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What Can We Learn From The Suez Canal Mess?

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Note: As of Monday morning at 8am, the ship was set free and was making its way to a lake halfway up the canal for an inspection.

Like most of you, I’ve been watching the Ever Given container ship drama in the Suez Canal all week. The canal is completely blocked. As of this writing, there are 327 ships lined up waiting for the Ever Given to be moved. The high tide that was expected to raise the boat on Saturday did not live up to hopes (note to self: hope is STILL not a strategy). While the rudder has been freed in the stern, with a large rock under the bow, there’s nowhere for the ship to go.

The president of Egypt has demanded that the shipper start off-loading the cargo so that it will rise higher in the water, but even that holds risk. There are fears that if it goes out of balance, the ship will capsize. Now that would be a mess! I don’t pretend to understand why that would happen, but that’s the story, and the shipper is sticking to it. I guess we’re about to find out.

Some other shippers, including Maersk have opted to start routing their containers around the bottom of Africa, which adds two weeks to the trip from Asia to Europe, but seems like it might be quicker than waiting for this mess to be resolved. It won’t be cheaper, but it’ll certainly be a safer bet.

So, what are the takeaways? To me it speaks to two things:

  • Really lousy coordination between shipbuilders and canal operators and designers. The place where the ship got stuck is a “single lane” portion of the newly expanded canal
  • The continued and constant quest for lower costs continues to bite us in our private parts

Ships have clearly been made bigger before the Canals they travel through have been completed, and as with so many aspects of our world, no contingency plans are in place. Consider that there are new super-container ships that won’t fit through the Panama Canal, which completed a massive expansion project in 2016, after a two year delay, designed for what were the largest ships at the time called “New Panamax” ships.  They are no longer the largest ships and we are still left with an inability to get all the ships extant through that canal.

This is particularly unfortunate. Along with the Suez problem, which is meant to carry 10-15% of all global trade, we have real back-ups on the west coast of the US. Ships hang around for a week or more waiting for a slot in the port of Los Angeles, while the ports in the Southeast United States, which were also upgraded in concert with the Panama Canal expansion remain pretty empty.

I know that dredging and upgrades were done in Savannah, Charleston and the Port of Miami among others. Miami even created a tunnel bypassing a lot of traffic to get trucks from the highway to the port. I keep meaning to take a ride through that tunnel, but I haven’t done it yet. I do know that I see no container ships at the port of Miami.  Granted, there’s a not-insignificant number of cruise ships sitting idle because, well, you know – COVID – but those tend to be different piers.

So what the heck? Well, the shippers are complaining that they’d have to reconfigure the loads to take the trip from LA through the Canal. I’m not sure why that has to happen, but I am sure that the shippers just aren’t interested. Too expensive.

Certainly, better near-real-time response is a good idea…five days have already been lost, and I can guarantee another 5-10 will be lost as this problem gets mitigated somehow.

I think, though, if asked to pick ONE thing that should be called out here it would be the lack of collaboration, which would also drive contingency planning.

PLANNING. Plan for every contingency with ALL your partners.

Once upon a time I was a very good CIO. I was good not because I was the smartest person in the world of IT, I was good because I always thought about every single contingency. And when something broke, I was quick to work with my partners on the business or vendor side to make it right or find a work-around. This passion for contingency planning can drive my friends and partner a little nuts, but it served me well in my career.

I confess to have laughed at most of the images I’ve seen of tiny front-end loaders trying to dig out a ship that’s longer than the Empire State Building is high. And, of course, the memes are fabulous.

Do I believe the wind blew the ship off course? No, not exactly. Do I believe a sandstorm created difficult conditions and the captain wasn’t paying careful attention while the wind blew? I do. But avoidable or not, plans should have been in place, far above the captain’s paygrade.

When it comes to global trade, we’re just not being thoughtful and careful enough. It costs money. But NOT being thoughtful and careful can cost a whole lot more.

Think about it. Please.

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Newsletter Articles March 30, 2021
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