Suez Canal and impact for international supply chain networks
What is Suez Canal ?
Lets look at briefing.
What happpened ?
The Suez Canal is one of the world’s most important waterways, connecting Asia and Europe.
On March 23, 2021, the Ever Given container ship ran aground, blocking transit in both directions.
Experts warn that the impacts from the shutdown of one of the world’s busiest waterways will reverberate through supply chains.
In 2020, more than 50 ships per day on average passed through the 120-mile long waterway, accounting for around 12% of global trade.*
Why is the Suez Canal so important?
It is the only place that directly connects the waters of Europe with the Arabian Sea, the Indian Ocean and the countries of the Asia-Pacific.
Without the Suez, shipments traveling between those parts of the world would have to traverse the entire continent of Africa, adding hefty costs and substantially extending their journey times.*2
The time saved by the passage is almost invaluable. Today, a ship traveling from a port in Italy to India, for instance, would cover around 4,400 nautical miles if it passed through the Suez Canal — a journey that, at a speed of 20 knots, would take about nine days.*2
Lloyd’s List estimates that more than $9 billion worth of goods passes through the 120-mile waterway each day, translating to around $400 million per hour.*3
If we look at in general ;
Around 70 percent of international trade today involves global value chains (GVCs). These are made up of domestic and international enterprises that trade and transfer materials, goods and services.
You will also read my article related with GVC which is link below ;
According to the Nada Sanders Professor of SCM, Northeastern University
The fundamental problem behind each of these disruptions is simply the inability of modern supply chains to adjust when something goes wrong, even briefly.
A big problem early in the pandemic, for example, was simply a lack of flexibility.
Supply chains for this and most every other product have been increasingly designed to be as lean as possible in terms of cost and efficiency, rather than resiliency.
As a result shocks that affect global production are growing more frequent and more severe.
Global flows and networks offer more “surface area” for shocks to penetrate and damage to spread.
Building redundancy in supplier and transportation networks; holding more inventory; reducing product complexity; creating the capacity to flex production across sites; and improving the financial and operational capacity to respond to shocks and recover quickly from them with resilient and agile.
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