If history can be relied upon for lessons learned, an imminent military engagement in Iraq can be expected to have modest impact on global freight transportation and logistics.

The Gulf War in 1991 had a limited effect on commercial ocean container shipping overall. Carriers imposed various risk surcharges and insurers became understandably nervous, all of which played out through a temporary pass-along of cost increases. However, the international freight transportation system was generally unaffected by what turned out to be a brief, localized conflict. In today’s geopolitical environment, the duration, scope and broader consequence of a major military engagement in the Middle East are key factors that remain uncertain.

Possible service disruptions of shipments from Asia via the Suez Canal to Europe and the U.S, East Coast remain a concern today as they did during the first Gulf War (though the Canal did not close during the 1991 conflict). Notwithstanding the levy of a War Risk surcharge, landbridge services through the U.S. West Coast would become an ocean transportation contingency in the event of a service disruption at the Suez Canal.

In the air cargo segment, a war in Iraq is expected to have little impact on capacity, except during the earliest stages of engagement. According to The Journal of Commerce, aside from affecting fuel prices, a war would not have as much impact on decreasing cargo volume as it would on decreasing passenger volume. A war in Iraq also could affect the worldwide economy, resulting in less cargo flying the skies due to decreased demand. Worse than the effect a war might have, industry representatives say, is the uncertainty the world is facing now ‘as the U.S. stands on the brink of a war of undetermined length or outcome.’

What kinds of contingencies can international shippers explore? Managing the logistics of uncertainty varies from company-to-company and supply chain-to-supply chain. However, the following generic guidelines may be worthy of consideration as you anticipate potential business impacts and disruptions in the Middle East and elsewhere:

• Increase forward safety stocks (Just-in-Case supply chain management model);
• Turn to alternate sourcing;
• Plan for freight diversion to other ports and holding facilities;
• Identify all ocean carriers with operations through the Suez Canal, reviewing routings and potential alternate routings for shipment re-routing if the Suez Canal should close.
• Revise marketing/sales objectives as warranted and communicate appropriately;
• Plan/budget for war and fuel surcharges on transportation;
• Anticipate added expense for higher security among warehouse/distribution center partners (particularly where hazardous materials may be targeted as components for weapons of mass destruction and local acts of terrorism);
• Establish clear, concise communication protocols with customers and suppliers for contingency plans, shipment prioritization and potential delays.

In the event hostilities do breakout, BDP Transportation and Logistics Operations personnel will be in continuous contact with our air, ocean, rail and motor carrier partners, and other third parties, to reduce the potential impact whenever and wherever physically possible. The call to customer service will be redoubled as events unfold. Our standing practice of sharing news and operational updates during times of crisis via www.bdpinternational.com and www.bdpcustomer.com will also carry on.

We encourage our clients and trade partners to reach out to BDP Operations, Transportation and Account Management personnel with questions and to discuss contingencies as warranted.

Thank you.