The Suez Canal puzzle – pulling the pieces together

On 23 March 2021, the container ship Ever Given went off course and blocked the Suez Canal for six days. Various estimates of losses ranging into the dozens of billions of dollars have been floated in the market. Those numbers are likely inflated compared to the real damage. What is objective fact is that more than 350 vessels got stuck in the canal and that had real implications.

But not all cargo is the same – some is more time sensitive than other. Data can tell us what cargo is affected by a disruption. But more importantly, data can help us to deal with the ripple effects of incidents to avoid an aggregation of waiting time at the canal and the destination ports. We therefore need to ensure that enough relevant data is shared to provide everyone with situational awareness, allowing informed and intelligent decisions to be made.

In this article we elaborate on queue numbers and how such information may support us in enhancing predictability, enabling the reduction of waiting time in destination ports in Europe, in Asia and at the East Coast of the United States. Incidents such as the blocking of the Suez Canal that should provide us with the necessary incentives to share data and act collaboratively upon the situational awareness provided.

Putting the pieces of the puzzle together

It all starts with the choices made by the shipping company

The transport ecosystem encompasses autonomous actors, each having pieces of a puzzle of common situational awareness that is key for everybody’s coordination of their operations. The incident in the Suez Canal reminds us how much an immobilised piece of this puzzle can affect the global supply chain. Therefore, we need to use actual ship movements to assess progress, make plans and address disruptions.

The captain is not operating the ship in isolation. The shipping company is mainly concerned with ensuring that ships are moved cost-efficiently and in a timely manner across the oceans with high fulfilment levels of the ship’s carrying capacity. Some argue that the growing sizes of container ships has made it difficult and risky to maneuver in narrow passages. For sure, increasing ship sizes has also increased the impact of something going wrong (see figure 1 and 2).

Figure 1: Snapshot of the congestion at 1200 UTC 23rd to 29th of March north of the Suez due to the blockage
Figure 2: Snapshot of the congestion at 1200 UTC 23rd to 29th of March south of the Suez due to the blockage

If vessels speed up, fuel cost and CO2 emissions will rise rapidly. We even noticed vessels making a U-turn on the Mediterranean Sea. Such diversion delays arrivals and consumes more resources. But at least they would allow arrival times to be predicted better. This makes such incidents and subsequent decisions a trade-off between capital productivity and energy efficiency for the shipping company.

Ports need to complement physical services with digital services

When shipping companies share data on plans, progress, and possible disruptions ports can optimise their use of the infrastructure and resources that are shared among clients. Despite promising initiatives for optimising ships’ arrival times to the port, the port is just a small piece of the whole transport chain. Whether such initiatives suffice to optimise the fleet and port infrastructure is an unresolved question.

The Suez Canal incident is an opportunity for ports to show their potential as information hubs. They can assume an important role by helping to establish a new level of visibility and collaboration along the chain and among ports.

Some experts expect a rush to destination ports because of limited discharging equipment. Reducing potential waiting times in the ports requires organizing the arrivals of ships, through pro-actively arranging for some vessels to slow down to avoid congestion, which at the same time conserves fuel. This also allows for better planning the handling equipment in the port and capacity in the hinterland. This requires a higher level of situational awareness through data sharing.

Augmented visibility for beneficial cargo owners and multimodal transport coordinators

The debates on optimising port operations should be expanded to how the lack of data sharing and collaboration impacts the multimodal transport coordinator, the cargo owner and, at the end, the ones that buy the cargo – the end-consumer.

Transport coordinators, like freight forwarders, are challenged to secure seamless transport end-to-end. Most ports operate on a first come first served basis, which makes it impossible for the transport coordinator to plan its operations.

Ideally transport coordinators would develop capabilities to re-direct transports based on sequential decision-making, but this requires up-to-date information shared among all actors. Due to a lack of predictability in maritime operations both transport coordinators and cargo owners introduce buffer zones. Augmented visibility about the journeys of the vessels, waiting times and the available capacity in ports would empower transport coordinators to discuss in advance with ports and hinterland carriers the optimal mode and sequence of transport, determined by the cargo owners’ needs.

Beneficial cargo owners can benefit from end-to-end visibility to take risk mitigating actions. Importing companies need to manage their supply chains and their inventories in such a way that can satisfy the time requirements for the end-consumers. They know that disruption can occur at any time and work with the reality of months-long timescales of ocean shipping. While time sensitive cargo is shipped by airfreight or supplied out of well provisioned nearby distribution centers.

The way forward

Reengineering practices and securing shared data are prerequisites to optimise maritime flows. A holistic approach, such as the one that is addressed within Maritime Informatics, would bring more value to buffer zones and better predictability.

Driven by the Suez Canal blockage, there is a line of ships that passes through the canal based on its arrival time. About 350 ships have been queuing, waiting for the green light for passage (figure 3). Under normal conditions the canal manages 55 southbound and northbound passages on a daily basis, which over time decreases the number of ships waiting in line.

Figure 3: Emerging queue due to the Suez blockage for all vessels heading north and south

Based on the first come first principle it is reasonable to assume that each ship receives a queue number based on when it arrived at the entry point. That would guide our understanding of when a specific ship passes through the canal. A question that remains is whether some ships should be prioritised over other ships, dependent on the type of goods they carry. A marketplace for queue numbers may also be an option to optimise the flow of ships, which may also be a tool to help to reduce port congestion.

The queue order is dependent on how many other ships are waiting to pass. Each of the post blockage 49 southbound heading container vessels stuck in the Mediterranean, and each of the 40 container vessels that were blocked in the Gulf of Suez heading north would have a queue number (figure 4). The place in the queue gives the single operator a foundation for predicting when a specific ship passes the canal, providing grounds for forecasting when it is to arrive at the next port.

Figure 4: Position in the queue for waiting container vessels heading south and northbound

By using the real throughput time for the canal combined with data on queue replenishment this would also mean that we would be able to approximately predict which ship would be passing through the canal at what time. This is of substantial value for actors that would like to predict when goods will appear at the port and point of destination and consequently allow them to plan for the use of buffers, and possibly accelerated handling at the port and hinterland transportation, or even emergency supply through, for example, airfreight transport.

This analysis also provides us with the capability to follow whether any ships are deviating from the queue system.

Figure 5: Pieces for common situational awareness coming together providing customer value

Conclusions

Global supply chains will remain vulnerable, exposed to disrupting events. We cannot avoid situations like the Suez Canal blockage. But we can improve our ability to manage their consequences.

Situational awareness spanning from the factories to the end-consumer can help to extract more value from buffer zones. Depending on the risk level and the risk appetite there will always be an optimum size of the buffer zone, and small buffers may not always be the optimal solution given the inherent risks in supply chain networks.

Situational awareness also helps to increase customer and consumer satisfaction with a higher level of visibility and predictability, while laying the ground for optimisation of the chain end-to-end. This requires incentives to share data along the chain, standardised data protocols and the willingness to collaborate as the basis for better alignment, decision-making and integration across different modes.

This is a call to review incentives for data sharing along the global supply chain to achieve higher levels of capital productivity and to better prepare for incidents like the Suez Canal blockage. Only data allows us to pull the puzzle together to manage such situations.

This article is even more a call for port collaboration than for data sharing. Data sharing will come over time, but collaboration is needed now. The level of data and collaboration required to smoothen the ripple effects resulting from the canal incident reflects the cultural change that needs to occur as well.

If we arrive at a place where we can predict when a ship is passing the Suez Canal and will arrive at the destination port, we can probably also adapt the same standards, tools and practices to predict congestion at any chokepoint at any port in the world. This would be a major step towards avoiding, or at least significantly reducing, waiting time in the maritime industry of tomorrow.

Editor’s note: This article is an edited version of the original paper by the authors, which includes a full list of references. The full paper can be downloaded here.

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About the Authors

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Mikael Lind is Professor of Maritime Informatics at Chalmers, Sweden, and Senior Strategic Research Advisor at Research Institutes of Sweden (RISE).

Wolfgang Lehmacher is operating partner at Anchor Group.

Lars Jensen is an independent advisor and consultant at SeaIntelligence Consulting.

Torbjörn Rydbergh is founder and Managing Director of Marine Benchmark.

Dr Hanane Becha is the UN/CEFACT Vice Chair, Transport & Logistics and the Lead of the UN/CEFACT Cross Industry Supply Chain Track and Trace Project.

Luisa Rodriguez is Economic Affairs Officer at UNCTAD and editor of the UNCTAD Transport and Trade Facilitation Newsletter.

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