RIT supply chain expert on Suez Canal blockage: Economic impact in 2-6 weeks

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This satellite photo from Planet Labs Inc. shows the Ever Given cargo ship stuck in Egypt’s Suez Canal Monday, March 29, 2021. Engineers on Monday “partially refloated” the colossal container ship that continues to block traffic through the Suez Canal, authorities said, without providing further details about when the vessel would be set free. (Planet Labs Inc. via AP)

ROCHESTER, N.Y. (WROC) — A ship called the “Ever Given” got stuck in the Suez Canal last week, and it immediately took over the internet with a series of memes about the futility of modern life.

The impact of the ship’s blockage will be felt by “everyday” American consumers in a few weeks from now.

Supply chain expert and Professor of Supply Chain Management at RIT, Steven Carnovale, is quick to point out that it does depend on what the “everyday consumer” is buying, but does say that the impact will be felt in two to six weeks.

He says that this blockage not only stopped quick passage through the canal — which connects Asia to prominent East Coast ports like New York City or Miami — it also caused many companies to stop their ships all together, or take a huge detour by going around the Horn of Africa.

“People don’t realize how important that trade route really is,” he said. “It connects many factories in Asia with the US.”

He suspects that while products that are made here in the US — things like food, water, and other essentials — should remain protected from price increases, but other goods like technology that requires assembly in Asia, and “durable goods” like shoes, clothes, and backpacks could see a price increase in that time frame.

“We’ll have to see if the companies pass along the price to the consumer,” he said.

He also pointed out that the US is already facing a semi-conductor shortage, and this will only exacerbate the problem for auto manufacturers.

“Compounding all of this, there has been an external pressure on oil prices, which causes shipping rates to go up, and this is going to delay things considerably,” he said.

In as shipping routes return to normal, Carnovale says that this will cause a massive influx and create a backlog. Backlogs can further disrupt a supply chain, as it changes demand further; not to mention that a sudden influx in supplies means that processing centers also have to work through unpacking and distributing those goods.

That means that cargo containers that are needing by the sipping companies might not have access to them right away, because they are still being unpacked by the processing centers at the ports.

But he says that some of this can be mitigated if we “learned our lesson with safety stock” from a year ago, when the pandemic caused a massive shock to the supply chain.

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