Uncertainty in the supply chain? Better Call Ports

Red Sea: a detour with several impacts

If we focus on the last major disruption, Notteboom and Garcia-Milà agree in their analysis of the consequencesof the diversion of maritime traffic through the Cape of Good Hope to the detriment of the Suez Canal due to the instability being experienced in the Red Sea. A scenario that began in 2023 and is becoming increasingly widespread among shipping companies to protect crew and cargo from Houthi attacks.

Lloyd's Intelligence data cited in the study show that some 1,500 merchant ships were transiting the Suez Canal monthly before the onset of the Red Sea crisis in mid-November.

• An increasingly unpredictable estimated time of arrival

This change of course adds days of navigation to container traffic and the need to make different calls, causing a greater loss of reliability in the ETA(estimated time of arrival), which can delay cargo delivery by up to 15 days. "The overall impact on the logistics chain is enormous," says Garcia-Milà.

According to the Notteboom report, circumnavigating Africa as an alternative route to the Suez Canal adds 4,575 nautical miles of sailing distance between Shanghai and Rotterdam and 12 days of additional sailing time.

In the case of the Mediterranean, Garcia-Milà explains that most shipping lines now access from Gibraltar, increasing the number of transshipments in western Mediterranean ports such as Tangier, Algeciras, Valencia or Barcelona and impacting very negatively on countries located at the other end such as Greece and Turkey. "It has also generated the creation of unorthodox routes such as the entrance to the Suez Canal from the eastern Mediterranean to serve the Middle East from the ports of Saudi Arabia," he exemplifies.

What are the consequences?

The Red Sea crisis has produced a number of data showing changing trends in freight transport and in the modes of freight transport. Italy, for example, has experienced a general increase in the use of rail and air.

The latter is particularly suitable for high-value, low-volume, low-weight goods, which is the case in Barcelona, given the management of goods such as automotive, pharmaceutical and fashion components, which can be transported by air if necessary.

Economics is another yardstick for measuring the consequences of supply chain disruptions. "They obviously generate an additional cost on producers and distributors that impact consumption. This has created a distortion in just-in-time and in the way companies work and receive goods," says Garcia-Milà.

Another paradigm shift whose implementation has been less than expected, however, is the reshoring or nearshoring of certain productions or distributions to bring them closer to consumer markets and thus reduce the disruptive effects that long-distance transport or shipping may have.

Why the experience of ports can be invaluable

At the end of March, the International Association of Ports and Harbors met in London to discuss, among other issues, how ports can use their experience to help the logistics chain adapt to these turbulent scenarios and increase its reliability.

Garcia-Milà, present at the sessions, stressed that the service vocation of ports and their neutrality in the chain link further strengthens their role as an agent that can contribute to a scenario that favors greater certainty and predictability.

This can be achieved in two ways, says the Port of Barcelona expert:

• first, it is necessary to identify the key elements that allow companies to manage, with maximum reliability, this disruptive logistics chain.
• and second, using tools such as new technologies.

"Here, Port Community Systems (PCS) are key, as they provide a high degree of predictability based on how these same events have developed in the past, providing a level of certainty that is vital for managing the supply chain of companies with business models and a very patterned distribution from its origin to its end," he says.

The IAPH has held meetings with other key players in these processes, such as the Digital Container Shipping Association, the Terminal Industry Committee and the International Port Community System Association, as well as publishing the document Risk and Resilience. Guidelines for Ports, in order to provide the necessary tools to help simplify predictability.

The geopolitical and environmental context is no longer the same as it was at the beginning of the century. Nor is the logistics chain, and industries, services and consumption will have to adapt to this new reality with the help of technologies that will be key to interpreting the present and predicting the immediate future with greater certainty.

As Garcia-Milà points out, risks also open the door to new opportunities; you just have to know how to identify them and provide solutions.