A look back at 2015: The top 10 supply chain disruptions
Across the globe in 2015, industries in every sector incurred substantial losses from a broad range of disruptions.
With predictions that natural disasters, socio-political unrest, and many other risks are on the increase, it’s ever-more urgent that companies identify, monitor, and plan in advance for events capable of damaging productivity, destroying profit, and disrupting the supply chain.
Active in 220 countries and territories around the world, DHL has more ‘eyes on the ground’ than most organizations 24 hours a day, seven days a week. This global footprint enables DHL to continuously track, collate, and analyze the world’s most disruptive events, using this data to inform its innovative supply chain risk management platform, Resilience360. To achieve better outcomes and greater supply chain resiliency, DHL Resilience360 also partners with the world’s leading risk intelligence data providers and delivers relevant disruption data to customers, providing alerts in near-real time along with detailed, regularly updated reports.
Assessing over 258,000 records from the Resilience360 platform in 2015, DHL analysts have identified the top 10 disruptive events.
Port explosions at Beijing’s maritime gateway
Hundreds of military hazmat specialists and firefighters responded to two explosions in a dangerous goods warehouse containing 3,000 tons of highly hazardous chemicals. The blasts in August 2015 killed over a hundred people, left hundreds more injured, and devastated the port city of Tianjin, Northern China’s largest port and the main oceanic entry point into the massive capital city of Beijing.
The automotive sector was badly hit, and the explosions impacted most of the 285 ‘Fortune Global 500’ companies with offices in Tianjin. Supply chain visibility and strong contingency planning proved essential as companies scrambled to minimize losses and divert shipments.
Heavy rains submerged Chennai
Plant operations stopped and supplies were exhausted as flood waters closed over Chennai, South India’s largest commercial and industrial center, in November 2015. Resilience360 meteorological data delivered due warning in the preceding weeks, allowing some companies to initiate robust contingency plans. Without this early indication of catastrophic disruption, many organizations, particularly car makers, suffered substantial losses.
The armed forces and National Disaster Response Force enabled thousands to evacuate the flooded areas, but some 200 lives were lost, power was temporarily cut, and overall damages were estimated to exceed $1 billion.
Strikes choked India’s largest container port
Vast swathes of India’s largest container port choked to a halt following protracted labor unrest since January 2015 and widespread industrial action in August 2015. Go-slows and strikes by crane operators and truck drivers at Jawaharlal Nehru Port (also known as Nhava Sheva Port) halted almost all operations, creating vast cargo backlogs and congesting road routes both into and out of the key terminals. Many companies imposed emergency surcharges with shipping diverted to alternative terminals and ports.
Trading partners engaged in tit-for-tat retaliation
Following the downing of a Russian jet by Turkish forces in November 2015, these two trading partners expressed their mutual fury through unpredictable retaliatory action on cargo transport. This extraordinary and unexpected outcome caught most companies unawares, and all routes in both directions were impacted. At the height of the stand-off, 1,250 cargo trucks carrying Turkish goods were held up at the border while 800 containers awaited clearance at the Turkish port of Samsun and the Russian port of Novorossiysk, both on the Black Sea.
Resilience360 received direct intelligence from logistics experts on the ground at the key Russian and Turkish ports and borders. By successfully reporting cargo stoppages the instant they occurred, this platform enabled DHL’s customers to ‘switch to Plan B’, minimizing losses.
Mombasa port strike impacted multiple industries across East Africa
When Kenya’s dock workers took industrial action at East Africa’s biggest harbor, Mombasa Port, in July 2015, not just Kenya but also neighboring countries were impacted: Uganda, Rwanda, Burundi, South Sudan, eastern Democratic Republic of Congo, and Somalia. The strike involving some 5,000 workers disrupted multiple industries – with fuel imports and agricultural exports hardest hit – and utterly paralyzed cargo clearance. To minimize losses and take remedial action, companies required in-depth information relevant to their specific geographies and operations.
Brazil’s highways blocked by industrial action
Latin America’s largest economy suffered huge losses between February and April 2015 with a continuous round of strikes by Brazilian truck drivers. Apparently utilizing social media to achieve coordinated action, drivers either refused to work or blockaded roads across the entire country, disrupting transportation in every sector. The pork and poultry industry was particularly devastated, with losses estimated at $184 million in February alone.
Chilean customs stoppages fueled geopolitical tensions
Industrial action by Chile’s customs officials in May 2015 fueled tensions with land-locked Bolivia by allegedly impeding the free bilateral transit that is guaranteed by historical treaty. These customs stoppages also disrupted the country’s valuable fruit and salmon exports, causing immeasurable damage to hard-earned customer confidence around the globe. In addition, land transportation of goods between Chile and both Argentina and Peru was also severely affected.
Customs congestion, long lines of stationary trucks, and abandoned containers bore witness to significant losses, estimated in the region of $100m to the private sector. Copper production escaped relatively unscathed.
Container ships stuck on both sides of Panama Canal
Ocean carriers were forced to cancel services and make costly adjustments in the wake of congestion at the Panama Canal. Delays of up to 10 days were experienced in late October and early November by container ships on both the Atlantic and Pacific sides – a significantly longer canal transit time than the average 24-30 hours.
Authorities blamed adverse weather conditions – particularly an El Niño-induced drought which reduced water levels in the lakes that feed the canal’s locks – and an influx of larger-than-average vessels.
Mexico impacted by the new El Niño
As Mexico braced for the strongest-ever hurricane to make landfall on its Pacific coast in October 2015, forecasters linked this potentially catastrophic event to a new cycle of El Niño natural disasters.
Thousands of people were evacuated, and airports and transportation hubs were closed in advance of Hurricane Patricia. On touchdown, the category 5 hurricane weakened but much of the country remained in a state of alert, experiencing high winds and heavy rainfall with some risk of flooding and landslides. Companies suffered some operational and logistics disruption, but Patricia was an important reminder for vigilance during the current strong El Niño season.
USA transport gripped by extreme winter weather
From Massachusetts to California, every form of transport in the USA was impacted by extreme winter weather in February 2015. In the northeast of the country, severe winds brought plummeting temperatures, freezing rain, heavy snowfalls and treacherous ice. Power was lost, flights were cancelled, and roads, trains, buses, ferries, and subways ground to a halt.
In central states, destructive tornadoes and hail, as well as frequent lightning strikes disrupted thousands, while in Los Angeles heavy rains were responsible for flash flooding. Even in the far south, Florida’s Tampa Bay Port was closed for 48 hours due to dense coastal fog.
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With increasing globalization and outsourcing, and with leaner yet more complex supply chains, the level of risk is steadily rising. The near-real time risk monitoring capabilities of Resilience360 allow companies to act fast to minimize impact. By booking alternative transportation, sourcing materials from alternative suppliers, and coordinating cross-network responses to disruptive events, companies can stay ahead and turn a disruption into a competitive advantage.
To find out more about DHL Resilience360, please contact the team.
Published: January 2016