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Global Supply Chains Disrupted by CrowdStrike Software Bug
The recent CrowdStrike software bug that crashed Microsoft operating systems has led to the largest IT outage in history, causing significant disruptions at U.S. and international ports. Global air freight systems were the most affected, with airlines around the world grounding flights, according to logistics experts.
“Planes and cargo are not where they are supposed to be and it will take days or even weeks to fully resolve,” stated Niall van de Wouw, chief air freight officer at Xeneta, a supply chain consulting firm. “This is a reminder of how vulnerable our ocean and air supply chains are to IT failure.”
Thousands of flights were grounded or delayed at major air freight hubs across Europe, Asia, and North America, exacerbating existing supply chain challenges.
Amid rising global demand—shipments increased by 13% year-over-year in June—air freight supply had only seen a 3% year-on-year increase, causing higher costs for shippers due to limited capacity. “Shippers already had concerns about air freight capacity due to huge increases in demand in 2024, driven largely by the extraordinary growth in e-commerce goods being exported from China to Europe and the U.S.,” noted van de Wouw. “Available capacity in the market is already limited so airlines are going to struggle to move cargo tomorrow that should have been moved today.”
Transportation Secretary Pete Buttigieg told CNBC that the government is closely monitoring the situation. “These systems, these flights, they run so tightly, so back to back that even after a root cause has been addressed you can still feel those impacts throughout the day,” he said.
Buttigieg mentioned that while critical operational systems like air traffic control and major urban transit systems in the U.S. were functioning, airlines were expected to experience more significant disruptions.
FedEx and UPS both reported that they had activated contingency plans, with potential delays expected in package deliveries. FedEx cited possible service delays, while UPS noted issues in the U.S. and Europe but stated that its airline operations continued effectively, with drivers on the roads delivering packages.
Ports and Railroads Report Varying Levels of Impact
Most rails and ports managed better after initial disruptions. Union Pacific, a major U.S. freight railroad, confirmed varying impacts across its network but assured it was implementing backup protocols to maintain communication and freight movement, though there were some delays in customer shipments.
Other significant freight operators, including CSX, Norfolk Southern, and BNSF, reported no current impacts on operations.
At the ports, Buttigieg highlighted that small issues could escalate quickly. Despite some operational delays, he stated that ports were largely “up and running and open for business today.”
The Port of Houston experienced “major system outages” overnight but reported minimal delays to operations as systems came back online. Similarly, the Port of Los Angeles and Port of Long Beach reported temporary shutdowns but resumed operations relatively quickly.
The Port of New York and New Jersey faced brief delays at two terminals but were operational within a few hours. “The Port Authority has been working closely with impacted terminal operators since the overnight hours, assisting in their recovery while also communicating updates through a multitude of channels to the port’s vast community of stakeholders,” said Bethann Rooney, port director at the Port Authority.
Most marine terminals at the Port of New York and New Jersey were open by 8 a.m., with operations unaffected by the outage.
Ports not using systems with CrowdStrike software, such as the Port of Savannah and Port of Virginia, reported normal operations.
Emily Stausbøll, Xeneta’s senior shipping analyst, warned that the IT outage could cause significant disruptions if ships were prevented from offloading or loading containers, potentially leading to cascading effects throughout the supply chain. “There are also knock-on impacts across inland supply chains if truck and rail services are unable to pick up and drop off cargo at the port,” she explained.
The shutdown of Charleston Port last May due to a software failure, which led to a 200% increase in port congestion, served as a cautionary example. “Port congestion has been a major problem during 2024. While it is now easing, there is no slack in the system and any disruption will push the needle back into the red,” Stausbøll added.
Maritime intelligence company Kpler indicated that the global IT outage affected operations at various ports, including Gdansk in Poland and several ports in the U.K. Rotterdam, the largest port in Europe, advised customers of potential disruptions but confirmed that critical operations remained functional.
Matt Wright, senior freight analyst at Kpler, suggested that while the outage could lead to some delays at the affected ports, the implementation of a fix by Microsoft and Crowdstrike would likely prevent any significant backlog.
Source
www.cnbc.com