The recent surge in Houthi rebel attacks in the Red Sea have disrupted one of the world's most important maritime trade routes and forced shipping and oil companies to suspend transit through the area. With this vital trade artery disrupted, retailers face the prospect of longer shipping routes, increased costs from transit through alternate means, and potential product shortages. In fact, recent data has shown that these disruptions are already more significant than pandemic-era ones; a January report by Sea-Intelligence analyzed and compared vessel delays, finding that the current drop in vessel capacity is the second-largest in recent years, second only to the disruptions caused when the "Ever Given" cargo ship was stuck in the Suez Canal in March 2021. However, amidst the turbulence, technology and pandemic-honed strategies can help retailers stay afloat and navigate these choppy waters.

If one good thing came out of the 2020 pandemic for retailers, it was that it served as a crash course in supply chain resilience. Many retailers have built diverse networks, spanning different regions and partners, which provide much-needed flexibility when disruptions arise. Similarly, optimizing inventory based on data-driven forecasts is no longer optional. Holding the right amount of stock, calculated algorithmically, can reduce the occurrence of empty shelves.

Technology now offers even more opportunities to improve logistics. Retailers and shippers should ensure they have the following tools:

Real-time visibility and tracking. Advanced logistics platforms provide granular, real-time data on shipment location and status. This granular visibility empowers retailers to proactively anticipate delays, optimize inventory allocation, and adjust sourcing strategies to minimize potential stockouts. 

AI-powered scenario planning. Disruptions are inevitable, but their impact can be mitigated through intelligent preparation. AI-powered tools can simulate various disruption scenarios, including rerouting options and their associated cost implications. These simulations allow retailers to identify the most efficient and cost-effective pathways to minimize delivery delays and maintain product availability before making significant changes like choosing air vs. maritime transit.

Capacity optimization. AI and predictive tools can also assist in bringing additional container capacity online efficiently and in the correct areas. This is a luxury not afforded to retailers during COVID, when there was no excess capacity available. A recent CNBC report indicated that, currently, about 10% of the world’s fleet is not in service. This could be intelligently deployed to correct imbalances in availability and make schedules more consistent.

Proactive mitigation through data analytics. Machine learning algorithms can sift through vast volumes of data, from historical shipping patterns to weather forecasts and geopolitical events. By identifying previously unseen patterns, and by predicting potential disruptions, these algorithms equip retailers with the foresight to implement proactive mitigation strategies. 

While technology provides critical tools that can help navigate disruption, success also hinges on open communication and strategic adaptation. Keeping customers informed about potential delays, and leveraging recommendation engines that are capable of offering alternative options like similar items, all builds trust, and fosters better relationships. Additionally, promoting flexible fulfillment options — such as the ability to buy items online and pick them up in store — potentially reduces reliance on long-distance shipping, mitigating the impact of future disruptions. 

Retailers should also do what they can to amplify their voice. A stable Red Sea benefits everyone, so working with officials and with retail lobbying groups that are advocating for de-escalation and peaceful resolutions is an approach that aligns not only with ethical principles, but also with long-term business interests. 

While the situation presents undeniable challenges, it's not an insurmountable obstacle. By embracing technology, implementing pandemic-learned strategies, and fostering collaboration, retailers can navigate these choppy waters and ensure their shelves remain stocked, their customers are satisfied, and their businesses remain resilient in the face of an ever-changing global landscape. 

Alyx Kaczuwka is director, AI development at XY Retail.