The global supply chain is more fragile than you think. That comes at a cost
It's likely that until last week, most Australians had no idea where the Strait of Hormuz was located, nor realised its crucial role in the transportation of the world's oil.
The Strait is the only sea passage for oil and gas shipments out of the Persian Gulf, moving an estimated 20 million barrels of oil daily, and threats to close it triggered significant global concern.
While the closure didn't come to fruition, it was yet another reminder of the vulnerabilities that exist within the global supply chain, and the severe disruption that can result from just one incident.
It's a situation we've seen play out in the past.
In 2021, the container ship Ever Given blocked the Suez Canal for six days, holding up billions of dollars' worth of goods and causing global shipping congestion, delays and container shortages that took months to fully resolve.
Other significant routes include the Strait of Malacca, Panama Canal and Strait of Singapore, where a major disruption would have significant global ramifications.
Australia is particularly vulnerable due to our heavy reliance on imported goods and the fact that we remain a relatively small player in terms of global trade.
Routes to Australia are often not as lucrative or as high a priority for the shipping lines as routes to and from Europe and the US, for example.
Experience tells us that when all aspects of the supply chain are operating smoothly, global shipping is generally a fast and efficient process.
However, efficiency and productivity within the industry has arguably been maximised to such a point that there is no longer any room for error or disruption.
Advances in technology mean schedules and estimated delivery times are now monitored to the minute, operating on a best-case scenario that requires all elements to be functioning correctly and as expected.
These efficiencies have been driven both by industry and the consumer, with global connectivity and the instant-gratification nature of our increasingly digital world raising expectations when it comes to delivery and shipment times.
It means that when disruption hits the supply chain - whether that be geopolitical tension, a significant weather event or another unforeseen incident - the knock-on effect is often far more widespread, with the economic and social impacts lingering for weeks or months after the initial issue is resolved.
Unfortunately, the next disruption is a matter of when and not if.
But, by understanding the interconnected nature of the global supply chain, and expecting the unexpected, industry stakeholders hope to mitigate potential impacts and avoid pandemic-style pictures of empty shelves in the future.
While recent tensions in the Middle East were a fresh reminder of how quickly geopolitical conflicts can escalate, they also cast a renewed spotlight on the fragility of the global supply chain and just how reliant the shipping industry is on a handful of key trade corridors.
It's likely that until last week, most Australians had no idea where the Strait of Hormuz was located, nor realised its crucial role in the transportation of the world's oil.
The Strait is the only sea passage for oil and gas shipments out of the Persian Gulf, moving an estimated 20 million barrels of oil daily, and threats to close it triggered significant global concern.
While the closure didn't come to fruition, it was yet another reminder of the vulnerabilities that exist within the global supply chain, and the severe disruption that can result from just one incident.
It's a situation we've seen play out in the past.
In 2021, the container ship Ever Given blocked the Suez Canal for six days, holding up billions of dollars' worth of goods and causing global shipping congestion, delays and container shortages that took months to fully resolve.
Other significant routes include the Strait of Malacca, Panama Canal and Strait of Singapore, where a major disruption would have significant global ramifications.
Australia is particularly vulnerable due to our heavy reliance on imported goods and the fact that we remain a relatively small player in terms of global trade.
Routes to Australia are often not as lucrative or as high a priority for the shipping lines as routes to and from Europe and the US, for example.
Experience tells us that when all aspects of the supply chain are operating smoothly, global shipping is generally a fast and efficient process.
However, efficiency and productivity within the industry has arguably been maximised to such a point that there is no longer any room for error or disruption.
Advances in technology mean schedules and estimated delivery times are now monitored to the minute, operating on a best-case scenario that requires all elements to be functioning correctly and as expected.
These efficiencies have been driven both by industry and the consumer, with global connectivity and the instant-gratification nature of our increasingly digital world raising expectations when it comes to delivery and shipment times.
It means that when disruption hits the supply chain - whether that be geopolitical tension, a significant weather event or another unforeseen incident - the knock-on effect is often far more widespread, with the economic and social impacts lingering for weeks or months after the initial issue is resolved.
Unfortunately, the next disruption is a matter of when and not if.
But, by understanding the interconnected nature of the global supply chain, and expecting the unexpected, industry stakeholders hope to mitigate potential impacts and avoid pandemic-style pictures of empty shelves in the future.
While recent tensions in the Middle East were a fresh reminder of how quickly geopolitical conflicts can escalate, they also cast a renewed spotlight on the fragility of the global supply chain and just how reliant the shipping industry is on a handful of key trade corridors.
It's likely that until last week, most Australians had no idea where the Strait of Hormuz was located, nor realised its crucial role in the transportation of the world's oil.
The Strait is the only sea passage for oil and gas shipments out of the Persian Gulf, moving an estimated 20 million barrels of oil daily, and threats to close it triggered significant global concern.
While the closure didn't come to fruition, it was yet another reminder of the vulnerabilities that exist within the global supply chain, and the severe disruption that can result from just one incident.
It's a situation we've seen play out in the past.
In 2021, the container ship Ever Given blocked the Suez Canal for six days, holding up billions of dollars' worth of goods and causing global shipping congestion, delays and container shortages that took months to fully resolve.
Other significant routes include the Strait of Malacca, Panama Canal and Strait of Singapore, where a major disruption would have significant global ramifications.
Australia is particularly vulnerable due to our heavy reliance on imported goods and the fact that we remain a relatively small player in terms of global trade.
Routes to Australia are often not as lucrative or as high a priority for the shipping lines as routes to and from Europe and the US, for example.
Experience tells us that when all aspects of the supply chain are operating smoothly, global shipping is generally a fast and efficient process.
However, efficiency and productivity within the industry has arguably been maximised to such a point that there is no longer any room for error or disruption.
Advances in technology mean schedules and estimated delivery times are now monitored to the minute, operating on a best-case scenario that requires all elements to be functioning correctly and as expected.
These efficiencies have been driven both by industry and the consumer, with global connectivity and the instant-gratification nature of our increasingly digital world raising expectations when it comes to delivery and shipment times.
It means that when disruption hits the supply chain - whether that be geopolitical tension, a significant weather event or another unforeseen incident - the knock-on effect is often far more widespread, with the economic and social impacts lingering for weeks or months after the initial issue is resolved.
Unfortunately, the next disruption is a matter of when and not if.
But, by understanding the interconnected nature of the global supply chain, and expecting the unexpected, industry stakeholders hope to mitigate potential impacts and avoid pandemic-style pictures of empty shelves in the future.
While recent tensions in the Middle East were a fresh reminder of how quickly geopolitical conflicts can escalate, they also cast a renewed spotlight on the fragility of the global supply chain and just how reliant the shipping industry is on a handful of key trade corridors.
It's likely that until last week, most Australians had no idea where the Strait of Hormuz was located, nor realised its crucial role in the transportation of the world's oil.
The Strait is the only sea passage for oil and gas shipments out of the Persian Gulf, moving an estimated 20 million barrels of oil daily, and threats to close it triggered significant global concern.
While the closure didn't come to fruition, it was yet another reminder of the vulnerabilities that exist within the global supply chain, and the severe disruption that can result from just one incident.
It's a situation we've seen play out in the past.
In 2021, the container ship Ever Given blocked the Suez Canal for six days, holding up billions of dollars' worth of goods and causing global shipping congestion, delays and container shortages that took months to fully resolve.
Other significant routes include the Strait of Malacca, Panama Canal and Strait of Singapore, where a major disruption would have significant global ramifications.
Australia is particularly vulnerable due to our heavy reliance on imported goods and the fact that we remain a relatively small player in terms of global trade.
Routes to Australia are often not as lucrative or as high a priority for the shipping lines as routes to and from Europe and the US, for example.
Experience tells us that when all aspects of the supply chain are operating smoothly, global shipping is generally a fast and efficient process.
However, efficiency and productivity within the industry has arguably been maximised to such a point that there is no longer any room for error or disruption.
Advances in technology mean schedules and estimated delivery times are now monitored to the minute, operating on a best-case scenario that requires all elements to be functioning correctly and as expected.
These efficiencies have been driven both by industry and the consumer, with global connectivity and the instant-gratification nature of our increasingly digital world raising expectations when it comes to delivery and shipment times.
It means that when disruption hits the supply chain - whether that be geopolitical tension, a significant weather event or another unforeseen incident - the knock-on effect is often far more widespread, with the economic and social impacts lingering for weeks or months after the initial issue is resolved.
Unfortunately, the next disruption is a matter of when and not if.
But, by understanding the interconnected nature of the global supply chain, and expecting the unexpected, industry stakeholders hope to mitigate potential impacts and avoid pandemic-style pictures of empty shelves in the future.
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