According to logistics experts, the CrowdStrike software error crashed Microsoft’s operating system and caused the largest IT outage in history, disrupting U.S. and global ports and hitting the highly complex air freight system the hardest, with airlines around the world grounding flights.
“Planes and cargo are not arriving where they should be and will take days or even weeks to fully resolve,” Niall van de Wouw, chief air cargo officer at supply chain consultancy Xeneta, said in a statement shared with CNBC. “This A reminder of how vulnerable our maritime and air supply chains are to IT failures.”
Thousands of flights are grounded or delayed at the world’s largest air cargo hubs in Europe, Asia and North America.
The new problems in the global supply chain come at a time when global demand is rising, with shipments in June growing 13% compared with the same period last year. Xeneta said air freight supply has increased, but only by 3% year-on-year, which has resulted in higher costs for shippers due to limited capacity. “Shippers are already concerned about air cargo capacity due to a significant increase in demand in 2024, mainly driven by a significant increase in e-commerce goods exports from China to Europe and the United States,” Van de Wouw said. “Available capacity in the market has already limited, so airlines will have difficulty transporting cargo tomorrow that should be transported today.
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U.S. Transportation Secretary Pete Buttigieg told CNBC on Friday morning that as the problem was identified, the administration was focused throughout the day on “what kind of ripple effects or cascading effects there would be when they bring everything back to the way it was before.” The network is back to normal. “
“These systems, these flights, they operate so closely, so back-to-back, that even if the root cause is addressed, you can still feel the effects all day long,” Buttigieg said.
He said most of the Federal Aviation Administration’s operating systems, such as air traffic control or the U.S. Department of Transportation, and major urban transit systems, such as New York City’s MTA, are operating, although “localized” disruptions are possible throughout the day. question. But “in terms of the airlines themselves, we’re definitely expecting more,” he said.
FedEx said in a statement that it had activated contingency plans, but added that it expected “possible delays in package delivery” on Friday.
UPS said in a statement that computer systems in the United States and Europe were affected, but its airlines continued to operate effectively and drivers were on the road making deliveries to customers. “We are continuing to work to resolve all issues as quickly as possible; some service delays may occur,” UPS said.
Ports, freight railways report some problems, but operations are normal
After some early morning disruptions, conditions have improved on most railways and ports.
Only one major U.S. freight railroad reported issues related to the IT outage, with Union Pacific confirming in an email to CNBC that the entire network was affected to varying degrees.
“Our backup protocols allow us to communicate with our teams and dispatchers. We are doing everything possible to keep shipments moving, but we are experiencing some processing delays with customer shipments while we address targeted areas impacting our network. We We will continue to keep our network safe.
Other major cargo operators, including CSX, Norfolk Southern Airlines and Berkshire Hathaway subsidiary BNSF, said their operations were not currently affected.
Buttigieg said small issues can turn into big problems at ports, noting that even when ships and cranes are operational, gates can be affected, meaning trucks can’t get in or out, causing delays at some ports. Adding that they are “operational and open for business today”.
The Port of Houston, the fifth-largest U.S. port, posted a notice on its website that the port’s Babs Carter and Bayport container terminals were closed Friday morning but expected to be able to open later in the day.
The Port of Los Angeles, the largest port in the United States, confirmed to CNBC that one of its terminals, APM Terminal, was temporarily closed but returned to normal in the early morning. Maersk subsidiary APM informed trucking customers in an email that the port was “able to recover fairly quickly” and restarted operations around 2 a.m. The company’s import arm group so that they can secure new appointments to waive demurrage charges for these containers.
Mario Cordero, executive director of the Port of Long Beach, said the impact on some terminals has been minimal, but systems have been activated or are in the process of recovery.
The Port of New York and New Jersey reported delays in the opening of two terminals, but within hours, the terminals were back to normal operations.
“Since overnight, the Port Authority has been working closely with affected terminal operators to assist with their recovery efforts, while also communicating through a variety of channels to the port’s broad stakeholder base,” said Port Authority Port Director Bethann Rooney. The group provided an update on the situation. She said the port was able to launch a “quick and effective response to get the cargo moving again.”
All marine terminals open at 8am.
Not all ports use systems that include CrowdStrike software, with the Ports of Savannah and Virginia reporting “normal operations.”
Emily Stausbøll, senior shipping analyst at Xeneta, told CNBC that an IT outage could cause significant disruption at ports and could affect the entire supply chain if ships are unable to load and unload containers.
“If truck and rail services are unable to load and unload cargo at the ports, there will also be a knock-on effect on inland supply chains,” Stasbohr said.
She pointed out that in May, the Port of Charleston on the East Coast of the United States was closed for two days due to a software failure, causing port congestion to increase by 200%. “Port congestion has been a major issue in 2024. While things are easing now, there is no slack in the system and any disruption will push the needle back into the red,” she said.
Maritime intelligence company Kpler told CNBC that initial indications are that a global IT outage is affecting operations at ports around the world, including Gdansk in Poland, Dover, Felixstowe and Liverpool in the UK
Rotterdam, Europe’s largest port, informed customers of possible disruptions on its website, but a port spokesperson said in an email to CNBC that critical port operations for port authorities and navigation service providers remained operational. “However, some companies at the port, including container terminals, have experienced problems as a result of the disruption and have adapted processes. They are working on solutions.”
Matt Wright, senior freight analyst at Kpler, said the outage could cause some delays at affected ports, but with Microsoft and Crowdstrike reporting fixes being implemented, a return to normal operations later today means it is unlikely to create any significant backlogs.
