SUEZ - AA SU CHE?

about 6 months ago

Since last year, raging into today also, is the virus, which upended lives and taught us all several unforgettable life lessons. And this year, we are just into the third month, and we have been served with another lesson – all it took is a strong gust of wind and some amount of human inability and every technological advance we thought we had made, got thrown into the sea. It almost seems like as though, since last year, the Almighty wants to give us one tight slap after the other but somehow, we don’t seem to get it!

The global shipping industry was almost invisible to majority of us, till a mammoth cargo ship got stuck. And suddenly we started reading about the shipping industry, the sea-routes, the length and breadth of the Suez Canal, alternate routes. What really shocked us all is the sheer size of the ship – most of us did not even know that technology had made so much progress that we now have over 400m long (1,312ft) ship, weighing 200,000 tonnes, with a maximum capacity of 20,000 containers. Ever Given was carrying 18,300 containers when it became wedged in the canal, blocking all shipping traffic. We all heaved a sigh of relief knowing that it was finally freed yesterday. There were headlines around the globe which screamed, “She is free!”

The ship getting stuck there meant USA was again worried about toilet paper not getting there on time and yes, IKEA furniture too, cars, laptops. There were tens of thousands of live stock and yes, the cargo was carrying crude too. Suddenly, the Suez Canal became all so important and we started looking at the impact on the global trade – supply chains getting clogged all over again.

What this also brings to shore is the big question of our dependence on world trade. While we talk about global trade and exports, it is such a crisis which shows us how dependent we are on the seaways. One break in the link and we realized how the shipping industry provides an extremely efficient link, to ensure just-in-time deliveries. The Ever Given getting stuck for a week doesn’t mean that trade comes to a stand still but the impact, psychologically was bigger.

People who have never even been on a ship or even a small boat turned experts. Questions were being asked - Does this mean that the canals have to be widened? Do such large ships now need some change in the design to ensure that this never gets repeated? And more importantly, are there alternative routes? Well, the only alternative to a transit through the Suez Canal is the much longer passage around the African continent. But the threat of piracy is huge, first off the Somali coastline and more recently in the Gulf of Guinea. There is simply no alternative to the Suez.

Well, depending on the nature of a crisis, there may not be too many alternatives on how to bounce back. In the aftermath of the Suez Canal crisis, the options may be very limited. But companies do need to have multiple sourcing options – a lesson learnt in the pandemic too. And companies can also explore the option of sourcing from a vendor with multiple operations across many geographies rather than a single location vendor. That is precisely what we are learning from the ongoing supply crisis of semiconductors. Looks like for the businesses, the pandemic and this Suez Canal crisis had the same lesson- decentralized operations and supply chains.

The important take away – we might have made huge technological advances but ultimately, nothing works when fate intervenes…what we can only do is be always prepared for the unexpected.

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