Even before a massive container ship rammed a bridge in Baltimore in the early hours of Tuesday, plunging the span into the Patapsco River and bringing cargo traffic to a halt at a major American port, there was plenty of reason to worry about the problems affecting global supplies load chain.
Between the swirling geopolitical winds, the variables of climate change, and the ongoing disruptions resulting from the pandemic, the risks posed by relying on ships to transport goods around the planet were already evident. The dangers of relying on factories across the world’s oceans to deliver everyday items like clothing and essential goods like medical equipment were at once stark and implacable.
Off Yemen, Houthi rebels have fired rockets at container ships in what they say is a sign of solidarity with Palestinians in the Gaza Strip. That has forced shipping companies to largely bypass the Suez Canal, the crucial waterway between Asia and Europe, and instead circumnavigate Africa – adding days and weeks to journeys and forcing ships to burn extra fuel.
In Central America, passage through the Panama Canal is restricted due to a lack of rainfall associated with climate change. This hindered an important Atlantic-Pacific link and delayed shipments from Asia to the East Coast of the United States.
Those episodes unfolded amid memories of another recent blow to trade: the closure of the Suez Canal three years ago, when the container ship Ever Given hit the waterway and became stuck. While the ship stalled and social media filled with memes of modern life shut down, traffic ground to a halt for six days and trade was estimated to be worth $10 billion a day.
Now the world has received another visual representation of the fragility of globalization with the abrupt and surprising destruction of a major bridge in an industrial city defined by its busy docks.
The Port of Baltimore is smaller than the nation’s largest container terminals – those in Southern California, Newark, New Jersey and Savannah, Georgia – but it is an important part of the vehicle supply chain and serves as a landing zone for cars and trucks coming out Factories arrive in Europe and Asia. It is also an important transshipment point for the export of American coal.
Many of these goods could experience delays in reaching their final destination, forcing shippers to make alternative plans and limit inventory. In the age of networking, problems in one place can quickly become more widespread.
“The tragic collapse of the Francis Scott Key Bridge will put pressure on other modes of transportation and port alternatives,” said Jason Eversole, a senior executive at FourKites, a supply chain consulting firm. Some of the cargo that would have been transported through Baltimore will likely end up in Charleston, South Carolina. Norfolk, Va.; or Savannah.
This will increase demand for truck and rail services, while making it more complex and costly to get goods where they need to go.
“Even if they remove the debris from the water, traffic in the area will be affected as truck drivers are reluctant to move loads in and out of the region without a price increase,” Mr Eversole said.
There is now unrest in the supply chain, a topic that is no longer just the preserve of taste buds and industry experts, but is also a topic of conversation for people who want to understand why they can’t complete their kitchen renovation.
There are new reminders of the alarming shortage of medical protective equipment during the first wave of Covid-19, which forced doctors in some of the richest nations to forego masks or gowns when caring for patients. Households recall being unable to order hand sanitizer and scrambling to find toilet paper, a previously unimaginable prospect.
Many of the worst impacts of the major supply chain disruption have significantly diminished or disappeared. The price of transporting a container of goods from a factory in China to a warehouse in the United States multiplied from about $2,500 before the pandemic to tenfold at the height of the chaos. These prices have returned to historical norms.
Container ships are no longer lining up at ports like Los Angeles and Long Beach, California, as they did when Americans flooded the system with orders for exercise bikes and barbecue meals during quarantine.
But many products remain in short supply, in part because the industry has long relied on just-in-time manufacturing: Instead of paying to stock extra goods in warehouses, companies stockpile over the decades reduced to save costs. They relied on container shipping and the internet to get what they needed. This leaves the world vulnerable to any sudden disruption in the movement of goods.
Fast-growing American cities continue to face a housing shortage that has caused home prices to rise as developers are still unable to source items such as electrical switches and water meters that can take more than a year to arrive.
“The supply chain is still delaying construction,” said Jan Ellingson, a real estate agent with Keller Williams in Casa Grande, Arizona.
The pandemic chaos engulfed the entire system at once, forcing truck drivers and longshoremen into lockdown just as record amounts of imported goods were landing on American shores. The recent event in Baltimore could prove more cost-effective than other recent episodes.
“The system is lame and it is much better able to absorb the kinds of shocks we are experiencing,” said Phil Levy, former chief economist at shipping logistics company Flexport.
He warned that it would be wrong to conclude from wayward container ships that globalization itself was wrong.
“Why don’t we make everything in one place so we don’t have to worry about transportation?” he asked. “Because it would be dramatically more expensive. We save a tremendous amount of money by allowing companies to source parts where they are cheapest.”
Nevertheless, companies are increasingly seeking to limit their exposure to the vulnerabilities of maritime transportation and changing geopolitics. Walmart has shifted production of manufactured goods from China to Mexico. That campaign began with President Donald J. Trump imposing tariffs on imports from China — a trade conflict that has since been pushed forward by the Biden administration.
Other American retailers such as Columbia Sportswear are looking to establish factories in Central America, while Western European companies are focusing on moving production closer to their customers and expanding factories in Eastern Europe and Turkey.
Given these tectonic shifts, the Baltimore disaster could prove to be a temporary or long-term challenge to the movement of goods. In supply chains, the consequences of a single disruption can be difficult to predict.
A factory near Philadelphia may have virtually all of the hundreds of ingredients needed to make paint. But one delayed ingredient — perhaps stuck on a container ship off California or made scarce by a weather-related factory shutdown in the Gulf of Mexico — can be enough to halt production.
The absence of a single key part – a computer chip or a component of its assembly – can force automakers from South Korea to the U.S. Midwest to freeze finished vehicles in parking lots and wait for the missing part.
Somewhere on Earth – maybe close by, maybe on the other side of the world – someone is waiting for a container stuck on a ship in the port of Baltimore.
The waiting time will now be a little longer.
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2024-03-27 20:48:05
www.nytimes.com
