With Key Bridge Rebuild Years Away, Business Are Reminded They Need Diversified Supply Chains
The global supply chain is more fragile than you think. The lesson of the collapse: Build flexibility into your supply chain before you need it.
There is no clear timeline for rebuilding the Francis Scott Key Bridge in Baltimore, which collapsed last month after being struck by a cargo ship, killing six construction workers. Detritus from the bridge still clogs the lower Patapsco River, which leads to the Port of Baltimore, and two smaller channels opened earlier this month for essential vessels small enough to manoeuvre around the wreckage to access the port.
In March, Secretary of Transportation Pete Buttigieg said rebuilding the bridge “will not be quick, easy, or cheap,” and that $100 million worth of cargo moves in and out of the port in a given day. The economic repercussions will be most acute locally: Port workers are missing out on $2 million a day in lost wages as the 15,000 people who work in and around the port have their livelihoods thrown into uncertainty.
The 21 crew members of the Dali, the cargo ship bound for Sri Lanka that struck the bridge, are still onboard as the ship sits marooned, surrounded by wreckage.
Disasters like a bridge collapse are a rarity, but the Baltimore incident underscores the need for any business dependent upon the global supply chain to have contingency plans, says Stephen Georgetti, vice president and director of risk underwriting at the insurance conglomerate Allianz’s North American trade division. The question you should be asking, even if you’re not directly impacted by the bridge collapse: “Do you have a diversified supplier base?” Georgetti says.
Building out a diversified supply chain is important, but fortunately it isn’t terribly complicated, says Lisa Anderson, a supply chain expert and founder of the LMA consulting group. It’s crucial to have a backup supplier for most, if not all of your products, she says. “It’s difficult because it’s harder to afford,” she notes, but purchasing between 10 to 20 percent of your products from a backup supplier will provide enough of a lifeline if supply chains are potentially compromised.
Also, emphasizing domestic suppliers could be beneficial. “You can gain some efficiencies, sometimes by having a regional source of supply–and it certainly will [help you] save on freight costs,” she adds.