Red Sea
January 25, 2024

Lessons to Learn as Red Sea-Related Disruptions Continue


There’s been no soft landing in the New Year for supply chain professionals hoping the Red Sea missile attacks would soon dissipate. Things are still chaotic in the Red Sea, which is creating chaos throughout the global supply chain. What lessons can we take from this challenge? Dive into this week’s headlines to learn more about what proactive organizations are taking away from the Red Sea crisis — and how your organization can move forward.

Supply Visibility Tech to the Rescue

Commercial ships continue to get hit by missiles as they traverse the Red Sea, and container lines are “scrambling” to rent more ships as they deal with the fallout.  If there’s one lesson to be gleaned from this disruption that has served as a bridge from 2023 to 2024, it’s that there’s a greater need for supply visibility tech now than ever before. Shippers, LSPs, carriers, and others with a high degree of visibility into where containers are looking at any given time and when they will arrive at their destinations will be the ones poised to overcome the Red Sea crisis — no matter how long it lasts.

Weather Issues Await

Just a few weeks ago, no one could have predicted that missile attacks in the Red Sea would create global supply chain issues. It’s enough to make one wonder: What other disruptions are lurking in 2024? According to a Supply Chain Dive report, weather events are the New Year's most pressing supply chain risk. Droughts have made shipping difficult in China, up and down the Mississippi River, and even through the Panama Canal in recent years. Flooding, hurricanes, wildfires, and more drought conditions could pose further risks in 2024. Again, when these weather events strike, it’s too late to establish a high level of visibility that can help an organization through the disruption. Visibility is something to implement during times of relative calm so that you can make fast and confident decisions when disruptions emerge.

Geopolitical Shifts in the Future

Geopolitical issues are a common source of supply chain disruption. We’ve seen that in the Red Sea and supply chain-related consequences related to the war between Ukraine and Russia. “Fraying” relations between China and the United States could be another source of supply chain disruption in the near future. Chinese manufacturing is the foundation of many businesses and a not insignificant portion of the U.S. economy. Mexico has recently dethroned China as the leading exporter to the United States. If that trend continues, there will be a period of upheaval as businesses and the economy reconfigure to match the new reality.

How to Derisk Your Supply Chain

Proactive organizations are creating plans to address their supply chain risk. A new piece by Supply Chain Quarterly outlines three key considerations for those organizations. According to the story, the first step to derisking your supply chain is understanding your risk maturity, risk appetite, and culture. Visibility plays a crucial role in analyzing your risk maturity, with the article stating that the “ability to become aware and respond faster than competitor to risk events is a critical success factor.” Not only does visibility give you a competitive edge, but it also helps enhance the customer experience.

How Regulations May Strangle Innovation

Dealing with modern supply chain disruptions requires innovation, but SAP poses the question: Is supply chain innovation possible in an age of tighter regulations? The supply chain is subject to emerging regulations from sources like the European Union, and these regulations will have to be accounted for as organizations develop plans to keep their products and goods flowing even in the face of significant disruptions. The SAP story, like others, highlights the need for transparency and visibility to adhere to new regulations while continuing to innovate in a way that streamlines supply chain operations.

You’re Only as Good as Your Technology

Technology is required to establish the transparency and visibility needed to innovate now and in the future. According to a Gartner survey of 127 supply chain leaders taken late last year, organizations, on average, dedicate 5.8% of their supply chain budgets to technology. As disruptions continue to be commonplace across the supply chain, expect the percentage of total budgets dedicated to technology to increase over time.

Orchestration and Visibility for Your Supply Chain

Don’t wait for the next supply chain disruption to think about establishing a platform that can help with orchestration and visibility. BCOs and LSPs thriving in this age of disruption long ago secured orchestration and visibility platforms to serve as a single source of truth (rather than building fragmented tech stacks). These platforms are your best tool to keep supply chain operations churning, even as the global supply chain throws curveballs (like the Red Sea crisis) your way. At Cargologik, our platform is designed to support orchestration and visibility for BCOs and LSPs, giving organizations clarity as the unexpected emerges. If you need orchestration and visibility support, get started now.

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