The Francis Scott Key Bridge Collapse

On March 26, 2024, the Francis Scott Key Bridge, a major transportation artery connecting Maryland and Virginia, collapsed. The collapse caused significant traffic disruptions and raised concerns about the fragility of our nation's infrastructure and its impact on supply chains.

This blog post will examine the supply chain disruptions caused by the collapse. We will also provide insights for supply chain managers. Finally, we will look at how to mitigate the impact of future infrastructure failures and other disruptions.

The Impact of the Bridge Collapse on Supply Chains

The Francis Scott Key Bridge collapse significantly impacted supply chains. The collapse affected the city, the state, the region, and beyond.

According to Maryland Port Administration data, the Port of Baltimore is the busiest U.S. port for handling imports and exports. In 2023, it handled 847,000 cars and light trucks.

The bridge's closure caused major delays for businesses transporting goods between Maryland and Virginia. At this time, the projected date for the Port of Baltimore's reopening is unknown. Regrettably, the bridge’s collapse disrupted supply chains in several other ways.

Delays and increased transit times.

The bridge closure caused delivery delays, resulting in longer alternate routes for trucks. The bridge closure has doubled travel time from Baltimore to Washington, D.C. This has led to delays in the delivery of goods to businesses and consumers.

In addition, much of the traffic is being rerouted to other East Coast Marine terminals.

Increased transportation costs.

The longer transit times also resulted in increased transportation costs for businesses. Trucking companies usually charge based on the distance traveled. That means longer routes come with higher costs. Consider the example of a truck that would cost $500 to travel from Baltimore to Washington, D.C. That same journey now costs $700 or more due to the closure.

Disruptions to just-in-time (JIT) inventory systems.

Many businesses depend on JIT inventory systems. JIT consists of minimal inventory and more frequent deliveries.

The bridge collapse disrupted JIT systems, leading to stock shortages. Here’s an example. A grocery store couldn't receive its daily fresh produce delivery from a Maryland supplier due to the bridge closure. This caused the grocery store to run out of fresh produce within a few days.

Loss of inventory and goods.

Besides delays and increased costs, the collapse also led to the loss of inventory and goods. The collapse damaged some trucks. Others faced delays so long that their perishable goods spoiled. 

For example, the closure caused several hours of delay for a truck carrying a load of fresh seafood. The seafood spoiled and had to be discarded by the time the truck arrived at its destination.

These are just a few of the specific ways the bridge collapse disrupted supply chains. The collapse highlights the importance of supply chain resilience and preparedness.

Lessons Learned for Supply Chain Managers

The Francis Scott Key Bridge collapse provides several important lessons. First, it highlights the importance of supply chain resilience and contingency planning. To mitigate the impact of disruptions, businesses must prepare and implement mitigation plans.

Second, the bridge’s collapse highlights the importance of diverse transportation options. Relying on a single bridge or supplier makes businesses more vulnerable to disruptions. Having multiple options allows businesses to reroute shipments and avoid delays quickly.

Third, the bridge collapse underscores the value of real-time visibility and communication. Real-time tracking of shipments and effective communication with suppliers is critical for businesses. The same applies to customers. This allows them to identify and respond to disruptions quickly.

Finally, the bridge collapse shows technology's role in mitigating supply chain disruptions. Technology streamlines processes, enhances efficiency, and offers real-time visibility. Technology investments can make supply chains more resilient and responsive to disruptions.

Supply chain managers can learn from the Francis Scott Key Bridge collapse. This will help businesses avoid costly losses and delays caused by disruptions.

Best Practices for Mitigating Supply Chain Disruptions

The bridge collapse offers lessons for supply chain managers to prevent future disruptions. These

steps include:

Develop and implement comprehensive contingency plans. Contingency plans should detail steps for business disruptions. These plans should include alternative transportation routes, backup suppliers, and communication protocols. A business may develop a contingency plan to mitigate the disruptions. For example, businesses can reroute shipments or change transportation modes.

Diversify transportation routes and suppliers. Businesses should avoid relying on a single bridge or a single supplier. By having multiple options, businesses can quickly reroute shipments and avoid delays. A business can diversify transportation routes through multiple bridges or highways. Or it can use a combination of trucking, rail, and air transportation. Supply chain managers have viable options available to them.

Investing in real-time visibility and communication systems. Businesses can track shipments and communicate effectively using real-time systems. This allows them to identify and respond to disruptions quickly. For instance, a business may use a real-time tracking system. That would enable it to monitor shipment locations and receive alerts for any delays.

Utilizing technology to automate processes and improve efficiency. Technology can automate processes, enhance efficiency, and provide real-time visibility. Businesses can enhance their supply chains by investing in technology. These investments increase their ability to handle disruptions. For example, a business might invest in a transportation management system (TMS). That would enable a business to optimize its routes and track shipments in real-time.

Besides these specific steps, businesses can also take a more general approach. Specifically, businesses can achieve supply chain resilience by focusing on the following principles:

Agility: Supply chains must be agile to adapt to demand and supply changes. This requires quickly rerouting shipments, changing suppliers, and adjusting production schedules.

Flexibility: Supply chains should manage various disruptions. That includes infrastructure failures, natural disasters, and economic downturns. This means having multiple suppliers, transportation routes, and production facilities.

Visibility: Supply chains require real-time visibility of inventory levels, shipment locations, and supplier performance. This allows businesses to identify and respond to disruptions quickly.

Best practices improve supply chain resilience and responsiveness. It helps avoid costly disruptions, delays, and losses.

Conclusion

The Key Bridge incident underscores the need for supply chain resilience. Businesses must be ready for disruptions and have mitigation plans in place. Supply chain managers can improve resilience and responsiveness by following best practices.

Governments also have a role in promoting supply chain resilience. Fortunately, governments have a variety of options. They can promote economic resilience by investing in infrastructure. They can diversify their supply chains. And they can incentivize businesses to adopt resilient practices.

By working together, businesses and governments can create more resilient supply chains. As disruptions occur, you'll be able to ensure access to necessary goods and services. And that reliability will translate into long-term loyalty.

Protect Your Supply Chain from Infrastructure Failures and Disruptions

The Francis Scott Key Bridge collapse is a stark reminder of the fragility of our infrastructure and its impact on supply chains. As a leading provider of supply chain solutions, American Global Logistics is committed to helping businesses mitigate the risks associated with infrastructure failures and other disruptions.

By partnering with American Global Logistics, you can:

Don't wait for a disruption to cripple your supply chain. Contact us today to learn how we can help you build a more resilient and responsive supply chain.

Together, we can ensure the uninterrupted flow of goods and services, even in the face of unexpected challenges.

10 Disruptive Issues in the Supply Chain

Volatility and uncertainty in the logistics industry have dominated the news in 2024. So, we’ve written numerous posts about these events to help you make sense of those disruptions. Specifically, we covered the threats, impacts, and mitigation strategies disrupting supply chains. 

Without further ado, here is a status update of the top 10 disruptive issues we’ve uncovered, and what they mean for shippers in 2024:
  1. Red Sea Risks
  2. Panama Canal
  3. Inflation outlook
  4. Key labor issues
  5. Cybersecurity
  6. Global Trade: Re-shoring, Near-shoring, and Off-shoring
  7. Supply Chain: Shipping capacity
  8. Supply Chain: Shipping rates
  9. Supply Chain: Port/Intermodal issues
  10. Supply Chain Resilience Council

1. Persistent Red Sea Risks Continue  to Disrupt Critical Trade Route

The ongoing conflict in Yemen has created several shipping risks in the Red Sea. In particular, there is a risk of Houthi rebels laying mines in the shipping lanes. That's a hard-to-prevent risk that could damage or sink ships.

There is also a risk of prolonged attacks on ships by Houthi rebels, who continue to launch unceasing attacks on ships. This has led to increased insurance premiums for ships sailing through the Red Sea, and some shipping companies have avoided the area altogether.

The impact of these risks on shippers has been significant. Shipping delays and increased costs have led to higher prices for goods. Worse yet, some goods have become unavailable altogether.

This has caused disruptive issues for businesses and consumers. Hence, this has led to calls for action to address the situation.

Almost since the start of the Red Se attacks, the U.N. has been working to negotiate a ceasefire in Yemen. But so far, these efforts have been unsuccessful. The U.S. and other countries have also imposed sanctions on Iran and have provided support to the Houthis.

These sanctions have made it more difficult for the Houthis to obtain weapons. But they have also had a negative impact on the Yemeni economy.

Currently, we see hopeful signs of ending this disruption. First, the U.S. and its allies have increased the intensity and scope of its counterattacks. They are doing so with increasingly devastating effects by targeting Houthi military capabilities, from ships to drones to air strikes and speed boats.

One sign of a return to stability comes from CMA CGM. As of late February 2024, CMA CGM is now shipping cargo through the Red Sea trade route. At the same time, Maersk has decided to wait tout the situation before returning to the Red Sea. The situation in the Red Sea will likely remain volatile for the foreseeable future. Shippers should continue to track the situation so they can mitigate the risks.

2. Enduring Drought Disrupts Panama Canal Navigation

The Panama Canal is a vital shipping route that connects the Atlantic and Pacific Oceans. In recent years, the canal has been experiencing drought, which has led to delays for ships.

The disruption and congestion is due to a number of factors. They include drought, increased demand for shipping, expansion of the canal, and labor disputes.

Drought and congestion at the Panama Canal have significantly impacted shippers. At present, shipping through the canal has declined by 36%. Delays have led to higher costs for goods. In fact, some goods have become unavailable altogether. This has caused chaos for businesses and consumers. Now, we have growing demands for steps to redress this serious disruption.

The Panama Canal Authority is working to address the congestion. The authority has increased the number of open locks and has also implemented several other measures to improve efficiency. However, it is unclear when the authority will resolve the congestion.

To date, traffic in the Panama Canal has declined a whopping 75%. In the near term, disruption at the Panama Canal will continue. The Canal Authority likely won’t see meaningful relief until the rainy season starts in May 2024. The situation should resolve itself partially in the mid-term.

Shippers should continue to track the situation at the Panama Canal. That should inform us of which steps to take to mitigate the risks as the disruptive issues continue to persist.

3. Inflation outlook

The rising inflation has had a significant impact on businesses and consumers. Businesses have faced higher costs for raw materials and labor. That has led to higher prices for goods and services. Consumers have seen their purchasing power eroded. And that has led to a decline in consumer spending.

The Federal Reserve is taking steps to address the rising inflation. The Fed has raised interest rates several times in recent months. Rates are likely to stay stable in the near future despite earlier expectations of a decrease. This will help to steady the economy and bring down inflation over the long term.

Shippers should keep tracking the inflation outlook to find ways to reduce risks.

4. Key labor issues Disrupting Global Supply Chains

There are a number of key labor issues that are affecting the logistics industry. One issue is the shortage of truck drivers. The shortage of truck drivers results from a number of factors, including

The shortage has led to higher prices for shipping and delays for goods. And it even has led to shippers switching from UPS to FEDEX. The Teamsters and UPS resolved their dispute in August 2023, the threat of losing accounts due to future strikes looms large.

Labor continues to have a significant impact on the logistics industry. The shortages and disputes are leading to higher costs and delays for goods. More importantly, future strikes or the mere threat of strikes may cause a loss of customers to the competition. Shippers should continue to track the labor issues and take steps to mitigate the risks.

5. Cybersecurity

Cybersecurity is a major concern for the logistics industry. In recent years, there have been a number of high-profile cyberattacks on logistics companies. These attacks have led to data breaches, disruptions to operations, and financial losses.

The cybersecurity risks are growing because of the increasing sophistication of cyberattacks. Cybercriminals are using new tools and techniques to target logistics companies. The logistics industry is also becoming more interconnected, making it more vulnerable.

Most recently, on February 21, 2024, cyber criminals attacked Cencora, a drug distributor in Pennsylvania. At this time, Cencora is assessing the financial and operational effects of the attack.

6. Global Trade: Re-shoring, Near-shoring, and Off-shoring

Re-shoring, near-shoring, and offshoring are all terms used to describe the movement of manufacturing or production from one country to another.

Re-shoring involves moving manufacturing or production back to a country from which it was previously outsourced.

Near-shoring is the process of moving manufacturing or production to a country that is geographically close to the country where it was previously located.

Off-shoring is the process of moving manufacturing or production to a country that is geographically distant from the country where it was previously located.

In recent years, there has been a trend towards re-shoring and near-shoring. This is due to many factors. They include rising Chinese labor costs, the pandemic, and the need for supply chain resilience. They include rising Chinese labor costs, the pandemic, and the need for supply chain resilience.

Re-shoring and near-shoring can offer a number of benefits, including:

However, re-shoring and near-shoring can also be challenging. Some challenges include:

Despite the challenges, re-shoring and near-shoring are becoming increasingly popular. As the global economy continues to develop, it is likely that we will see even more of this trend in the years to come.

7. Supply Chain: Shipping capacity creating disruptive issues

Shipping capacity is the amount of cargo that ships can transport. In recent years, shipping capacity has been under pressure. Some factors that affected shipping capacity include:

The shortage of shipping capacity has led to higher shipping rates and delays for goods. Shippers also have to pay higher prices for shipping. And shippers experience delays in receiving their goods.

Experts expect the shipping capacity shortage to continue in the near future. Shippers should continue to monitor the situation and take steps to mitigate the risks.

8. Supply Chain: Shipping rates and consumer spending

Shipping rates are the prices that shippers pay to have their goods transported by ships. In recent years, shipping rates have been rising due to the same factors affecting shipping capacity.

The rising shipping rates have had a significant impact on businesses and consumers. Businesses have faced higher costs for shipping, which has led to higher prices for goods and services. Consumers have seen their purchasing power eroded, which has led to a decline in consumer spending.

Experts expect the shipping rates to remain high in the near future. Causes are increasing fuel costs, labor shortages, and global supply chain disruptions. Shippers should continue to track the situation and take steps to mitigate the risks.

9. Supply Chain: Port/Intermodal issues

Port/intermodal disruptive issues are problems that occur at ports or intermodal terminals. These problems can include:

Port/intermodal issues can significantly impact the flow of goods. Delays at ports can lead to shortages of goods. Equipment shortages can lead to delays in the movement of goods. Finally, labor disputes can also lead to delays and disruptions.

Shippers should know the potential for port/intermodal issues to mitigate the risks. This may include working with their logistics providers to develop contingency plans in case of delays or disruptions.

10. Supply Chain Resilience Council

The SCRC aims to improve supply chain resilience through collaboration between businesses and government organizations. The council was formed in response to the COVID-19 pandemic, which highlighted the vulnerabilities of the global supply chain.

The council is currently working on several initiatives, including:

At present, the SCRC is proceeding slowly as its task is  massive. According to Dr. Vitasek, University of Tennessee: “When you consider Biden’s first Executive Order on improving U.S. supply chains was nearly two years ago, it hints at the fact that progress will likely be slow.”

The SCRC is a valuable resource for improving the resilience of global supply chains, do not expect speedy progress.

AGL is tackling disruptive issues head-on

Challenges to the logistics industry and global supply chains abound and persist. To deal with these risks and disruptions, it’s important to take stock of the situation. From there, shippers can adjust and adapt as needed.

At American Global Logistics (AGL), we do just that. We track changes, disruptions and assess their impacts to supply chains. That allows us to successfully manage our customers’ supply chains despite the challenges.

We make every effort to prevent, mitigate, or avoid disruptions to your supply chain. That’s AGL’s mission.

We provide reliable shipping services so you can focus on growing your business. You can trust us to deliver your valuable goods as promised.

Contact us if you want us to deal with the volatility and uncertainty of your supply chain.

VUCA Emerging Trends in Supply Chain Management

Imagine juggling blindfolded while riding a rollercoaster. That's what managing today's supply chains often feels like. The world of logistics has become a whirlwind. We refer to whirlwind as Volatility, Uncertainty, Complexity, and Ambiguity (VUCA). But within this storm, innovative trends are emerging, offering companies anchors of resilience and agility to navigate the choppy waters.

The VUCA Reality of Global Supply Chains

The year 2024 has already thrown its fair share of curveballs at supply chains. The ongoing wars in Ukraine and Israel/Gaza continue to disrupt trade, inflation drives consumer behavior shifts, and extreme weather events. 

We face volatile demand fluctuations, requiring rapid adaptation to shifts in volume and product needs. Geopolitical instability necessitates diversified sourcing and alternative routes. 

And more frequent, severe weather events demand agile planning and flexible transportation options. Supply chain risk analysis firm Everstream Analytics revealed that billion-dollar weather-related events occur every three weeks. That is because of an 83% increase in extreme weather events since 1999.

This volatility breeds uncertainty, with ever-changing trade policies and environmental regulations adding complexities. While promising, developing technologies like AI and automation introduce new questions about their impact. Further complicating matters, complex and multi-tiered supply chains often lack real-time visibility. That creates uncertainty about delivery times and inventory levels.

Complexity adds another layer of challenge. Integrating various technologies, systems, and trading partners requires seamless collaboration. Massive amounts of data must be analyzed and utilized effectively, further increasing the burden. And with interconnectedness comes vulnerability, as cybersecurity threats loom large on the horizon.

Ambiguity fuels the fire. Predicting long-term economic trends feels like gazing into a crystal ball. Evolving customer demands for speed, sustainability, and transparency further complicate logistics strategies.

Finally, navigating changing social and environmental trends requires agile adaptation of logistics practices.

Anchors in the Storm: Six Emerging Trends That Can Help Stabilize Today’s Turbulent Markets 

So, how do we navigate this VUCA storm? By harnessing the power of emerging trends that foster resilience and agility. 

Let's dive deeper into six key categories that offer the promise of stability in unstable times.

1. Resilience and Agility

Building a flexible and adaptable supply chain is no longer a luxury but a necessity. This means diversifying sourcing and employing dynamic planning tools. It also means implementing robust risk management strategies.

Real-time data analytics help anticipate disruptions and adjust routes based on weather patterns, geopolitical tensions, or sudden demand spikes. Companies also invest in scenario planning, simulating "what-ifs" to ensure continuity.

2. Enhanced Visibility and Traceability

Lost containers, delayed shipments, and missing inventory fuel the VUCA fire. Fortunately, technologies like the Internet of Things (IoT) and blockchain provide solutions.

By embedding tiny sensors in goods and integrating them with blockchain platforms, companies can track goods in real-time, offering unprecedented transparency and control throughout the supply chain. This helps build trust with customers. It reduces delivery times, and it allows for early identification of issues.

3. Advanced Analytics and AI

Data is the new gold, but only if it's harnessed effectively. Advanced analytics tools help refine operations using machine learning and artificial intelligence (AI). For example, AI can predict demand fluctuations. It can optimize transportation routes. And AI can identify potential disruptions before they occur. 

Imagine an AI system analyzing historical data and current trends to predict a surge in demand for winter boots in a specific region weeks ahead of time. This allows companies to pre-stock inventory and avoid stock-outs. That ensures customer satisfaction and maximizing profits.

4. Collaboration and Partnerships

No company is an island in today's complex supply chains. Building strong relationships with suppliers, carriers, and other stakeholders is crucial for information sharing and risk mitigation. Collaboration platforms enable real-time communication, joint problem-solving, and active issue resolution. 

Imagine a platform where carriers, customs officials, and port authorities share real-time updates on potential delays, allowing all parties to adapt their plans and minimize disruptions.

5. Investment in Automation and Robotics

Labor shortages and rising wages are pushing companies to embrace automation and robotics. From automated guided vehicles (AGVs) in warehouses to AI-powered sorting systems, technology is streamlining operations and reducing reliance on manual labor. 

While ethical considerations and workforce reskilling remain crucial aspects, automation offers a path to increased efficiency, improved safety, and cost reduction.

6. Focus on Sustainability

Consumers are increasingly demanding eco-friendly practices. Companies are responding by implementing sustainable logistics solutions. Examples include electric vehicles, green packaging materials, and energy-efficient warehouses.

Circular economy principles are gaining traction with many companies. They are seeking ways to cut waste and environmental impact with reuse and recycling.

The VUCA world of logistics can be daunting, but it's also brimming

Weathering the VUCA Storm… Together

The VUCA storm rages on, but you don't have to brave it alone. Partnering with American Global Logistics (AGL) is an emerging trend in itself. By combining our expertise, technology, and resources, we can help you navigate today's choppy waters. Together, we can build a more resilient and agile supply chain. 

You can focus on product innovation and managing your customers. Meanwhile, we'll navigate volatile demand and secure alternative routes amid geopolitical tensions. Our global network lets us leverage collective insights to ensure mutual success.

You'll gain the strength of our worldwide network to navigate uncertainty jointly. Don't weather the storm alone. Reach out to AGL today and discover the power of partnership.