south end of the Suez.
As these canals face unprecedented challenges, a new Forbes article suggests that “better forecasting and end-to-end supply chain visibility” powered by technology are the only ways for organizations to take proactive measures. With accurate forecasting and visibility, firms can act “quickly and flexibly” when unexpected events occur.
Geopolitical Tensions + Climate Volatility = Bad News
We’re experiencing an unfortunate convergence of geopolitical and climate-related issues impacting the supply chain. This convergence will be felt in the price of certain products, including manufactured goods, according to Axios.
For example, traveling around the southern tip of South America when the Panama Canal is impassable can add six to 14 days to a maritime vessel’s journey. That added expense trickles down to consumers, eventually leading to price spikes. Not only might prices increase, but extended journeys related to canal issues might also lead to inventory issues and longer delivery times — which can create poor customer experiences.
The Growth of Tech in Supply Chain Management
As noted in many articles above, technology is a must-have solution for modern-day supply chain disruptions. With this growing emphasis on technology, the market for supply chain control towers is expected to grow to $32.86 billion by 2030. For comparison, the supply chain control towers market was estimated to be $6.79 billion in 2022.
As the market for supply chain technology grows, there’s an emphasis on comprehensive, single-source-of-truth platforms over fragmented tech stacks that use many different and unconnected technologies. These platforms allow organizations to be more efficient, make faster decisions, and operate confidently.
A Tech Solution for Overcoming Today’s Disruptions
At Cargologik, we offer a supply chain orchestration platform that supports organizations trying to overcome global disruptions. Our platform helps with visibility, document management, and myriad other tasks, providing a single source of truth for both BCOs and LSPs.
The supply chain disruptions discussed above aren’t going to disappear. In fact, it’s more likely that we see other disruptions layered atop what we’re already dealing with. The best solution is to secure a comprehensive platform that offers a technological solution to disruptions. To learn more about Cargologik and how we can support your business, get started.