Kai Ryssdal: I have to tell you, the first thing I thought when I saw the pictures of this ship turned sideways in the canal — other than “How the heck did that happen?” — was, “Wow, the global supply chain is really, really fragile if this can block up a major artery.”
Christine McDaniel: Yes, it is fragile. There’s lots of moving parts. But remember, the global shipping industry logistics are used to supply shocks, demand shocks, weather-related, war-related. It’s nothing they haven’t dealt with before.
Ryssdal: Fair enough. But if you are a tanker company looking at this traffic jam in the Suez Canal, how long are you going to wait and let your extremely valuable ships sit there in the backlog before you go around down the south of Africa and go the long way around?
McDaniel: Economists — especially trade economists — have spent some time trying to calculate how much time costs in international trade. A couple of economists estimated that each additional delay of shipping is equivalent to about a half a percent to up to 2% of a tariff. And then of course, this is cascading, because it’s not just the stuff on that particular ship that’s delayed, it’s everything else that’s getting delayed because of that.
Ryssdal: Yeah, the issue here is downstream, right? I think this ship was supposed to go to Rotterdam, and you have to believe there’s a bunch of companies in Rotterdam or elsewhere in Europe saying: “Where’s my boat?”
McDaniel: Right, right, just about everything that gets made, you know, crosses at least a few borders. It’s not just a particular component that might go into a car radio. That car cannot be shipped until that car radio has all the components and is ready to go.