TAKEAWAYS
RED SEA ATTACKS IMPACT SHIPPING
About one year ago, tension erupted in the Red Sea when Houthi rebels started attacking global shipping vessels. Since then, Houthis have targeted more than 90 commercial vessels, damaging more than 30 ships and sinking two. Attacks continue in the area; most recently, drones attempted to attack a U.S. warship. The ongoing Houthi attacks have drastically impacted global shipping routes, particularly through the Suez Canal, leading to significant delays and disruptions. How has this impacted international shipping overall? Global supply chain platform Project44 has released a report illustrating the current status. The report notes that carriers have been forced to reroute vessels, resulting in increased transit times on key trade lanes. The rerouting has hit European ports the hardest, while the U.S. East Coast has seen less disruption because the Panama Canal oers an alternative route. Key highlights from the report include: • Major ocean carriers continue to avoid the Red Sea and faced high transit times throughout peak season in 2024. • Volume through the Suez Canal remains low. Despite the peak season for ocean shipments, November 2024 saw a 72% decline in container vessels passing through the canal compared to November 2023.
• Vessel types most disrupted by the attacks are containers, followed by bulk vessels and tankers. • Transit time between Southeast Asia and the U.S. East Coast has increased 47%, with a 33% increase to Europe. • China to Europe has seen a 25% increase in transit time. • Sailing schedules are still seeing delays of 4-6 days but have improved by up to 70% since February 2024.
3 CRITICAL SUPPLY CHAIN REORGANIZATION MISTAKES TO AVOID Supply chain reorganizations often fail to deliver desired results. flexibility for customized solutions. This balanced approach supports better alignment with diverse customer requirements.
MISTAKE 2: DEBILITATING HEADCOUNT REDUCTION Cutting headcount to save costs often weakens long-term organizational capabilities. While reducing expenses may yield short-term gains, it risks the loss of critical talent and expertise essential for sustained growth. Instead, high-performing organizations focus on strengthening internal capabilities, investing in talent development, and creating adaptable work structures. Prioritizing people and processes over immediate cost- cutting builds resilience. MISTAKE 3: THE COPY/PASTE APPROACH Simply copying organizational designs from other companies without considering unique business needs limits eectiveness and slows decision-making. Successful leaders design structures that empower rapid decision-making, streamline internal processes, and dierentiate between day-to-day operations and transformational eorts. Clarity in authority and responsibility eliminates bottlenecks and ensures responsiveness to market demands.
Gartner conducted interviews with supply chain leaders who underwent successful organizational redesigns and found that leaders who succeed prioritize balance, strength, and speed in their designs, tailoring structures to meet unique organizational needs. Gartner also determined the following three errors derailed reorg eorts aimed at achieving critical business outcomes:
MISTAKE 1: THE EITHER/OR APPROACH Many organizations adopt a binary approach, choosing either centralized or decentralized models. This oversimplified framework leads to delays, gaps in performance, and confusion over responsibilities. Successful companies integrate both centralized and decentralized elements, ensuring eciency where standardization is needed while allowing
44 Inbound Logistics • January 2025
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