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14

Suez Canal Obstruction and fragility of global supply chain

The whole world took a sigh of relief as the mammoth container ship “Ever Given” re-floated in waters after getting stuck for 6 days. Suez Canal, the world’s busiest shipping corridor facilitating 12% of the global trade and allowing 30% of the container ship traffic on daily basis came to a complete halt due to this unprecedented […]

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The whole world took a sigh of relief as the mammoth container ship “Ever Given” re-floated in waters after getting stuck for 6 days. Suez Canal, the world’s busiest shipping corridor facilitating 12% of the global trade and allowing 30% of the container ship traffic on daily basis came to a complete halt due to this unprecedented obstruction.
No parking zone: This isn’t really a place to park the ships?
Approximately 369 ships carrying vital fuel and cargos were queuing to pass and some even took another longer route at a larger cost. It had cost $10 billion of trade every day and everyone could be seen literally freaking out or chewing the nails in anxiety as to how long it would last.
Though the ship resumed its course after 6 long days of dredging and excavation work, the disruptive ripples can be felt worldwide for weeks to come. The analysts expect at least 10-12 weeks of disturbance and the after-effects can’t still be ascertained.
The already pandemic hit the global supply chain had to bear this brunt.
How about putting a fragile tag?
Such incidents make us realize how vulnerable is our system. The Suez Canal passageway is responsible for 7% of the world’s oil supply and this blockage led to oil prices going up and other commodities too in anticipation of what the future might unveil. Every such crisis brings along financial fallout handy.
High winds and poor visibility were all that took to bring the world’s longest canal to a deadlock. All the trading companies, freight firms, insurance providers came on a hook at this time. Japan stepped up in co-operation with Russia over the alternative trans-Siberian railway and Northern sea route; and such thought of needing a backup plan must have crossed everyone’s mind. This also made Egypt officially released a statement about its plan to expand and deepen the Suez Canal waterway.
This is kind of a wake-up call for everyone associated with International Trade that we are operating in an ecosystem that is highly vulnerable and volatile to anything happening across the world.
Globalisation has made the world come so close and inter-connected that any mishap in one corner brings the impact on the other end too.
We need to continuously innovate and redesign our strategy to survive and grow, else we will face grave consequences of believing that we might not need a plan B. Be it pandemic, such supply chain impasse or cyber-attack; are we ready to face the crisis head-on or succumb to it leading to ultimate fall.
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