February 2, 2024
The global supply chain industry is currently facing various challenges that are affecting shippers around the world. One of these challenges includes ongoing Houthi attacks in the Red Sea, targeting commercial vessels and oil and gas tankers, and it’s not a small percentage of carriers choosing alternate routes. As shared by Forbes, “The fragility of the world’s supply chains has been underscored again by escalating tensions in the Red Sea and decisions by major shipping companies to bypass the Suez Canal in favor of a longer and safer route around Africa.” These attacks have far-reaching impacts on multiple aspects of the supply chain, which we covered in the recent “Coffee With Crane” podcast, you can view the full video below.
The delays faced by European retailers in receiving freight originally intended to traverse the Red Sea have caused some core problems. Those planning to release their spring lines are facing significant inventory challenges. With products still stuck in transit,, businesses are left with limited availability and options, which will trickle down through many major retailers. Spectrum News said, “The British retail chain Marks & Spencer warned that the turmoil would delay new spring clothing and home goods collections due in February and March.” This delay in the supply chain ripple effect can cause disruptions globally, affecting the flow of goods and exacerbating inventory management issues.
Shipping delays result in increased costs for businesses and consumers alike. The longer transit times and uncertainty surrounding the delivery of goods can lead to higher storage costs, increased transportation expenses, and potential lost sales opportunities. These factors can have long-term economic repercussions, impacting not only individual businesses but the overall economy.
There are also environmental consequences at play. Longer transit times and increased fuel consumption result in higher carbon emissions, contributing to climate change. Remember that sending ships around the Horn of Africa is not a short distance. Instead, it’s an additional 4,000 miles on each leg! Additionally, alternative freight options like air freight, though faster, come with a high cost and an even larger carbon footprint. Finding sustainable solutions that balance economic and environmental considerations as the disruptions continue is crucial.
The Lunar New Year traditionally brings an operational slowdown in China, further complicating the global supply chain. Factory closures and reduced production during this period can cause significant shipment delays, disrupting supply chain timelines. In many cases, Southeastern Asian companies operate with minimal teams, a so-called “skeleton crew,” throughout the celebration. While not directly affecting freight in the Red Sea, it still harkens back to adding more delay atop an already stressed supply chain. Shippers must account for these predictable challenges and plan to mitigate their impact on their operations.
Extended sailings and other disruptions have resulted in a shortage of containers and other essential equipment. Shippers face difficulties in finding the necessary transportation equipment, further exacerbating delays and impacting the overall efficiency of the supply chain. Finding reliable partners who can access essential equipment is crucial in overcoming these equipment shortages. However, the often-overlooked empty container supply chain also means that it’s not only the delay in getting the containers to their destinations and unloaded but also accounting for additional delays on the return trip to Asia. Now, imagine how that combines all the other factors, and we’re amid a perfect storm of disruption for much of Q1 2024.
In light of these challenges, it is essential to future-proof your supply chain. Shippers need comprehensive solutions to help businesses navigate the complexities of the global supply chain. While these may be the latest developments, there are certain to be many more in the future. We still have nearly two months of winter remaining, and no one knows exactly what will happen.
The best strategy is to have a plan and to be prepared with alternate options. With our expertise, global reach, and ability to adapt to changing demands, Crane Worldwide Logistics is well-positioned to address the unique supply chain challenges shippers face today. Contact Crane Worldwide Logistics today to request a quote or learn more about enhancing your supply chain strategy.
Listen in to the full episode of Coffee with Crane below, and don't forget you can download our latest episodes on your favorite podcast player.
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