Red Sea Attacks 'Highlight Need for Supply Visibility Tech'
Supply chain leaders and analysts say global shipping disruption caused by Red Sea attacks on container shipping reinforces the need for tech that enables end-to-end supply chain visibility.
The attacks continue to cause significant disruption in global trade, as major shipping companies are diverting routes, in some cases adding 3,500 nautical miles to container ship journeys.
For consumers this means products could take a week and-a-half longer to hit store shelves and, with shipping costs surging by up to 250%, they’ll likely be more expensive. Among the goods on these rerouted vessels are spring clothing, footwear, home goods, electronics, patio furniture and pool supplies.
“Businesses need to know exactly where their goods are and to be able to communicate with key stakeholders,” says Melanie Nuce-Hilton, SVP, Community Engagement, GS1 US, speaking to Supply Chain Digital.
GS1 is a not-for-profit whose job is to develop and maintain barcode standards internationally to facilitate identification, data capture and data sharing between trading partners globally.
Disruption 'makes visibility tech crucial'
Nuce-Hilton adds: “Mitigating price hikes and preventing pandemic-era stock-outs hinges on effective visibility and a harmonised global framework for sharing supply chain information.
She stresses that the Red Sea situation is the latest in a succession of disruptive global events that is a “call to action” for organisations to “shift away from outdated, closed-loop systems and paper-based record-keeping”.
Businesses need to embrace the standardised, structured digital solutions that provide event-based traceability allowing them to remain agile as disruptions unfold,” she says.
Others are more sanguine about the impact of the Red Sea situation. Georg Roesch is VP Direct Procurement, at JAGGAER, a provider of cloud-based business automation technology for Business Spend Management.
“Companies are generally better prepared to respond to disruptions such as the current shipping issues than they were a few years ago,” he says, adding: “We aren’t currently seeing the large scale of production issues or shutdowns that we saw with the COVID-19 pandemic or the Suez Canal blockage in 2021.”
Roesch, though, points out that companies are still facing tough choices and the risk of further disruption.
“They can either ship around Africa, which increases delivery times fuel costs, or they can look to more expensive modes of transportation such as air cargo.
“Both options have the potential to raise financial and operational pressure on organisations and their supply chains.”
Identifying alternative transport options 'key'
He adds that those companies that are able to quickly identify and secure alternative sources and transportation capacity “are better positioned to navigate this developing situation and future disruptions”.
He continues: “The Red Sea disruptions are compounding ongoing issues at the Panama Canal, where lower water levels due to drought conditions are impacting the number of vessels that can get through, causing another major choke point in global shipping.
“Businesses need to adapt quickly, with tools that enable ongoing resilience. Such events used to be ‘once in a blue moon’, but are now a regular part of running a business.”
Meanwhile, Supply chain evangelist Richie Daigle says the deployment of real-time shipment tracking technology is “more critical than ever”.
Daigle, Enterprise Account Executive at real-time supply chain visibility solutions provider, Tive, says: “Such tech is an indispensable tool for companies navigating uncertain waters, ensuring accurate shipment location and conditions data, which is the bedrock for operational efficiencies.”
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