Supply Chain Risk Management Blog

Treacherous waters

When will we learn?” asks an article in the shipping bible Lloyd’s List, reviewing the findings of a recent report on the Hoegh Osaka. We now know the container ship, which ran aground in the Solent in January 2015, was unsafe when it left port.

For Lloyd’s List and others the issue is one of safety: a proper concern for safety, rather than box-ticking, could have prevented the incident. There are, though, important lessons for supply chains, too, that are worth noting.

On the one hand, it’s important not to overstate the risks to supply chains from shipping catastrophes. Maritime cargo losses are on a long-term downward trend, according to insurer Allianz. Regulation and improved practice have seen losses almost halve in the last ten years.

On the other, shipping lanes are still dangerous places and best practice is undeniably patchy. To quote from Lloyd’s List: “These were vessels operated in developed countries by companies with resources at their disposal. What horrors are happening on the ships not run by immediately recognisable industry names?”

It’s certainly a question worth considering.

So, too, are a couple of other issues. One is that the risks facing the maritime industry are by no means static. Whether it’s the growing number of giant “mega ships” or, less obviously, cyber risks as ships become another component in the Internet of things, the risks continue to evolve.

Another issue, though, is that we’re stuck with some of our geography, which doesn’t look like changing anytime soon.

Consider these lines from the BBC report on the Hoegh Osaka: “It was pure chance that the ship ran aground in shallow water. If the ship had started to turn a few moments earlier or later, the Hoegh Osaka would have ended up in the only deep water channel. It would have stopped the container port, stopped the cruise ships, stopped the ferries. And it would have meant Britain’s largest oil refinery running out of supplies.”

That, too, is worth thinking about, especially since the Hoegh Osaka is far from the only ship in recent history to have threatened the Bramble Bank, the channel so pivotal to the UK’s refining capacity and free flow of shipping.

Some risks we are probably stuck with, although business can try to make it easier to establish liability when things go wrong. The story of the Hoegh Osaka has this reminder for supply chains, though: it’s not just who’s supplying you that matters; you need to know how they’re doing so, too.

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