The blockage of the Suez Canal by the Evergreen Line containership Ever Given sent a dire warning to global supply chains. As they outgrow transportation infrastructure, modern-day mega-vessels threaten to cause further disruptions to the flow of cargo. In this conversation with SupplyChainBrain Editor-in-Chief Bob Bowman, Diego Pantoja-Navajas, Vice President of Oracle WMS, explains the urgency of upgrading infrastructure to accommodate the super ships and a continuing surge in global trade volumes.
SCB: Regarding the Suez Canal blockage by the Ever Given, how could a similar incident be prevented in the future?
Pantoja-Navajas: Most of us think we’re living in this Matrix type of world. But the truth is that we're living in a physical world, using infrastructure that was designed and built for sailboats and steamships in the 1850s. We’ve seen this evolution in the technology side, but the new economy is moving very fast, and we haven’t seen improvements in infrastructure.
SCB: So we can expect more such disruptions?
Pantoja-Navajas: The situation in the Suez Canal is going to replicate very easily in different regions of the world, because we're building bigger ships, and demanding that goods be manufactured in different regions around the world. As long as we continue in this trend and don't update our global infrastructure, we're going to see more issues like the one that we saw in the Suez.
SCB: Is it inevitable that this would eventually happen, given the size of today’s containerships?
Pantoja-Navajas: Yes. The size of the ships is an issue. But if they keep growing, and we don't improve infrastructure, your supply chain is going to get disrupted.
SCB: When you say improve infrastructure, what exactly do you mean? The Suez Canal is a natural bottleneck. Is there anything that can be done to improve access of these giant ships around the world?
Pantoja-Navajas: There has to be. That's why Panama created a third set of locks, to be able to handle bigger ships. That's why the Port of Savannah, Georgia is building a deepwater port. If we want more cargo to move faster, the infrastructure has to support that growth. I can’t be talking to you about cloud computing and SaaS applications if I don't have the right I.T. infrastructure. It's the same thing.
SCB: But even the Panama Canal with its latest expansion can’t accommodate ships the size of the Ever Given. So in addition to improving infrastructure, as you describe it, do you think we need to go backwards in terms of ship size, in order to avoid this type of event in the future?
Pantoja-Navajas: There's no clear answer. The lesson learned from the Suez Canal is that there are risks about how the maritime industry is working in today's world — the risk of moving those ships through Africa, and about taking other routes. How can we manage those risks and at the same time provide improved safety for the ships and goods that are being transported? It’s a very customer-centric world, where organizations are being challenged by growth and their ability to provide products faster than ever before. Certain things are going to break if they don't get fixed.
SCB: And if things don't change, what is the risk? What will be the impact on businesses and consumers?
Pantoja-Navajas: That we get used to disruptions like the one we saw in the Suez Canal. We need to start investing in technology, and also maybe redefine supply chains to bring some sourcing in-region, so that the time it takes to move goods can be reduced.
SCB: Do you see that actually happening?
Pantoja-Navajas: This is a bigger conversation. There has to be a decision by companies to invest in the right technology to support growth. At the same time, we need to decide if we’re going to continue in our strategy of developing goods offshore. We’ve seen the risk with COVID-19 and now the Suez Canal. Tomorrow we'll have another event that will continue disrupting supply chains.\
SCB: So maybe shortening the distance between sourcing and consumption is a partial solution — near-shoring or re-shoring to avoid the need for such long voyages in the first place.
Pantoja-Navajas: I completely agree with you.
Timely, incisive articles delivered directly to your inbox.