Date: Monday, December 27, 2021
Source: The Maritime Executive
Failing to look beyond the immediate challenge of supply chain disruptions within the maritime transportation system could result in future disruptions of more severe impacts. The current supply chain disruptions brought increased attention to the involved systems as many are feeling the impacts. With 90 percent of trade traveling via maritime conveyance, the supply chain heavily relies upon the maritime transportation system. According to the U.S. Committee on the Maritime Transportation System, the system is the complex network of “waterways, ports, and intermodal landside connections that allow various modes of transportation to move people and goods to, from, and on the water.”
While it is easy to view the shipment delays associated with ships anchored outside ports as the result of the COVID-19 pandemic and believe this problem will resolve when life returns to normal, this perspective ignores underlying challenges within the maritime transportation system that could cause or exacerbate problems like the current crisis. Significant events during the past year expose issues with the security, resilience, and efficiency in the system, highlighting the potential for future crises while offering insight into solutions. The current crisis, with the heightened collective awareness about the vulnerability of the supply chain, provides an opportunity to address these issues. Reflecting on events over the past year should prompt investments in security, resiliency, and efficiency.
Security of the entire system is crucial and multiple events throughout the year exhibit the susceptibility of the system to disruption, whether physical or cyber. The blockage of the Suez Canal by a massive container ship in March caused global shipping delays at the cost of $9 billion a day and increased the price of crude oil. Similarly, a ransomware attack on the Massachusetts-based Steamship Authority disrupted online ticket purchasing for ferry service in June of 2021. These events demonstrate the possibility of disruptions from physical or cyber incidents, indicating the need to improve security within the system.
Events throughout the year also displayed the importance of resilience within the system. As an example, Hurricane Ida passed through the Gulf of Mexico before making landfall in Louisiana, causing damage to and the shutdown of key oil refineries, platforms and other maritime facilities within the supply chain. These closures and the inability of the system to accommodate changes resulted in the loss of over a million barrels of oil production a day for 10 days following the storm.
Similarly, the closure of the Mississippi River due to a bridge crack delayed 60 vessels and over 1000 barges transporting agricultural goods and fuel. One estimate for a closure lasting two weeks placed the economic impacts as high as a billion dollars and others noted that longer closures could impact commodity prices and markets. These incidents portray the impacts that a lack of resiliency in the system can have on the economy and the supply chain.
Lastly, system inefficiencies continue contributing to the problems within the maritime transportation system and supply chain. Shipment delays and backlogs at U.S. ports existed at the beginning of the year, but have grown as the system could not catch up. Reliance on standard practices in scheduling, off-loading cargo, inspections, and other processes continue moving ships and cargo at the standard speeds without adjustments that allow for significant impacts on the backlog. The inefficiencies in the system compounds problems by not allowing the system to quickly recover.
While events throughout the year display the underlying challenges and threats to the system, they also present opportunities for solutions. The cyber-attack on the port of Houston demonstrates the vital nature of investing in cyber security to develop, practice, and execute a cyber response plan to mitigate cyber threats. In the same manner, improving and implementing standard container security devices can enhance tracking and verification of cargo, thereby reducing the threat of illegal smuggling as well as the impacts of loss.
Just as the backlog of ships at ports demonstrated the need for improvements in efficiency, it also alludes to the benefit that building extra capacity within the system could promote resiliency. Expanding ports and facilities to accommodate more ships or different cargo is one example of building resiliency that could allow the system to better recover from shocks such as those caused by the pandemic. Other ways to promote resiliency might include adding system redundancy by creating backups of digital systems and files or alternative paths to complete processes. Investments in efforts like these help mitigate the impacts of incidents in the system and facilitate the rapid resumption of operations.
Improving system efficiency also bolsters resiliency and enables the system to recover quicker. Automation and artificial intelligence offer opportunities to improve efficiencies through rapid adjustment of schedules and movements of vessels and cargo, improved coordination of logistics, and waste minimization within the system. Advance automation of off-loading efforts combined with improved visibility of containers and cargo through security devices could expedite the completion of inspection, cargo screening, and transition to awaiting storage or transportation. Efforts such as these that improve completion of various processes throughout the system will provide more flexibility and enable the system to overcome backlogs.
The current supply chain situation provides visibility and awareness about the importance of the maritime transportation system in our national security and economy that should prompt action. Events throughout the year reinforce this significance while demonstrating vulnerabilities and potential repercussions if risks are not properly addressed. Under slightly different circumstances, these types of incidents could cause comparable or more severe impacts for the supply chain, the economy, and national security.
The heightened sensitivity about the supply chain and the role of the maritime transportation system within it makes this an opportune time to advocate for investment to promote security, efficiency, and resilience within the system. Incidents throughout 2021 should serve as a warning about potential future supply chain disruptions if these issues are ignored.