The Impact of Global Events on Shipping and Logistics

In the era of globalisation, today’s world is no less than an intrinsically interconnected hub. In this context, any event affecting a particular region impacts the global economy, be it an epidemic, military conflict, or disaster.

So far, the COVID-19 pandemic has been an ultimate example of an event which started in China and paralysed the whole world in a few months. While the world continues to recover from the global pandemic, we can still see the traces of destruction it has caused across the continents, particularly the economy.

Amongst some of the worst-hit sectors by the COVID-19 pandemic, logistics and shipping come second. The global supply chains, being the lifeblood of the global economy, nearly became fragmented, aggravating the shortage of goods and commodities worldwide.

Although the global shipping and logistics industry has come a long way, they is always prone to falling prey to multiple global events now and then. In this blog, we will delve into the events and happenings which are obstructing the supply chains and ways through which logistics and shipping can be immunised against such global adversities.

The Global Adversities Which are Roadblocks to Logistics and Shipping Industry

Military Conflict

Geopolitical tensions have been creating turmoil in international relations for ages. Be it the expansionist policy of China or the hegemony of the United States over third-world countries, the foul ambitions of the big economies have always led to military conflict and trade wars. Present-day conflicts like Russia’s invasion of Ukraine disrupted the shipping activities in the Black and Azov seas, where port infrastructure got severely hit by projectiles, causing extensive damage.

Not just that, it also pushed major businesses in shipping to temporarily halt their operations via Egypt’s Suez Canal, a significant trade route which connects the Mediterranean Sea to the Red Sea and facilitates cargo and energy exchange between Asia and Europe. As the UNTCAD estimated, in the past few months, trade volume via the Suez Canal went down by 42% when compared to 2023, in which 12–15% of global trade was handled via the Suez Canal.

In solidarity with the Palestinian militant group Hamas in its ongoing war with Israel in the Gaza Strip, Houthi militants have been attacking the shipping vessels in the Red Sea with ballistic missiles since November 2023. So far, 43 ships have been attacked in the region, impacting a major portion of global trade, 12% of which passes through the Red Sea.

Natural Disasters

Climate change is the real culprit behind the series of disasters which jolted the world economies in 2023. The catastrophic earthquake (measuring 7.8 on the Richter scale) in Turkey and Syria, excessive flooding along with Typhoon Doksuri in northwestern China and Libya, and unusual rainfall and landslides in the Indian states of Himachal Pradesh and Uttarakhand resulted in disruptions of supply chains. In addition to that, frequent cyclones in major parts of the world severely disrupted the logistics infrastructure.

Climate Change

While climate change continues to remain one of the most significant global challenges in the 21st century, it is almost a nightmare for the shipping and logistics industry. Consistent surges in sea levels and increasing storms can potentially threaten coastal transportation infrastructure, leading to a spike in coastal erosion and flooding.

The performance and efficiency of modes and vehicles can be impacted by variations in temperature and precipitation patterns, which can also have an impact on transportation logistics. Increased temperatures can impact vehicle emissions and fuel economy, lower the lifespan and durability of transportation infrastructure, and raise the risk of heat stress for drivers and passengers.

Cyberattacks

In the age of hyper-digitalisation and AI, disrupting global supply chains through ransomware attacks and illegal hacking is no longer a big deal. Supply chains are highly prone to data breaches and cyber threats and booming technological advancements are making it certain.

Mitigating The Risk: What’s The Way Ahead For Logistics and Shipping?

●Automation

New-age technology such as AI, IoT, and data analytics enables real-time monitoring and agile decision-making. Automated systems can detect disruptions early, allowing courier service and logistics companies to adapt swiftly to changes and optimise routes accordingly, minimising delays and bottlenecks caused by global events.

●Supply Chain Visibility

Better visibility across the supply chain provides insight into potential disruptions and enables proactive measures to mitigate their impact. By having clear visibility into inventory levels, transportation routes, and supplier performance, logistics companies can quickly identify alternative solutions and maintain operational continuity during any large-scale adversity.

●Diversifying supply chains

Diversifying supply chains by sourcing from multiple regions and suppliers helps reduce dependence on any single source. This strategy diminishes the risk of supply chain disruptions caused by geopolitical tensions, natural disasters, or other unforeseen events. Having alternative sourcing options ensures a more resilient supply chain and minimises the impact of global events on logistics and shipping operations.

●Risk management

Executing robust risk management strategies involves identifying potential risks, assessing their impact, and developing contingency plans to address them. By conducting thorough risk assessments and implementing proactive risk mitigation measures, logistics companies can better prepare for and respond to major disruptions in logistics operations.

To Conclude

In terms of the future, there won’t be an end to the global crisis and ongoing conflicts and wars will further escalate the upcoming global challenges. This in turn will impact supply chains and logistics operations on a global scale and the only way forward is to adapt to technological advancements which will help the world economy navigate through the complexities of global events. Partnering with technologically advanced logistics companies like NimbusPost can empower your business journey through the ups and downs caused by various factors.