Preparing for the Next Inevitable, Unexpected Supply Chain Disruptions
The video footage of the March 26 destruction of the Francis Scott Key Bridge is shocking — the 1,200-foot continuous steel truss collapsing into the Baltimore harbor as if made of toothpicks. The mayor of Baltimore, obviously shaken in the first hours after the collapse, blurted to reporters, “It looked like something out of an action movie.”
The worst impacts, of course, are being felt by the families of the construction workers on the bridge who perished. And there will be a period of economic hardship for the thousands of people who work at the Port of Baltimore while it’s closed to vessel traffic. But with supply chain disruption becoming so consequential for the global economy since the COVID pandemic, much of the public discussion since the bridge collapse has focused on the short- and long-term ripple effects of the incident on international trade.
Economic Implications of the Bridge Collapse
The Port of Baltimore is a busy one; according to the U.S. Department of Commerce, it accounted for about $80.3 billion of U.S. foreign trade in goods in 2023. Much of this consisted of automobiles and construction vehicles and machinery. As an import-heavy port, its closure “until further notice” will exacerbate domestic supply chain delays by forcing the rerouting of goods requiring overland transport. Thousands of containers already on ships headed for Baltimore have to be handled by other ports — not something that can be accomplished as easily as flipping a switch. And 10 ships were reported to be stuck inside the port as of this writing; those ships would have traveled to other ports to make stops to load and unload goods before heading overseas.
According to import/export data from the U.S. Census Bureau, the weekly direct economic impact of the port closure on the nation's international trade is estimated at $1.7 billion, which is the average weekly value of trade in goods through the port in 2023. Annually, the port handles 37,850,000 tons of cargo, 632,000 TEU (twenty-foot equivalent units — a general unit of cargo capacity), and 252,000 passengers. It also has the geographical advantage of being closer to the Midwest than any other East Coast container port.
Despite all this, on the scale of the supply chain disruptions of the past few years, the global impact of the Key Bridge collapse is likely to be smaller than other recent disruptions originating in the Panama Canal or the Red Sea. But the incident serves as yet another unwelcome stressor on a global supply chain that was already under pressure from multiple events. There is also talk of a potential strike by U.S. East Coast longshoremen in late September of this year — smack in the time frame for imports of Christmas-season goods.
Preparing for the Next Supply Chain Crisis
If there is a takeaway for supply chain leaders from the current cluster of disruptive events, it should be this: Supply chain disruptions are inevitable, and always have been. Some kind of disruption is always going to play out at some point. In Dun & Bradstreet’s Global Business Optimism Insights report for Q2 2024, one in seven businesses surveyed indicated that recent geopolitical events have impacted their operations due to supply chain disruption.
Every crisis acts as a not-so-subtle reminder that businesses must not just strive for visibility of potential risks — they must be prepared to react to the critical risk events that no one could have predicted. How can businesses deal with this inevitability? Greater vigilance is needed to manage risk, and greater resilience is needed to maintain business stability and continuity.
In a nutshell: the key to overcoming supply disruptions is to expect them. No supply chain professional has any control over their occurrence. But each event generates data that supply management teams can use to help understand, plan for, and mitigate supply disruptions.
Where Data Can Help You Make Informed Supply Chain Decisions
Here are some practical tips on what you should know — and when you should know it — to be able to control the delays and costs that can result from supply chain disruptions.
Know the different causes of supply disruptions
Each of these six main categories is unique, but they have the potential to overlap and intensify the adverse impacts for supply chains:
Geopolitical Events – from tariff clashes to trade disputes to military conflicts
Natural Disasters – floods, hurricanes, wildfires, and other catastrophes that have been increasing in frequency due to climate change
Market Events – market volatility and consumer demand can deliver shocks to an already intensely competitive ecosystem of suppliers, distributors, vendors, and retailers
Societal Trends – such as the rise of remote work, growing income inequality, and DEI (diversity, equity, and inclusion); all have had a direct influence on the logistical systems of procuring and distributing goods and services
Business/Technology Issues – the power loss of the cargo ship that hit the Key Bridge falls into this category; so would a massive cyberattack on a financial network or global social media site
Regulatory Compliance – government and industry regulations focused on sourcing, manufacturing, and trade practices continue to have significant effects on supply chain operations
Know your vendors — thoroughly
A company is never static. It can change significantly, even within a short time. Every aspect is fluid — its location, its ownership, its staff, its suppliers, its financial and legal status.
Any of these changes have the potential to adversely affect your operations by disrupting your supply chain. Is the company still capable of meeting demand? What about quality control? International shipping? Environmental standards? Ethical business practices? All of these factors are in flux, all of the time.
Keep an alternative source on the bench when needed
The corollary to knowing all your players is having a few understudies in reserve. Having data on alternate suppliers, vendors, or shippers who could step in to fulfill any need when you’re running into supply challenges — especially when it comes to critical goods or components — is absolutely invaluable.
Perform scenario planning regularly
Today’s supply chain professionals have to anticipate that something is going to happen, and they need to plan for everything to happen. This is where ongoing access to data is critical. It enables you to perform continual assessments of potential risk situations (see #1 above) to be more responsive as changes arise.
The better your access to supplier and supply chain data, the better poised you’ll be for realigning resources and considering alternatives to help ensure business continuity.
At this writing, it’s unclear how long it will take to clear the thousands of tons of debris out of the channel of the Patapsco River, but demolition crews have begun cutting up the pieces of the fallen bridge. In the meantime, the port has remained open for trucks, and other East Coast ports have the capacity to absorb Baltimore-bound shipments. Although macroeconomic impacts are not expected to be significant, some companies will undoubtedly feel the pinch of added time and cost of their shipments. For everyone else, the incident highlights yet again that supply chain disruptions are inescapable, and that the key to managing through them is having the ability to make well-informed decisions.
Learn more about how Dun & Bradstreet helps companies build supply chain resilience.
The information provided in articles are suggestions only and based on best practices. Dun & Bradstreet is not liable for the outcome or results of specific programs or tactics undertaken based on your use of the information. Please contact an attorney or financial/tax professional if you are in need of legal or financial/tax advice.