Whenever a supply chain problem hits, one answer comes up again and again: diversification. Add more suppliers. Spread production across several countries. Keep another shipping route available in case the usual one becomes difficult to use.

Recent events have shown why adding one more option is not always enough.

When the Red Sea crisis made the Suez Canal difficult to use, many vessels diverted around the Cape of Good Hope. The alternative existed, but on Asia-Europe routes the detour added roughly 3,000 to 3,500 nautical miles and could extend transit times by around 7 to 10 days.

The Strait of Hormuz presents a different problem. Roughly one-quarter of global seaborne crude oil trade passes through the strait, along with significant volumes of LNG and fertilizer. For cargo moving out of the Gulf, there often is no simple equivalent to the Cape route—no single alternative route that solves the problem.

The same issue applies to production. A company can add a factory outside China, but if both plants still depend on critical components or raw materials from the same region, or ultimately use the same ports and shipping routes, the underlying risk has not been fully diversified.

So when a real disruption hits, how well will the diversification plans companies are building today actually work?

Different Disruptions Hit Different Parts of the Supply Chain

The major supply chain disruptions of the past decade did not all fail in the same place.

When Hanjin Shipping collapsed in 2016, the carrier itself was the problem. Hanjin was the world’s seventh-largest container carrier at the time, and the shutdown left some shippers dealing with cargo delays and additional costs. The experience was one reason some companies later began limiting how much volume they placed with any single carrier.

COVID-19 affected a much broader part of the system. In the first half of 2020, U.S. seaborne container imports fell 7% year over year. Import demand then rebounded quickly, creating shortages of vessel capacity and containers and putting heavy pressure on ports. Demand dropped sharply and then came back faster than the logistics network could adjust.

The semiconductor shortage of 2021 and 2022 exposed a different weakness: production capacity could not easily be replaced in the short term. COVID-related production disruptions and shifts in demand for automobiles and electronics were among several factors, but the industry also lacked the ability to quickly replace the required volume at other production sites.

More recently, shipping routes were disrupted in the Red Sea, while the Strait of Hormuz has put another risk in focus: the concentration of large cargo flows through a single maritime chokepoint.

There is no single part of the supply chain that companies can prepare for and consider the job done. A carrier may fail. A factory or port may become unavailable. A transportation route may be blocked. Diversifying one part of the supply chain does not protect against every scenario.

Why Moving Production Does Not Solve the Whole Problem

Since COVID-19, companies and governments have taken concrete steps to diversify supply chains.

East Asia—including Taiwan, South Korea, Japan and China—plays a major role in semiconductor and other advanced-technology supply chains. The United States enacted the CHIPS and Science Act in 2022 in part to expand domestic semiconductor production and strengthen research and development. By encouraging investment in U.S. semiconductor manufacturing and R&D, the legislation is intended to reduce dependence on semiconductor production concentrated overseas.

China+1 has also become more common in consumer goods, apparel and electronics. Instead of eliminating production in China, companies keep their existing manufacturing base while adding capacity in countries such as Vietnam or India.

But a second factory does not automatically create a second supply chain.

A company may produce in both China and Vietnam, for example, but if the two factories depend on the same source for critical components or raw materials, the benefit of splitting production may be smaller than it looks. The final assembly sites may be different, but the same vulnerability remains if a key component still comes from a single supplier.

Warehouses and inventory need the same scrutiny. Production may be spread across several regions, but if finished goods or critical inventory are concentrated in one warehouse, a disruption in that location can still create a serious problem.

Factory location is only one part of the picture. Companies also need to know where each factory gets its raw materials, where finished goods are stored, and which routes those goods use to reach customers.

The recent expansion of China+1 needs to be viewed the same way. Manufacturing in countries such as Vietnam and India is growing, but China still plays a major role in global manufacturing and complex supply chains. Moving part of production does not automatically move the supplier relationships behind it.

Diversification Has to Continue Into Logistics

Once a product leaves the factory, there are still plenty of decisions to make.

Where should inventory be stored? If the usual port becomes unavailable, can the cargo move through another one? If a route is blocked, which alternative can be used?

The same questions apply to carriers and sailing schedules. If one carrier suspends a service, can another carrier take the cargo? If a planned sailing is missed, is another schedule available? The answers affect how quickly a company can respond.

Sometimes the transportation mode itself also has to change. If a delay in ocean freight is too costly to absorb, air freight or another mode may be worth considering despite the higher cost.

That creates a practical trade-off: having an alternative does not mean having a like-for-like replacement.

Routing around the Cape of Good Hope keeps cargo moving, but adds distance, time and cost. Air freight can cut transit time, but at a much higher price. Another factory may exist, but it may not have enough spare capacity to absorb the full volume at short notice.

Supply chain diversification is therefore not about building a second option that works exactly like the first.

In a crisis, the more realistic goal is to have another option that keeps operations from stopping altogether.

No company can duplicate every supplier, factory, warehouse, carrier and route. The cost would be too high.

Each company has to decide where to focus first. Where would a disruption cause the most damage? How long would that part of the supply chain take to replace? And how much additional time and cost would come with the alternative?

If Uncertainty Lasts, Lead-Time Planning Has to Change

Even with several alternatives in place, the operating plan cannot stay unchanged. The moment a shipment is rerouted or moved to another transportation mode, the original assumptions around transit time and cost change with it.

Rerouting around the Cape of Good Hope is a straightforward example. The cargo keeps moving, but the journey takes longer. If purchasing and inventory plans still assume the same inbound date as before, schedules are much more likely to fall out of alignment.

On uncertain routes, asking only “How long does this shipment usually take?” is no longer enough. Companies need to consider both the normal transit time and how much extra delay could follow a rerouting or schedule change.

Shipping earlier is one response. Cargo with a higher risk of delay can leave with more time built into the schedule, while the cost of air freight or another emergency option can be reviewed in advance. It is easier to respond when the team has already decided which option to consider under which conditions than to start looking for an answer after the disruption begins.

These changes extend beyond the logistics team. A different arrival date can affect purchasing and production plans as well as delivery commitments made to customers. Actual shipment conditions and expected changes need to be shared with sales, purchasing and production teams, and customer timelines may need to be adjusted as well.

The goal is not to hold out until transit times return to what they used to be. If uncertainty is likely to last, the operating assumptions themselves need to change: ship earlier, build more buffer into the schedule, and consider more expensive transportation alternatives when necessary.

Supply chain diversification does not end when a company adds another supplier or route. If those alternatives are going to be usable, order timing, inventory, transportation lead times and customer delivery commitments may need to change along with them.

Compare Scenarios, Not Just the “Best” Route

Supply chain planning also changes in this kind of environment.

Under normal conditions, the priority may be to find the fastest or lowest-cost supplier and transportation route. Once disruption risk enters the picture, that is only one part of the decision.

Companies can compare the transit time and cost of staying on the existing route versus rerouting, the difference created by switching transportation modes, and how much volume another production site could handle if the primary one stopped operating.

AI and machine learning can also be used to examine these scenarios. Changing the assumptions and comparing the results can help teams review possible responses before a real disruption occurs. Digital schedules and routing information provided by carriers can also help identify and compare available transportation options.

Planning, however, only goes so far.

A port call that was scheduled when the booking was made may later be omitted. A transshipment schedule may change. The route can change, or the ETA can keep moving away from the date originally expected.

The more countries, carriers and routes a company uses, the more shipments it has to monitor for exactly these kinds of changes.

More Options Also Mean More to Monitor

Managing cargo from one origin through one or two carriers is very different from managing shipments departing from China, Vietnam and India on different carriers and sailing schedules.

Teams need to confirm whether each shipment has departed, whether it is still moving on the vessel and route originally planned, and whether a delay has occurred during transshipment. If the ETA changes, inland transportation, customs clearance and warehouse schedules may all need to be checked again.

Diversification gives a company more ways to respond to disruption. It can also leave the team spending more time simply figuring out what is happening to each shipment.

Shipment visibility becomes more important as that complexity grows.

Tradlinx Ocean Visibility brings shipments across multiple carriers into one place and helps teams track changes that occur during transit, including ETA changes, delays, transshipment events and route changes.

The service does not decide which supplier a company should use, nor does it diversify the supply chain on the company’s behalf. Its role is to help teams see how the choices they have already made across suppliers, production locations, carriers and routes are actually playing out in transit.

If a shipment is arriving later than expected, downstream inland transportation or warehouse schedules may need to be adjusted. If a problem develops during transshipment, the affected shipments may need another look. The more carriers and routes a company uses, the more important it becomes to see these changes in one place.

Diversification Is Not About Waiting for Normal to Return

The collapse of Hanjin Shipping, COVID-19, the semiconductor shortage, and disruptions in the Red Sea and around the Strait of Hormuz all came from different causes. The next major disruption could look completely different again.

No company can predict every risk in advance. But it can identify how far the impact might spread if a particular supplier, production site, warehouse, port, carrier or route became unavailable, and prepare alternatives that could actually be used if needed.

Those alternatives may take longer or cost more. A more diversified supply chain also creates more information to manage. Even so, it is becoming harder to assume that running one highly efficient supply chain and improvising every time something goes wrong will continue to work.

The purpose of supply chain diversification is not to eliminate every risk. It is to create enough room to keep logistics and supply moving when something unexpected happens.

That means knowing where dependencies are concentrated before a disruption occurs and preparing alternatives that are actually usable. Once one of those alternatives is activated, teams also need to know whether the cargo is moving as planned and how the schedule is changing.

Supply chain diversification that works in a crisis goes beyond spreading suppliers or production across more locations. It means having options that can actually be used when conditions change, and an operating model that can keep making the next decision as the situation changes.

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