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Inside Out & Outside In
OpinionComment
David Dodwell
David Dodwell

Covid-19 pandemic’s ‘butterfly effect’ on shipping containers reveals the need to prioritise supply resilience over efficiency

  • The wide-ranging impact of the pandemic continues to unfold, not least in stranded containers and a disrupted supply chain
  • When even the smallest changes can cause big effects, we need to pay more practical attention to the resilience and security of critical supplies

Reading Time:4 minutes
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A container is moved at the Qinzhou port in south China’s Guangxi Zhuang autonomous region on December 28. Photo: Xinhua
David Dodwell

Today’s is a story of instability, unpredictability, of “black swans” and serendipity (my favourite word). It is about how small changes can have big effects, and the need to give more thought to resilience over efficiency.

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It is about shipping and containers, and how we have, as a result of the global pandemic, found ourselves in a terrible tangle because the world’s containers are in the wrong place. Getting them back in the right place will be costly and take time. Meanwhile, global supply chains have been massively disrupted and freight costs have soared.
The Covid-19 pandemic is surely the ultimate black swan – a low-probability, high-impact event. Except, of course, it should never have been seen as one, because the certainty of pandemics has been acknowledged for decades.

The risk was clear. Most risk managers knew that steps needed to be taken to ensure resilience. But, in the day-to-day tussle between efficiency and profit maximisation on the one hand, and risk mitigation and resilience on the other, it was always clear which motivated us most.

Yet the pandemic is a black swan in that it has had a stunning, powerful and wholly unanticipated social and economic impact on a remarkably wide range of countries and business sectors. There can be few better examples of the “butterfly effect”, first articulated in the 1960s by US meteorologist Ed Lorenz.

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Worldwide coronavirus death toll nears 2 million

Worldwide coronavirus death toll nears 2 million

Pared to its minimum, Lorenz’s idea was that small events can have a surprisingly large “non-linear” impact on complex systems. And that the tiniest variation in influences can tremendously change outcomes.

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