How Fresh Water is Disrupting the Global Supply Chain

Saturday - November 25 2023, 22:04 UTC - 1 year ago

The slowdown in shipping through the Panama Canal has highlighted the need for better water management in global supply chains. Humankind has been dealing with water issues for centuries, but in recent years the issue has receded into the background. Businesses and communities often find themselves in conflict over water resources, and it is important that we take a deeper look into how much water is used to make consumer products. This could help us better manage resources and meet the demands of businesses and communities alike.

Reports of lengthy shipping delays for vessels traveling through the Panama Canal this year have highlighted the critical but often overlooked role that fresh water plays across global supply chains. Drier than normal conditions in Panama, brought on by El Niño, have left the region drought-stricken and water levels in the locks that feed the canal lower than normal. This has led to fewer ships being able to pass through the canal each day: only 31 ships currently, compared with 36 to 38 under normal conditions. This means longer waits to move products through the canal and onto store shelves.

The slowdown at the Panama Canal shows how access to fresh water is key to the way goods are made and shipped, affecting everything from the price of groceries to retail forecasts for the upcoming holiday shopping season. As a professor of supply chain management, I think businesses would be wise to pay closer attention to this issue.

But first, you might ask: What does fresh water have to do with ocean freight? Plenty, it turns out.

Water, water everywhere, and not enough to share .

The Panama Canal is a freshwater connection between two oceans – not a saltwater link, as one might assume. A series of locks on each side of the canal raise cargo freighters nearly 100 feet to human-made lakes that extend across Panama’s isthmus and lower them down to sea level on the other side.

Each crossing by a ship requires 52 million gallons of fresh water from lakes, rivers and streams across this small country. This creates a trade-off between preserving water for local needs and using it to allow ships to traverse the canal. Less water allocated to the canal means fewer ships can pass through.

This isn’t an isolated phenomenon. Periodic low water levels in the Mississippi River and the Rhine River in Germany have impeded barge traffic for years, disrupting supply chains while stoking debate about how to divide limited amounts of fresh water. Recent plans by communities in northern Colorado to build their own reservoirs on tributaries of the Colorado River highlight questions about who owns access to local waterways and how this resource is governed.

An ancient challenge .

The need to manage water resources isn’t new, with complex water management systems dating back to the Roman Empire and even earlier. Humankind has made great progress on water management over the centuries, but in recent years the issue has often taken a back seat to other pressing environmental concerns such as global warming.

Water management is complicated by the fact that businesses and communities sometimes find themselves in conflict: Businesses want to use water for their operations, while communities want to preserve water supplies to ensure that residents’ basic needs are met. At the same time, communities also need the jobs and services that businesses provide. Examples such as the Panama Canal highlight this tension.

Balancing these seemingly contrary needs calls for a deeper look into how much water is used in the making of products people buy and use every day.

As my colleagues and I show in a recent journal article, water is an important componenet of many supply chains. Decisions about how to transport goods often come down to their destination and the roads, rails and canals that are needed to get them there. But water use is inherent in many aspects of supply chain management. For example, product manufacturing often requires large amounts of freshwater, while growing water-dependent crops like many fruits and vegetables can require more than 98 gallons of freshwater to create one pound of a food product.