Gamal Abdel Nasser would surely afford himself a wry smile. Sixty-five years after the late Egyptian president nationalised the Suez Canal, prompting the 1956 invasion by the UK, France and Israel, the waterway continues to hold a vice-like grip on global commerce.
 
This week, a single ship — admittedly one almost as long as the Empire State Building is tall — caused ripple effects around the world when it blocked the southern entrance to the canal after running aground.
 
Crude oil prices have jumped, tankers and container ships are backed up and suppliers of everything from oil to televisions are contemplating sending their cargo around the Cape of Good Hope, potentially adding a week to shipping times, as well as significant extra costs. On Friday, rescuers were still desperately trying to dislodge the 220,000-tonne Ever Given, but warned it might take weeks to budge.
 
[...]
 
The strains created by Covid-19, with its initial shortages of personal protective equipment and its continued ugly scramble for limited vaccine supplies, have exposed problems in the global trading system. Those difficulties could plausibly push governments and businesses alike to rethink a just-in-time supply-chain model that has arguably wrung efficiencies from the system at the cost of resilience.
 
“The industry’s supply chain is several miles long, but only an eighth of an inch deep,” says Ted Mabley, a supply chain consultant at PolarixPartner in Detroit.
 
Given the widespread fears a year ago about shortages, the global trading system has in many ways held up remarkably well during the pandemic. “If you really look at what is happening objectively, you will see that supply chains have been pretty resilient,” says Ngozi Okonjo-Iweala, director-general of the World Trade Organization.
 
[...]
 
It is also thanks to the delivery models honed by companies such as Amazon and Alibaba and by a complex network of shipping, haulage and logistics companies. Throughout the pandemic, consumers in wealthy countries have found their supermarkets stocked, their petrol stations open and their doorbells buzzing for online deliveries.  
 
[...]
 
The pandemic itself was already exposing vulnerabilities in global supply chains. Container shipping rates have more than tripled as companies that control shipping lines took out capacity in expectation of falling demand. Now it costs about $4,000 to ship a 40-ft container between east Asia and the US west coast, up from $1,500 at the start of 2020.
 
“Our supply chain is based on predictable scenarios,” says Ashwani Gupta, Nissan’s chief operating officer. “What we had not anticipated is the extreme scenario with an unprecedented crisis like Covid-19 and the unique challenges it is throwing at us.”
 
As if all of this were not enough, political pressures are pushing against globalisation and the long and winding supply chains that underpin it.
 
Ngaire Woods, professor of global economic governance at Oxford university, says “global supply chains are facing three different pressures that are worth thinking about”. One is the push, most strongly articulated by former US president Donald Trump, to bring jobs home.
 
The second, exposed by Covid-19, is the strategic reliance on other countries for medical equipment and more broadly for basic goods and key military and civilian technologies. “This is more about national resilience: ‘We need to make sure we can produce our own food, our own PPE, our own vaccines etc.’ It’s a kind of security argument that I think is not just a purely nationalistic argument,” says Woods.
 
The third is the demand, led by institutional investors and consumers, for businesses to get a better grip over their supply chains, imposing extra costs as companies are cajoled into policing carbon emissions or labour practices in far-flung suppliers.  
 
And yet, despite these pressures, the truth about global trade — and globalisation — is that its death has been repeatedly exaggerated.
 
“Some people are saying we are going from globalisation to ‘slowbalisation’,” says Okonjo-Iweala. “But I don’t really think so. What I think is that we’re going through a period of reorganising globalisation.”
 
In the 1990s and early 2000s, global commerce was growing at twice the rate of output because big economies such as China, India and in eastern Europe were being integrated into the global economy. Now they have been more or less absorbed, it is only natural that things slow down, but this does not mean we have reached the high-water mark, says Okonjo-Iweala.
 
“I think we should look at the fact that there are certain regions of the world that have not really been integrated. Africa accounts for just 2-3 per cent of global trade. So there’s plenty of scope for integration of African and other poor countries into the system,” she says.
 
[...]
 
He cites the energy industry as evidence that supply chains are now more, not less, robust. When, in 1990, Saddam Hussein invaded Kuwait, oil prices more than doubled in two months. Today that wouldn’t happen, he says, “because supply has expanded, supply is global, there’s a connectivity between markets, different kinds of oil terminals and refineries and the flexibility of refineries to handle different categories of oil”.
 
[...]
 
When a crisis hits, manufacturers go to enormous lengths to salvage production. After a fire broke out in 2018 at a Michigan factory making truck parts for Ford’s F-150 pick-up, the carmaker sent a team to the smouldering plant to extract the tooling for the parts. The 19 machines, including one weighing 44 tonnes, were driven to Ohio and then flown on a Russian-built Antonov cargo jet to the UK where production restarted. The whole operation took 30 hours.
 
It is difficult for consumers to appreciate the complexity of the networks that bring goods to their shops or doorsteps. “I’m not sure end users care about the details except when they don’t work,” says John Butler, president of the World Shipping Council.
 
[...]
 
A dose of the BioNTech/Pfizer vaccine, for example, requires 280 components from multiple countries, according to the company. The idea of moving from what Okonjo-Iweala calls “just in time to just in case to just at home” is harder than it looks.
 
[...]
 
“On the shore side,” he says, referring to the billions of landlubber consumers with little idea about the global shipping trade and how their favourite goods reach them, “people don’t understand anything about this shadow sector”.

21st century supply chains: 19th century infrastructure, as with railways, sewers, water supply, most urban roads and parks and a great deal of badly insulated housing. It's called sweating your assets.
Where once architects, engineers and planners took decisions, now economists and accountants don't.

Shortly after the death of an overworked Bank of America intern in London in 2013, a then M&A analyst at a big investment bank recalls that he had an encounter on leaving his Canary Wharf tower at 11pm.
 
“I smell capacity,” he was told by a more senior banker — that is, free time that could be spent working.
 
He never reported the incident for fear of reprisals. A few years later, burnt out from bouts of working 15 hours a day and seven days a week, he quit. He brought up the incident in his exit interview as a reason he would never return.
 
[...]
 
Many first-year analysts have never seen their colleagues or bosses other than on screen. “Every time I leave my screen to go for a walk or take a break I need to communicate it to my VP,” said an analyst at a boutique investment bank. “Everyone is constantly scared about being monitored . . . it’s a huge breach of our privacy.” Another analyst called the technological monitoring a “virtual leash”.
 
[...]
 
The industry has changed, too. Back in 1994, Brian Mullen, then a managing director at boutique investment bank Donaldson, Lufkin & Jenrette, wrote a now-famous memo in response to complaints about staff being too busy. “Let’s define ‘busy.’ You are “busy” [if] you are working each weekday at least 16 hours and at least 16 hours on the weekend” he wrote. “If these are not your hours at the office, you have the capacity to take on more work.”
 
[...]
 
The cynicism may be warranted. Deniz Okat and Ellapulli Vasudevan, two academics, have studied the effect of no-Saturday working policies instituted by investment banks following the death of Erhardt. They looked at data on millions of taxi rides between 10 investment bank headquarters in New York City and residential neighbourhoods, and found that while Saturday rides decreased, late-night taxi rides on other nights increased significantly. “The policy backfired by inducing bankers to work longer during non-protected days,” they concluded.
 
[...]
 
The former banker who was chided for leaving work at 11pm recalled that “a huge amount of what I did can be done away with. The work was pointless . . . the best bankers are the ones that come in with two to three pages or no presentation at all because they know what they are talking about.”