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What the Suez Canal crisis can teach us about planning ahead.

The stuck cargo ship that spawned a thousand memes is now free and traffic through the Suez Canal has resumed. Crisis over? Unfortunately the damage to the global supply chain has already been done.

The blockage has resulted in many companies suffering losses caused by the delay of receiving supply inputs or goods to keep their supply chain going. These delays resulted in lost sales and/or additional supply costs and freight charges. The domino effect means that supply chains will take weeks or even months to recover.

Further logistical delays can also be expected in ports around the world as cargo ships race to miss congestion in already congested ports.

Chain visibility company project44 has published cargo data and route information that highlights where the post-Suez competition for docking capacity will be the most intense. Ports including Jeddah, Rotterdam, and Singapore are likely to be overwhelmed.

In the U.S. market, East Coast cargo flows will bear the brunt of the fallout, although consequences will be felt nationwide.

The need to plan ahead.

As the multiple crisis’s from Covid-19 to the Suez Canal crisis has shown us the necessity for companies to plan ahead has never been more apparent.

Companies need to understand their supply chain and logistical needs first. Consultations with your logistical and supply chain supplier should be held regularly to understand how your logistics works and, more importantly-what can go wrong.

Scenario planning workshops can be helpful in thinking about the specific events that can impact a business’ operations. Then creating contingency plans for these scenarios.

Can you avoid this happening to your supply chain in the future? A good rule of thumb is to diversify your supply chain. Companies needs to have multiple sourcing options in place. Another element of this recommendation would be to do business with one preferred vendor that has multiple operations across many regions of the world. This will avoid the massive impact a single location event would have on their business. This is by far the key toward mitigating exposure to these types of events in the future.

A best practice for responding to and managing a crisis is to always be prepared for the unexpected.

If you need more information or would like to understand your logistics better get in contact with us today. You can mail us here or visit our locations page to see more info about the office in your region of interest.

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