TT Club warns supply chain operators regarding the impact of disruption due to the recent blockage in the Suez Canal and emphasizes resilience.
As Mike Yarwood, TT’s Managing Director, Loss Prevention, explains, beyond the delay to cargo on board those ships affected, there will inevitably be a knock-on impact for those involved in discharging the containers at destination ports when they finally arrive, as well as the final mile delivery carriers.
While the immediate impact may be a lack of cargo arriving when expected, presenting market supply challenges, it is when the cargo does start to turn-up that further potential risks emerge.
The arrival of large volumes of laden containers, along with the requirements for hinterland distribution, will create disruption at ports and terminals, challenging throughput and yard capacities, and creating accumulation of cargo.
What is more, the situation will cause an imbalance on container equipment especially on the East to West trade routes as laden containers are tied up and consequently empty availability to reposition to shipment areas worsens.
The risk of theft at ports and freight depots in this scenario is heightened and a greater focus on security is required, as Mr. Yarwood stresses.
Finally, TT Club concludes that the last decade has witnessed many in the supply chain drive towards streamlining and operational efficiencies. Such measures have included reducing the number of suppliers and introducing ‘just in time’ principles to lessen the burden of unnecessary inventory costs.
However:
Experiences over the last twelve months through the pandemic, the Brexit transition and more recently the Suez Canal blockage, bring into question this bias towards efficiency and cost reduction. If such are achieved at the expense of resilience, is this policy the correct one? The new normal might see many stakeholders increase their focus on contingencies and adopt more a ‘just in case’ philosophy than a ‘just in time’ one.
