Supply chain chokepoints are a threat to consumers, nation states and the re/insurers that need to understand their potential risk accumulations, according to a new Russell report.
Navigating a Path Though Accumulating Marine Exposures looks at the world’s largest ports and identifies several international chokepoints. The authors also reflect on the impact of the COVID-19 Pandemic to ports and shipping.
China, the report finds, is hyper-aware of its exposures, and is investing heavily in infrastructure in South America as a result. This will relieve pressure on today’s chokepoints.
In Brazil it is diversifying supply routes, reducing its reliance on the Panama Canal by constructing a railway across South America, and expanding its operational base.
Russell’s analysis reveals that in 2021, 55% of TEU (Twenty-foot equivalent unit cargo container) trade passed through the South China Seas, which accords with other industry estimates of around 60%.
The report also highlights issues along the US West Coast, at Los Angeles and Long Beach ports. Though bottlenecks there decreased significantly in the first few months of the year, it is expected to become congested again in 2022 as a result of the number of vessels anchoring outside Chinese ports, stuck there because of COVID-related factory closures.
Suki Basi, Russell Group MD, said: “The report concludes that understanding chokepoints and enhancing knowledge of disruptive hazards are becoming key to business viability. We must connect existing models of transport network dynamics with real-time trade data to enable the modelling of geopolitical chokepoints.”
“Expanded data functionality underpinned by an understanding of connected risk insights could provide the basis for the development of risk management strategies.”
