The supply chain is in chaos – and it gets worse. Air cargo warehouses at Shanghai Pudong Airport are stuck due to strict Covid testing protocols imposed on China’s largest city after a local outbreak. More than 120 container ships are moored in the city’s port, Shanghai-Ningbo. In Shenzhen, a major manufacturing center in the south of the country, truck costs have risen by 300 percent due to a backlog of orders and a shortage of drivers following the implementation of similar Covid restrictions. Major ports around the world, which used to work like clockwork, are now plagued by delays, with container ships queuing for days in some of the worst congestion on record. The list continues.
More than a million containers that have to travel by train to Europe from China – on a route passing through Russia – now have to make their journey by sea as the sanctions bite. The Russian invasion of Ukraine has also severed key supply lines for nickel, aluminum, wheat and sunflower oil, sending commodity prices skyrocketing. Countries in the Middle East and Africa that rely on products from Ukraine are likely to experience severe food shortages in the coming weeks and months. Some European car production lines have cut production due to a shortage of wiring that normally comes from factories in Ukraine. If the pandemic, which led to an increase in the purchase of goods, caused the global supply chain to collapse, Russia’s invasion of Ukraine and China’s ongoing zero-Covid policy threatens to break it completely.
The supply chain is too complex, interconnected and fragile to be completely immune to shocks, especially shocks as seismic as a global pandemic or major war. But a new reality is forcing companies to adopt new strategies to keep goods moving. In this reality, backlogs and outages are the new normal, making it more important than ever to anticipate disruptions as early as possible.
“We used to have black swans every now and then,” said Richard Wilding, a professor of supply chain strategy at Cranfield University in the UK, referring to rare and hard-to-predict events that have major consequences. “The problem right now is that a whole flock of black swans is coming towards us.” Wilding says managing a supply chain used to be 80 percent dealing with predictability and 20 percent dealing with surprises, numbers that have now been reversed. And he says a growing number of companies are now using tools that provide greater insight into the flow of goods and can sometimes predict potential bottlenecks. “You basically have to have continuous supervision,” he says. At a time when everything is interconnected, the global supply chain — a jumble of transportation routes connecting goods to manufacturers and buyers — has remained alarmingly analogous until recently. That used to be manageable, but the age of constant supply chain disruption means companies are looking for more data.
Everstream Analytics is a company that collects supply chain data using open source information, including shipping data, news, and social media, as well as data provided by customers, including logistics, shipping, and retail companies. Customers include DHL, Dupont and BMW. Julie Gerdeman, the company’s CEO, says it employs analysts who try to predict bottlenecks, but also feeds the data it collects into machine learning models trained to spot problems. For example, Everstream predicts that last week’s shutdown in Shenzhen will have ripple effects in terms of production backlogs, shipping delays and congestion as great as that caused by the Suez Canal blockage in March 2021.
Different types of data can help build a picture of a stalemate as it unfolds. For example, Windward specializes in maritime information resources, including shipping transmissions, satellite imagery and port and container data to analyze trends and risks in the supply chain. Chris Rogers, chief supply chain economist at Flexport, a company that helps companies move goods and provides live tracking data on their movements, says it’s not enough simply knowing where products are. “There’s a booming industry doing this kind of predictive analytics,” he says.
