Shipping Companies Prepare For Ongoing Disruptions

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Frank Kenney, director of Industry Solutions at Cleo, a supply chain connectivity and integration solution provider, spoke to Container News about the significant impact of geopolitical events in the Red Sea on global trade, says an article published on container news website.

Summary

  • Frank Kenney, Director of Industry Solutions at Cleo, discusses the significant impact of geopolitical events in the Red Sea on global trade.
  • He emphasizes the need for shipping companies to embrace agility and resilience, as the “new normal” involves anticipating and adapting to supply chain disruptions.
  • Disruptions in the Red Sea, coupled with global events like the pandemic and geopolitical instability, have triggered a reevaluation of supply chain strategies.
  • Companies are experiencing increased expenses, including higher fuel costs due to longer routes, elevated freight rates, and the repercussions of delayed goods.
  • Nearly 15% of global seaborne trade passes through the Red Sea, affecting industries such as global grain trade (8%), seaborne-traded oil (12%), and liquefied natural gas (8%).
  • Reflecting on the Ever Given incident in the Suez Canal, Kenney highlights the importance of agility and visibility in supply chain management.

Geopolitical Events Reshape The Logistics Landscape

Frank Kenney, Director of Industry Solutions at Cleo, a supply chain connectivity and integration solution provider, highlights the significant impact of geopolitical events in the Red Sea on global trade. He emphasizes the need for shipping companies to embrace agility and resilience, as the “new normal” involves anticipating and adapting to supply chain disruptions.

Economic And Logistical Impact Of Red Sea Crisis

Kenney acknowledges that disruptions in the Red Sea, coupled with global events like the pandemic and geopolitical instability, have triggered a reevaluation of supply chain strategies. Companies are experiencing increased expenses, including higher fuel costs due to longer routes, elevated freight rates, and the repercussions of delayed goods. While the resolution of the Red Sea situation remains uncertain, the concept of “normalized” shipping is evolving as the new normal.

Industries Facing Challenges

Nearly 15% of global seaborne trade passes through the Red Sea, affecting industries such as global grain trade (8%), seaborne-traded oil (12%), and liquefied natural gas (8%). The crisis has a ripple effect, impacting manufacturing and retail businesses that rely on just-in-time delivery through the Red Sea and other affected routes.

Lessons From Previous Incidents

Reflecting on the Ever Given incident in the Suez Canal, Kenney highlights the importance of agility and visibility. Supply chain professionals have learned the need for proactive preparation through traceable supply chains and forward-looking planning. Investing in modernized systems and strategies helps companies identify innovative solutions to maintain business continuity during disruptions.

Diversification Of Shipping Routes

In response to disruptions, Kenney suggests companies consider diversifying shipping routes and transportation methods. While water routes are vital, collaboration with rail and road systems can provide alternatives. The example of bypassing busy U.S. ports through the Panama Canal, Port Savannah, and Port Elizabeth illustrates the importance of strategic route planning.

Crucial Role Of Collaboration

Kenney emphasizes the crucial role of collaboration among different stakeholders in the supply chain sector. He advocates for comprehensive platforms that integrate disparate assets, improving transparency and efficiency. Such integration facilitates seamless flow of data and information between partners, promoting resilience and timely delivery while reducing late fees and penalties.

Leveraging Technology For Transparency

Kenney concludes by highlighting the importance of leveraging real-time technologies to enhance communication and coordination across the supply chain. Clear communication, alongside diverse transport methods, allows businesses to maintain visibility and agility, mitigating the impact of major disruptions in the future.

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Source: container news

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