Takeaways from the Suez Canal Crisis
An Appeal for Supply Chain Agility — Powered by Verifiable Credentials
The Suez Canal debacle had a massive impact on global supply chains — estimated at >$9B in financial hits each day the Ever Given was stuck, totaling at nearly $54B in losses in stalled cargo shipments alone. And it’s no secret that the canal, which sees >12% of global trade move through it annually, dealt an especially brutal blow to the oil and gas industry while blocked (given it represents the primary shipping channel for nearly 10% of gas and 8% of natural gas).
While the Ever Given itself was a container ship, likely loaded with finished goods versus raw materials or commodities, the situation has already — and will continue to — have a massive negative impact on totally unrelated industries…for months to come. Here’s an example of the resulting impact on steel and aluminum prices; this had related impact again to oil and gas (steel pipes flow oil) as well as infrastructure and…finished goods (like cars). And the costs continue to climb as the drama unfolds with port authorities and insurers battling over what’s owed to who.
Transmute is a software company — a verifiable credentials as a service company to be exact — and we’ve been focused specifically on the credentials involved in moving steel assets around the globe alongside our customers at DHS SVIP and CBP for the last couple years now. Now, there’s no “silver bullet” for mitigating the fiscal impact of the Ever Given on global trade, and ships who arrived the day it got stuck or shortly after certainly faced a tough decision — sail around the Cape of Africa for up to ~$800K [fuel costs alone] + ~26 days to trip or wait it out at an up to $30K per day demurrage expense [without knowing it’d only be stuck for 6 days or ~$180,000].
So what if you’re a shipping manager and you can make this decision faster? Or, make the call before your ship arrives at the canal? [Some did make this decision, by the way]. What if your goods are stuck on the Ever Given — do you wait it out? Switching suppliers is costly, and you’ve likely got existing contracts in place for much of the cargo. Even if you could fulfill existing contracts and demand on time with a new supplier, what do you do with the delayed cargo expense? What if you’re unsure whether you can sell the duplicate and delayed goods when they reach their originally intended destination?
Well, verifiable credentials — a special kind of digital document that’s cryptographically provable, timestamped and anchored to an immutable ledger at the very moment in time it’s created — can give companies the kind of data needed to make these sorts of decisions. With use over time for trade data, verifiable credentials build a natural reputation for all the things the trade documents are about: suppliers, products, contracts, ports, regulations, tariffs, time between supply chain handoff points, etc.
This type of structured data is of such high integrity that supply chain operators can rely on it and feel empowered to make decisions based on it.
What I’m hoping comes from this global trade disaster is a change in the way supply chain operators make critical decisions. Supply chains of the future will be powered by verifiable credentials, which seamlessly bridge all the data silos that exist today — whether software-created silos or even the paper-based manual, offline silos.
Today, it’s possible to move from a static, critical chain style of management where we often find ourselves in a reactive position to supply chains that look more like an octopus. High integrity data about suppliers and products enables proactive, dynamic decision making in anticipation of and in real time response to shifts in the market — ultimately capturing more revenue opportunities and mitigating risk at the same time.
