What are the ongoing implications of the Francis Scott Key Bridge collapse in Baltimore or the earthquake in Taiwan? How were these disasters traversed and how can your company overcome the next disruption?
It starts with assessing and evaluating your suppliers.
In this Innovation Destination – Executive Perspectives episode, Brandon Daniels, CEO of Exiger, explains the necessary calculations organizations need to make in order to understand their procurement operations and how to build supply chain resiliency that can successfully navigate the next disruption.
This interview was edited and formatted for clarity.
Tyler Fussner, Managing Editor, Supply Chain Connect
Hi, Brandon, thank you for joining us today.
Brandon Daniels, CEO, Exiger
Hi, Tyler. Good to speak with you today.
Fussner
Could you please introduce yourself to our audience?
Daniels 0:27
Of course. I’m Brandon Daniels. I’m the CEO of Exiger. I’ve been in the risk, supply chain and compliance markets for over 20 years. I’m a risk management professional, corporate operational expert and a technologist—both by passion and trade. I’m really looking forward to this conversation and talking about all the transformative things that we’re seeing in the technology space and all of the volatility that we’re seeing in the supply chain space.
Fussner 1:02
I’m excited about this conversation too. Everyone is all too familiar with the incident that happened at the end of March, the Francis Scott Key Bridge collapsing after being struck by containership. The Port of Baltimore, where the bridge once stood, is a major supply chain hub. And now just a few days ago, the first cargo ship is passing through and the reopened channel.
Can you provide your insight and tell us a little bit about what this collapse really means for the U.S. supply chain? Do you see any certain industries that have been impacted more significantly than others?
Daniels 1:35
Absolutely. This has been heavily reported, and the fact is that there are multiple industries impacted. I know that everyone has heard that the automotive industry had an outsized impact. And that’s right. And in fact, there were multiple pictures of the incident where you saw container vessels that were carrying chips that had to be rerouted and that had to be redistributed, and that’s because that port is a major automotive port.
However, there are also major commodities that come through that port. And so, when we look at it, we actually first go to our applications, our tools, because we build applications and artificial intelligence that helps us to get insight and visibility into supply chains. We help our customers, whether it’s for compliance reasons or for increased resilience and alternative vendor sourcing, or it’s for cost reduction and better orchestration of their supply chains, we help them map their supply chains all the way down to the hole in the ground. And so, what we first do is we go to our tools and we look at our tools to understand what are the potential impacts of an event like this.
One of the first things that popped out at me is that this was a port that was receiving a large amount of raw materials that were then distributed to multiple parts of the country where advanced manufacturing are major commerce hubs; where advanced manufacturing is a big part of the local economy. One of those goods that I saw that was of real interest was aluminum. There’s a company called Alcoa that ships a substantial amount of aluminum through that port. I also saw a lot of scrap aluminum and a lot of other metallics that were coming through that port. That has a reverberating effect, or an echoing effect, along a lot of different supply chains. Those goods, they’re destined for companies that are going to use that in mills or companies that are going to use that to finish products or companies that are going to use that for specific areas of manufacturing that are then going to impact other industries.
We saw situations where major construction companies were impacted by the Port of Baltimore shut down; you saw major automotive factories that were impacted by the Port of Baltimore shut down. Aluminum is a pretty pervasive metal. This was something where there was a decent amount of urgency.
The next thing that we saw is that there were a lot of commodity materials specifically used in home construction. And so, you see areas of the market that already have a pinch or a crunch, like in a lot of cities right now we have a dearth of home inventory, and that’s driving up the cost of homes; that’s driving up the cost of home buildouts.
What these commodity materials being stuck at the port or being rerouted does is it adds delays to those projects and cost to those projects, because people are willing to pay more to keep those products flowing into their job sites. We saw those commodity products also impacting the construction industry. One of the other things that was interesting was that this also had a knock-on effect on the food industry. This is one of the major ports for sugar.
Now, the good thing, and when I say good thing, there’s nothing good about the Baltimore bridge collapse… This was a tragic event and a seismic event for anyone in that area. But the good thing for the global supply chain, for the backbone of global commerce, was that there were other ports that could absorb the overflow of these materials. The Port of Baltimore is not [accountable for] a huge percentage of overall East Coast imports. There are other viable locations that are within a couple hundred miles of Baltimore, ports in New York and New Jersey, for instance, which absorb about 38% of the overall port traffic. Those were immediately available routes.
There were some goods that got stuck in Baltimore, a bunch of shipping companies used force majeure, and said, “We’re going to leave these goods at other ports and you’re just going to have to deal with it.” There were great companies like Maersk that said, “We’re going to help you get it to your final destination; we’re going to help you get it back to Baltimore.” But a lot of companies used force majeure as an offset of liability.
There were immediate impacts from the Francis Scott Key Bridge collapse, but those are largely absorbed by the other ports in the area. The last thing I would highlight, which was an important point, is there are a number of materials that require special shipping constraints. They require special shipping conditions. Those materials are hazardous materials, hazmat. And one of the things that was also interesting, as we were looking at this and trying to help our customers navigate how to tackle this challenge, was that customers that were in receipt of large volumes of natural gas or things that could otherwise be volatile or hazardous going through bridges, they had to do more granular work to navigate and mitigate the risk of the Francis Scott Key Bridge collapse.
The immediate impacts were significant to many of the companies that were doing advanced manufacturing across the country, and for the automotive industry in that very small circumference that sits around Baltimore, but a lot of that got absorbed by other ports. I think the more interesting thing is long-term, what does this mean for our management of ports going forward?
Listen to the rest of the episode on the podcast player above or below, or wherever you listen to podcasts, picking up at the 8:23 mark!
