The supply chain and Mother Nature
More natural catastrophes take a higher toll. In the past it used to be mainly reinsurance companies that were concerned. Today, however, all of the players in the supply chain have to pay more attention to the effects of natural disasters. Low water levels are currently an issue.
It doesn’t always have to be the Panama Canal. However, restrictions on the passage of ships there (see page 18) are but one indication that delivery delays, shortages of goods, higher security stocks and the associated growing logistics costs are advancing rapidly.
According to figures released by the Bochum-based German software enterprise Setlog, traffic jams on the 80 km Central American canal are already having concrete consequences for the handling of goods in the USA. About 20% of volumes originally destined for the US east coast were rerouted to the west coast – mainly to the major ports of Long Beach and to Los Angeles.
From there they are then on-forwarded intermodally by rail and truck to the east or, if distribution flexibility allows, to other warehouses.
Some risks though
Actually, the industry is rather lucky. According to the French logistics platform operator Shippeo, the fact that it’s currently not peak season, and the fact that there’s enough capacity available to change transport routes and modes of transport, is a boon.
However, according to Ralf Düster, a member of Setlog’s board, the low water-levels in European inland navigation exposes it to substantial risks. “An analysis, published by the Kiel Institute for the World Economy, of the consequences of low water-levels in the river Rhine has shown that, in a month with 30 days of low water-levels, industrial production in Germany falls by around 1%. For some sectors, such as the chemical industry, supplies by inland waterway vessel are absolutely existential.”
It’s therefore a matter of properly developing the waterways on these transport routes for the smooth flow of goods, or of resorting to special solutions. One example is the ship Stolt Ludwigshafen, commissioned by BASF in May 2023. It can transport goods on the river Rhine even at very low water-levels.