Blog

2014/08/21

Shifting routes in a stable world…

Shifting routes

By Howard Roddie, Managing Consultant (@HowardRoddie)

Looking at a map of the world, you
would think things were pretty fixed.  Cities, continents and countries pretty much stay where they are, apart from, ofcourse, a little continental drift which needn’t concern us – supply chains aren’t planned on a geological timescale.

When we ship goods from one point to another, you would think there would just be one way that remains fixed – the optimum routing.  But in fact, the optimum route is actually subject to change over time and our relationship with our environment is the main reason for this.

Firstly there is seasonal routing.  Floods in Africa during rainy seasons may close roads for months at a time as ephemeral rivers fill up, leading to the use of alternative routes.  In Brazil, the southern part of the main route to Manaus, in the heart of the rainforest, is under water for half of the year.  Journeys of 4000km by road, which would usually take a week, become much longer and with less flexibility too.  We may be able to commandeer a truck with a few hours’ notice but try doing that with a container vessel.

It is no wonder that we try to make the best of what nature gives us.  In Russia, lead times can drop during harsh winters as ice roads open up across lakes.  If you’ve ever seen “Ice Road Truckers” on TV and wondered why they do it, it isn’t always about maintaining supply, sometimes it’s about improving it.

Some of the biggest changes however, come as we modify our environment, and some of these are permanent.  For instance, the opening of the Panama Canal back in 1914 opened up the west coast of the Americas to trade from Europe and Africa.  Lead times were cut dramatically, as well as the risks associated with going via the southern oceans around Cape Horn.  Equally, routes between Asia and the East of the Americas opened up and let’s not forget the impact of the Suez Canal on trade between Asia and Europe as well.

So these are our planned modifications  to our environment, but what about our unplanned modifications?  Climate change has led to a thinning of the ice cap around the North Pole, allowing a number of ice free summers around Northern Canada in recent years.  This opens up the possibility of the use of previously impassable north-west passage.  However, this is still a route for the intrepid, given the prevalence of icebergs and the chance of getting trapped in the ice.  Additionally, the melting of the ice has resulted in the seas in this area being much heavier than expected with huge swells becoming the norm.

We are not finished with grand projects either.  There is a plan for a second Suez Canal which will, once again alter trade routes and increase traffic through the gulf.  This may not be as seismic an event as the first canal, but it’s impact should not be downplayed.  Unintended consequences might include a marginalisation of Southern Africa and potentially Western Africa as trade routes.  A boom in piracy and security responses may also occur around East Africa.

Whilst geography doesn’t change much over time, our best options for getting from A to B do; even on a global scale.  Our intentional and unintentional changes to our environment will keep supply chain specialists busy for aeons to come.  Maybe we should think on a geological timescale?

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