Suez Canal Crisis: Key Takeaways For the Maritime Industry One of the takeaways in particular underlined the need for the industry to pre-empt similar incidents and prepare for dire consequences so as to put a check a on its successive impact
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A massive container ship that ran aground in the Suez Canal in Egypt transformed into a global story gripping the world's attention for days. Even as the mishap created havoc for world trade, it also underscored the fragility of the global economy.
A narrow, man-made waterway stretch, which is a key artery for shipping goods between Asia and Europe, carried approximately 12 per cent of global trade. While the closure of the Canal had huge impact on world trade, the disruptions caused and their knock-on effects are expected to be quite sizable. For global trade, already reeling under the pressures of soaring freight rates, equipment shortages and space crunch on ships owing to the COVID-19 pandemic, the Suez Canal ordeal proved to be a "just in time' nightmare.
To begin with, it was not any route but a vital channel through which on an average 19,000 vessels passed annually, that's around 50 vessels per day. Majority of these giant tankers and container ships carried everything: crude oil, refined products, finished good and electronics among others. Whereas the value of goods shipped through the canal is estimated to be $9.5 billion daily which precisely showcases the Suez Canal as one of the most critical canals in global maritime domain. Therefore the closure and the consecutive blockage meant the canal hosted more than 300 vessels waiting to cross the Suez.
Now the only alternative to a transit through the Suez Canal is the much longer passage around the African continent. However the mammoth accident had some interesting takeaways for the industry. The incident, its implications and its wide impact on the global supply chain has built a strong case for the industry to scrutinize the existing state of affairs – the infrastructure, and the interdependence on global economy.
However beyond the incident of a gigantic vessel causing one of the most crucial trade links to be choked the mishap also opened industry dialogues and highlighted the urgent need to uncomplicate the logistics framework whilst building flexibility. One of the takeaways in particular underlined the need for the industry to pre-empt similar incidents and prepare for dire consequences so as to put a check a on its successive impact.
Vessel movements at ports and canals need to be carefully choreographed, much like a conveyor belt. This means the slightest hiccup can put schedules out of order and create havoc in supply chains that may already be running in full throttle, just as in the current scenario owing to the pandemic, container shortage and other issues.
Now in case of the Suez Canal, owing to the significance of the route, stature of the incident and the scale of its impact, it captured global attention within a matter of few hours. The incident was widely covered by the international media. This alerted the industry in real-time and it was able to prepare and take corrective actions such as rerouting their vessels. But not always such incidents are covered by media, in which case a vessel can stay stuck for days or even weeks before the shipper gets to know of it. This in turn would mean the incapacity to put a check on the probable impact which may even have dire knock-on effects. It is here that technology helps with real-time status of the shipment & informative alerts can provide enough buffer time to take corrective measures.
The COVID-19 crisis emphasized more than ever the critical role of seaports in keeping supply chains intact and economies functioning across the world. However the pandemic also hideously highlighted the fragmented nature of the industry that currently exists across ports worldwide. While with the ushering of the fourth industrial revolution, many economies are now looking up to digitisation and full-fledged "smart ports', there are those who continue to grapple with the idea.
Digitisation offers multiple innovative tools and emerging technologies. For instance real-time tracking comes handy in case of congestions at ports or delays owing to other reasons. The shipper can be aware of the route, the vessel's ETA, and also the expected delay. Whereas a feature like 'Consignment Sharing' allows one to add consignees to any shipment, whereby the shipper can ensure that their international buyers have full visibility and transparency on the shipments and are aware of the delays so that they can plan their operations accordingly.
From the customer perspective, knowing the exact geographical co-ordinates of the vessels helps them stay abreast with their current shipments in real-time. In case of an expected congestion on any route, one can immediately assess the situation and make the right trade-offs to ensure timely delivery of cargo. For instance, if the vessel is stuck at congestion with an expected delay of 7 days one has the option to re-route the vessel through an alternative route which only takes 2 days longer than the ETA.
The digital revolution has emerged in the past decade as one of the main drivers of change in the port and maritime sector. Through digitization complex processes like manual tracking can be streamlined efficiently to offer real-time shipment tracking. This can empower exporters and traders with live information and status thereby helping them to plan, track and solve any crisis arising in mid ocean. Besides putting a check on the probable impact and its knock-on effects, it also saves time, money and efforts for shipping and logistics companies.