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Suez Canal Blockage Highlights Supply Chain Vulnerabilities

Suez Canal Blockage Highlights Supply Chain Vulnerabilities

In the latest supply chain crisis, a 400-meter-long mega-container vessel has wedged itself diagonally across the banks of Suez Canal since Tuesday, 23 March and has caused a blockage along this narrow channel.

The Suez Canal is the fastest shipping route from Asia to Europe and about 13 percent of world trade passes through the canal, according to Allianz, an investment firm. More than 50 ships pass through the canal every day, carrying 1.2 billion tons of cargo, including goods from crude oil to cattle. Hundreds of vessels remain trapped in the canal and some have opted for an alternative, much longer route around the Cape of Good Hope—the southern tip of the African Continent.

The blockage is holding up an estimated $9.6 billion worth of cargo each day, according to Lloyd’s List and causing a strain on global supply chains. Singapore’s Transport Minister has commented that the blockage could temporarily disrupt supplies to the region and drawdown on existing inventories will be necessary. Europe’s manufacturing industry including the auto sector will be one of the hardest hits as they operate in “just-in-time” supply chains where components are sourced from Asia and not stockpiled.

The incident has also emphasised vulnerabilities of our supply chain and the need for visibility in the entire supply chain to ensure transparency and agility in the event of an unexpected disruption.

*Update: Efforts to dislodge the giant vessel and restore traffic were finally successful a week after the incident and a backlog of 422 ships have the be cleared.

 

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