A Metric of Global Maritime Supply Chain Disruptions: The Global Supply Chain Stress Index (GSCSI)
Introduction
Recent years have witnessed unprecedented disruptions in global containerized trade, a critical backbone of global value chains. These disruptions, primarily triggered by the COVID-19 pandemic, led to an unprecedented supply chain crisis from late 2020 to mid-2022. The pandemic exacerbated the imbalance between surging trade demand and shipping capacity, further complicated by operational disruptions in key ports.
In 2023, additional disruptions emerged, notably:
- Drought in the Panama Canal: Caused a reduction in throughput and restricted the size of vessels capable of transiting the canal.
- Geopolitical Incidents: Militant group attacks in the Red Sea forced shipping lines to reroute vessels serving trade routes between Asia and Europe and Asia and the US East Coast through the Cape of Good Hope.
These disruptions, unlike typical localized events, are characterized by their geographic extent, longevity, and multifaceted impacts on demand patterns, manufacturing, maritime logistics, port operations, and freight distribution.
The Need for a Unified Metric
Quantifying the stress levels faced by global container ports requires a unified metric that can be precisely measured and used meaningfully. The Global Supply Chain Stress Index (GSCSI) addresses this need by measuring the delayed container shipping capacity across global maritime ports. Initially focusing on Panamax-class and larger container vessels operating on intercontinental liner services, the GSCSI does not encompass feeder loops due to their inherent volatility.
Methodology
The GSCSI is derived from Automatic Identification System (AIS) tracking data, which provides insights into container shipping traffic flows. The index is calculated monthly and aggregates data from port-level information into regional or global indices. It specifically targets intercontinental liner services, excluding feeder loops.
Real Use Cases
The GSCSI's utility is demonstrated through real-world applications, highlighting its effectiveness in quantifying the impact of disruptions on global maritime supply chains.
Comparison with Other Indicators
This working paper not only informs the underlying methodology of the GSCSI but also compares it with other indicators developed by private sector initiatives and governmental institutions. It emphasizes the unique contribution of the GSCSI in providing a comprehensive view of global maritime supply chain disruptions.
Rate Model Proposal
In alignment with observed patterns of rate hikes during disruptions, the paper proposes a rate model that elucidates the relationship between freight rates and supply chain disruptions.
Conclusion
In conclusion, the GSCSI offers a valuable tool for policymakers, businesses, and researchers to understand and respond to the complexities of global maritime supply chain disruptions. By quantifying the stress levels across ports, the index aids in targeted interventions and contingency planning, thereby enhancing the resilience of maritime infrastructure and networks.
