Why Engineering Matters: The Total Cost of the Suez Blockage
The colossal cargo ship blocking the Suez Canal was recently set free after a brutal six-day-and-night salvage effort dislodged the quarter-mile-long "Ever Given," with a little help from the moon's tidal forces.
However, the event substantially exacerbated an already overstrained global shipping industry. Even as the ship was re-floated and other vessels resumed transit through one of the busiest canals in the world — there were 400 still waiting to make the trip through, with delays of two weeks and additional congestion expected.
The total cost from delayed, damaged, or lost goods is estimated at roughly $10 billion — equivalent to nearly half of NASA's 2020 budget. But breaking down and analyzing the concerted efforts of re-floating a 220,000-ton ship also lays bare the necessary groundwork to engineering the future of digital supply chains.
Breaking down the cost of the Suez Canal blockage
Re-floating of the Ever Given was one of the most intense large-scale operations in modern history — bringing the stability of the global trading system unconscionably close to total chaos. An entire army of engineers, operators, tugboat captains, and other salvage operators raced to unlodge the vessel that brought supply chains closer to a major economic catastrophe every day.
Ships full of goods from around the world — including oil, laptops, vehicles, and livestock — typically glide through the Suez Canal without a hitch, connecting trade from the Middle East and Asia to Europe and the U.S. East Coast. Some experts predicted it could be weeks until the Ever Given was refloated and cleared, electing to take the long way around Africa's southern tip. But this can add weeks to the trip, and cost more than $26,000 per day in fuel expenditure.
Many ships may have saved money by waiting for the eleven tugboats that helped in efforts to free the vessel, with another two joining on Sunday. On the ground, numerous dredgers and one specialized suction dredger capable of removing 7,630 cubic feet (2,000 cubic meters) of material every hour dug their way around the bow of the ship, according to a statement from the ship's overseeing company, Bernhard Schulte Shipmanagement, in a report from The New York Times.
While impressive, the Suez blockage event was also very costly, which could spark a new conversation around the need for ocean-based shipping to find novel ways of managing the rapidly globalizing marketplace, and leveraging real-time updates to plan ahead for the emergent complications that follow. In the past, companies approached IT and logistical issues on a case-by-case basis, "but now we have the tools to build systems that respond to things — events — as they happen," said Distinguished Engineer at Solace Tom Fairbairn to IE via email.
Event-driven data management can minimize material and financial loss in a crisis
"Some of those containers on the Ever Given no doubt contained parts of raw materials bound for further manufacturing," Fairbairn said. Empty containers delayed for delivery to manufacturing plants will affect scheduled production runs. "But now, the raw material is going to be delayed," Fairbairn explained. "Unless action is taken, the production line will stand empty awaiting materials, with an empty container waiting at the end."
With event-driven data technologies, supply chain leaders could "react when they know their container is on the move — which means their planning is more up-to-date and they have real-time responsiveness as the disaster unfolds," added Fairbairn. This could offer both private and public authorities better intel, enabling them to make more appropriate and objective decisions, like re-routing ships or re-assigning an empty container to a different manufacturing process — minimizing material and financial loss during a crisis, at scale.
And we're already seeing business as usual benefiting from new technologies. "Shipping is inherently unpredictable: storms slow ships down [...] containers can break loose during heavy weather and delay unloading, which can cause congestion at ports," explained Fairbairn. Artificial intelligence can help control the flow of ships to ports and bunkers by slowing the ship down at correct moments, "so it arrives outside the congested times. This can actually reduce the ship's overall journey time," optimizing delivery schedules.
The potential for IoT in global supply chains is vast
Perishable items also present issues for shipping companies. Many raw and intermediate components for pharmaceutical drugs have a limited viable lifespan, and require a controlled environment. "[W]e've all seen the challenges of distributing the Pfizer-BioNTech vaccine at extremely low temperatures. Today, the temperature records are generally checked on arrival," explained Fairbairn. If we connect the temperature sensors in containers to IT systems, managers or officer-level executives can react to problems in real-time, instead of waiting until the goods are delivered. "[T]hat means cheaper drugs and vaccines produced faster."
"Fully digital, integrated supply chains enable shippers and shipping customers to simulate different scenarios and decisions," said Fairbairn. "The real goal is planning the ship's course so that it avoids congestion at ports and shipping chokepoints like the Suez."
On the corporate side, disruptions in supply chains will present more challenges in the coming decade. Whether "from ships running aground, trade wars breaking out, pandemics changing consumer lifestyles, or just the vagaries of consumer taste," disruptions can be reduced but never eliminated, said Fairbairn. Digital connectivity advances in global shipping systems should continually collect and share data — from mining or farming raw materials to logistics, manufacturing, and retailing. It's hard to say when another Suez Canal-like event will happen, but even in times free of crisis, the potential for further leveraging the internet of things and AI in supply chains is vast.