Alpha Software Blog

Red Sea Crisis, Panama Drought Compound Supply Chain Woes

Global supply chain challenges continue to plague manufacturers, retailers and logistics companies. New developments in the Red Sea and the Panama Canal are making it harder are adding even more delays.

Red Sea supply chain crisis

According to the BBC, more than $1 trillion in cargo, or 12% of global trade travels through the Red Sea yearly. With Hourthis now attacking ships and threatening those routes, major shipping firms are now rerouting vessels traveling between Asia and Europe from the Suez Canal to around the Cape of Goog Hope, adding significant delays as captains adds thousands of miles to their journeys.

On the other side of the ocean, the drought in Panama, compounded by the El Nino Winds, has created a backlog of cargo ships sitting outside the Panama canal waiting to pass, or preparing to divert and journey around Cape Horn. Aside from adding significant days to delivery time, rerouting around the Horn forces captains to navigate through some of the most dangerous waters on the chain crisis

Simultaneously, the war in Ukraine has also affected shipments traveling on the Black Sea.

Shipping and logistics companies are scrambling. Rerouting enormous container, thousands of miles off their original course is a logistical nightmare. As the Panama Canal adjusts the rate of shipping spots day-to-day, companies are left guessing when they'll be able to pass. These uncertainties tie up shipping and delivery schedules, and the effect permeates through to material suppliers, manufacturers, wholesalers, retailers and more.  When supply routes are choked, many segments timelines and revenues are dramatically affected.

Add to this, recent data from CargoNet that shows cargo thefts soaring by 57% in 2023 vs. 2022, and the story gets more troubling.

image-png-Jan-23-2024-05-29-11-4343-PMIn my recent column, Anticipating Market Shifts With Supply Chain Predictive Analytics, I discussed the importance of predictive analytics for supply chain management. Using novel ways to anticipate how these challenges and factors will affect your unique supply chain situation is more critical than ever. From predictive modeling to sophisticated algorithms and statistical methods to cognitive analytics to AI, companies are leveraging the latest technology in an attempt to combat supply chain challenges. Yet all these tools require that the data they're based on is accurate and up-to-date. Often that's not the case.

Companies must also invest in taking paper based logging, warehouse records and delivery sign-offs digital. With virtually every warehouse employee, dock worker and deckhand holding a own mobile device, the opportunities for better and more timely data collection are tremendous. And the impact of better, more autonomous data collection is significant.

As I reported in my article: 

"Once you have established dependable data, the integration of A.I. and machine learning in supply chain management, especially for consumer packaged goods companies, offers significant performance improvements...McKinsey recently reported that autonomous supply chain planning, which combines big data and advanced analytics, has been shown to increase revenue by up to 4 percent, reduce inventory by up to 20 percent, and decrease supply chain costs by up to 10 percent, which proves its value-generating contributions."

 As companies struggle with the current supply chain crisis, they can leverage these tools for important proactive supply chain management. However, they must not forget the critical need for a system to be in place that collects timely, accurate data for these tools to leverage.
At Alpha Software we help transportation and logistics companies, manufacturers and warehouses collect and analyze critical data, including supply chain trends.
Alpha Solutions for Manufacturing If your organization is struggling in the current market, Contact Us.
We'll show you how quickly and easily we can help you digitize your process and begin using the data to combat supply chain challenges.


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About Author

Amy Groden-Morrison
Amy Groden-Morrison

Amy Groden-Morrison has served more than 15 years in marketing communications leadership roles at companies such as TIBCO Software, RSA Security and Ziff-Davis. Most recently she was responsible for developing marketing programs that helped achieve 30%+ annual growth rate for analytics products at a $1Bil, NASDAQ-listed business integration Software Company. Her past accomplishments include establishing the first co-branded technology program with CNN, launching an events company on the NYSE, rebranding a NASDAQ-listed company amid a crisis, and positioning and marketing a Boston-area startup for successful acquisition. Amy currently serves as a Healthbox Accelerator Program Mentor, Marketing Committee Lead for the MIT Enterprise Forum of Cambridge Launch Smart Clinics, and on the organizing team for Boston TechJam. She holds an MBA from Northeastern University.

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