If you ever visit Northern Italy between January and February and you wish to experience local folklore, the Venice Carnival is an event not to miss. While it may be challenging to make your way through the narrow calles due to the large crowds, the parade and the sheer display of masks and costumes are a great way to get a feeling of the city’s history. The masks represent different aspects of the past, with strong roots to the Middle Ages, and they range from doctors during the Plague to merchants with some rough edges, so to speak. Of course, pirates also show up to the party.
The relationship between the ancient Republic of Venice and gangs of pirates has characterized the history of maritime trade in the Mediterranean region, with several wars and acts of guerrilla between the two factions. Most notably the Uskoks, former Croatian soldiers turned to piracy, engaged in open conflict with Venice, which escalated and led to the involvement of several major powers in the European continent. Zooming out a little, it is possible to notice how merchants in the region were constantly subject to piracy or warfare, due to the power struggles for the control of trade routes.
While the primary – or most visible – reason for these disruptions was commercial, maritime transport has always experienced the domino effects of different political, social and cultural clashes. Affecting the supply of goods and services is a very effective way to destabilize and earn attention. This happened in the Middle Ages as much as it happens today. In recent times, the world has observed supply routes suffer disruptions due to tensions in the South China Sea between China and Taiwan, the Russian invasion of Ukraine, and the semiconductor wars, which have been fought with laws and regulations for over three decades. The latest development in the complex relationship between politics, society and supply routes is the series of attacks of Houthi armed groups towards Western cargo ships, in response to the current conflict in Gaza.
So what is happening exactly?
The Houthi militants operate against Yemen’s government, they have close ties with Iran and they are currently launching attacks with drones and missile strikes on cargo vessels coming from countries that have affiliations with Israel, such as the US or European states. Thus far, the aggressions have led to several ships being hit and, in the case of the latest attack to an American vessel, to the first three casualties. As the conflict intensifies, so does the dilemma of how to keep workers safe while still managing to maintain shipping levels that are vital to several countries around the globe. As a result of the latest developments, vessels going from Asia to Europe could now take up to an additional twelve days to complete their journey, compared to prewar levels.
One of the main reasons for the diversion in maritime routes is due to the intensity of Houthi attacks in the Bab el-Mandeb strait, a chokepoint that allows to proceed towards the Suez canal. To get a sense of its importance, the International Maritime Organization (IMO) estimates that up to a quarter of the entire global maritime traffic goes through this route, which is no surprise given its close relation to Suez. Despite its importance, Bab el-Mandeb – which translates as “Gate of Grief” – has historically been a rough passage for merchants, with strong currents and winds, as well as abandoned explosive devices left over by previous conflicts, such as naval mines. Once more, the history of maritime warfare unfolds smoothly, free from disruptions.
This setback could be a severe hit to maritime shipping, as it comes at a time when ocean carriers were finally starting to see some improvements after a series of events that had deeply affected operations since the beginning of the Covid-19 pandemic. Political risk has become an increasingly concerning issue for supply chains in recent years, as a larger number of governments have started to focus inwards and consider bringing critical suppliers closer to home, at the expenses of international partnerships. This may be the case of a large player such as the US, whose supply chain orientation may look drastically different depending on the outcome of the presidential elections later this year.
Moving the clock back again by a few hundred years, it is interesting to look into the success factors that allowed Venice to overcome the challenges of its times. Specifically, the manufacturing process of La Serenissima’s naval arsenal was quite progressive. Venice was the first to streamline production and standardize and interchangeable ship components, building ships very quickly with a mindset that resembles modern just-in-time processes. In addition, workers adapted operations to their territory, using canals to move materials around and maximise times. Overall, their manufacturing philosophy rested on a principle of continual improvement, which led to the construction of lighter ships that made production easier.
Given the increasing disruption levels in the current operating landscape, perhaps an extremely lean production may not be the best choice today, but the underlying spirit of innovation adopted by maritime powers such as Venice should still be of inspiration. To withstand current volatility, companies need to adjust to their operating context, understanding the risks along their supply routes and building mitigation measures accordingly. It would be short-sighted to continue to operate with an obsolete mentality in a new and more complex scenario. The supply of goods and services is at the heart of every functioning society and therefore supply chains cannot live in isolation from social, political and economic trends. Normalizing disruptive events as part of the business landscape is the first necessary step towards building resilient processes. Sugarcoating reality won’t make it any simpler when an adversity occurs, just like wearing a Venetian mask won’t turn you into a different person once the Carnival is over.
Author: Gianluca Riglietti
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