ClearPrism Sees Suez Canal Disruption will Cost $45B in Q2
April 6, 2021
released new analysis showing the total impact of the Suez Canal disruption on
U.S. companies will cost up to $45 billion in negative economic impacts in 2Q
2021. The artificial intelligence (AI) technology leader’s latest research
details the supply chain recovery impacts on critical industries including
defense, construction, healthcare, manufacturing, and oil and gas, and outlines
how companies can prepare for future events.
“The economic impact due to the one week disruption of oil alone, just one of
the 10 commodities held up in the Suez Canal, will cost up to $28 billion in the
coming quarter,” said Ralph Welborn, Ph.D. (Cognitive Science) and Co-Managing
Partner, ClearPrism. “While most analysts will be projecting something in the
neighborhood of a $10 billion impact from disruption in the oil industry, our
data shows it will actually be almost triple that. Understanding and predicting
these ripple effects in downstream industries is critical as companies adjust
strategically, not just react to the immediate pressures they are under.”
reports the canal blockage will affect approximately 25 percent of the United
States gross domestic product (GDP) value, and the ripple effect will result in
impacts on another 15 percent. Using a unique AI algorithm and analytics
approach, the company assesses economic impacts through each step of the U.S.
supply chain of impacted industries of products that are blocked at the canal
such as oil and products, fertilizers, chemicals, fabricated metals, and
vegetable oils, while helping multinational companies accurately predict how
external events such as the Suez incident will impact each component of their
supply chains. “Faint signals” and risk exposure levels can be determined based
on a variety of indicators such as geographic locations, weather patterns,
healthcare events such as the pandemic, regulatory restrictions, and more.
"All supply chain disruptions have industry-to-industry as well as
industry-to-geo and geo-to-geo ripple effects," said Welborn. "There are
immediate effects and longer term effects, depending on what we call 'hops'
across industries. Such insights into these types of 'hops,' and the relative
quantitative dependency among them, is critical to understanding the economic
and production impacts of the key products that were blocked in the canal and
mitigating for future events."