Columns and Commentary

Qwick Takes: The fallout of the second Suez Crisis

April 2, 2021

Posted by Irina Slav

This week, Talking Biz News Deputy Editor Erica Thompson reached out to Qwoted’s community of experts to inquire about what the fallout of the recent Suez Canal blockage could be and which industries would be most vulnerable to damage.

Check out some of the top commentary:

Douglas Kent, Executive Vice President of Strategy and Alliances at the Association for Supply Chain Management (ASCM):

“One of the biggest issues in supply chains that is amplified by a situation like this is the lack of visibility into the end-to-end supply chain. The Association for Supply Chain Management recently partnered with the Economist Intelligence Unit for a new report examining supply chain resiliency in over 300 publicly listed companies. We found over half of companies lack end-to-end visibility into their own supply chain.

The key lesson from this situation, you need to have visibility in order to be immediately aware and assess the impact on your organization. The more latent your recognition of the potential issue that might be embedded deep within your supply chain, the longer it is going to take to react. The longer it takes to react, the more costly it will be for your organization to mitigate the impact. Unfortunately, I think a lot of organizations are finding that out the hard way with the situation in the Suez Canal.”

Bek Burkhan, CEO and Co-Founder of HaulerHub:

Companies affected by this rare but debilitating blockage of the Suez Canal are having their crisis strategies tested in real time. Many large companies have exposed that they have little in the way of contingency plans. I suspect that insurance claims will be in the millions for delays. Maersk, the world’s largest cargo shipping company currently has 3 ships stuck in the Canal, 30 ships waiting in the Mediterranean and Red seas, and an additional 15 ships rerouted around the southern tip of Africa to meet their intended destination. This disruption will take more than 6 days to “unclog”, with an interference that will be felt around the world for weeks to come.

Further investments in AI and transparency throughout the entire supply chain is necessary as an industry standard. Although there are other modes of freight transportation, some future investment may be made to bringing the manufacturing of certain goods back to American shores.

Alex Toews, Risk Solutions Manager at Fusion Risk Management:

The Suez Canal situation will quickly unveil which organizations have a strong understanding of their supply chain risk and overall operational resilience – and which do not.

For those organizations with a strong culture of resilience, ‘unforeseen’ or ‘unavoidable’ events won’t disrupt their ability to continue operating and delivering on their brand promise. After all, not all incidents can be avoided completely but the way in which you react is entirely within your control. We can expect the organizations that understand their end-to-end operations and champion a sharp focus on a cross-organizational resilience to demonstrate intelligent and successful responses to this disruption.

Simon Sloane, Partner, Dispute Resolution, at Fieldfisher LLP:

The temporary hold-up of the Ever Given is potentially the world’s biggest ever container ship disaster. The closure of the canal is thought to have blocked $10 billion of oil and goods that sail through the passage on a typical day. Liability for costs incurred as a result of these delays looks likely to be pushed towards the Ever Given’s owners – the Japanese firm Shoei Kisen KK, and its insurers.

It’s hard to pin down exactly which industries will be worst affected by the blockage, the likelihood is that it has impacted a wide variety of industries, from energy and consumer goods to manufacturing and the automotive industry.

 

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