The persistent disruptions in global supply chains necessitate robust partnerships to address the economic, environmental, and political challenges faced by governments and corporations.

Over the past two years, many of the world’s major supply chain routes have faced significant issues resulting in disruptions and delays for bulk carriers and other shipping vessels. Routes affected include the Panama Canal, the Red Sea/Suez Canal, and the Black Sea. These disruptions stem from ongoing issues surrounding drought and climate-related changes in the Panama Canal, sanctions on Russia following its invasion of Ukraine, and Houthi-led attacks on shipping vessels in the Red Sea to retaliate for Israel’s war in Gaza. Regardless of the reasons behind these disruptions, they have all led to significant spikes in the prices of consumer goods and operational challenges for both governments and major shipping companies.

For governments at all levels, shipping routes and ports are vital to the global economy. The Panama Canal route connects ships to key ports along the West Coast of the United States, including Los Angeles, Long Beach, Oakland, and Seattle. In California alone, port-related activities generate an estimated $38.1 billion in tax revenue and create approximately 3.1 million jobs, underscoring the shipping industry’s importance to the region.

In the Red Sea and the Suez Canal, many countries depend heavily on shipping, logistics, and trade for their economies. The United Nations estimates that around 30 percent of global container traffic passes through this region, involving numerous countries. Egypt, Sudan, Kenya, and Tanzania see between 10–34 percent of their overall trade pass through this route, with Egypt deriving 2 percent of its GDP from Suez Canal revenues alone. Similarly, Black Sea ports in Romania, Ukraine, Russia, Georgia, and Turkey are crucial transfer points for important resources like grain, fertilizer, and oil and natural gas.

The global supply chain disruptions have had significant impacts on both the public and private sectors. For large shipping companies such as Maersk and Hapag-Lloyd, the conflict between Houthi forces in Yemen and the Western naval coalition in the Red Sea has forced ships to reroute through the Cape of Good Hope, adding 10–14 days and 2,000–4,000 miles per journey. These detours increase operational costs and impact key performance indicators (KPIs) such as container turnaround time, vessel schedule adherence, fuel efficiency, and customer satisfaction. To offset losses, companies often raise shipping service prices, further driving up consumer goods prices.

For many countries, the challenges that corporations are dealing with directly affect governmental policy goals. Delays in ships reaching their final destinations have overwhelmed cities and countries lacking the infrastructure to accommodate long port stays. Following the Red Sea attacks, container traffic dropped by 50 percent, straining regional economies. Economic dissatisfaction and rising consumer goods prices have sparked global protests, becoming national security concerns due to the threat of riots, insurgencies, coups, and terrorism.

Additionally, climate and environmental sustainability goals are jeopardized by excessive oil and carbon emissions from these disruptions.

The political outcomes of this year’s 64 global elections, including the U.S. presidential election, are crucial for corporations assessing candidates’ responses to shipping supply chain disruptions. Corporations must also monitor potential political risks like expropriation and other losses, depending on the elected candidates and their economic policies.

Given the substantial impacts of supply chain disruptions on profits and policy objectives, increased corporate diplomacy efforts are essential. Corporations can act as mediators, advocating for multilateral organizations to create better policies surrounding ship security. This includes shared intelligence, encouraging more governments to join naval operations, and offering company resources.

Additionally, corporations can collaborate with governments to develop environmentally friendly alternatives, such as land and air routes that reduce distance, and investments in alternative clean renewable energy for shipping vessels. Public-private partnerships in global supply chains are also vital for creating sustainable jobs in trade-dependent countries, ensuring economic stability, and reducing the risk of property damage from unrest.

While supply chain disruptions are expected to continue into 2024 and beyond, they present an opportunity for corporations to engage more deeply in government affairs. Policymakers will likely need to consult with C-suite executives as future policies addressing global security issues are developed.