Microsoft, crowdstrike it outage hits global supply chain, with air freight facing days or weeks to recover

Microsoft, crowdstrike it outage hits global supply chain, with air freight facing days or weeks to recover

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In this article * CRWD Follow your favorite stocksCREATE FREE ACCOUNT Bfk92 | E+ | Getty Images The CrowdStrike software bug that crashed Microsoft operating systems and caused the largest


IT outage in history caused disruptions at U.S. and global ports, with highly complex air freight systems suffering the heaviest hit, according to logistics experts, as global airlines


grounded flights. "Planes and cargo are not where they are supposed to be and it will take days or even weeks to fully resolve," Niall van de Wouw, chief air freight officer at


supply chain consulting firm Xeneta, said in a statement shared with CNBC. "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 the world's largest air freight hubs in Europe, Asia and North America. The new issue for the global supply chain comes amid a rise in global demand,


with shipments up 13% year-over-year in June. Air freight supply has increased, but only by 3% year-on-year, already causing higher costs for shippers due to the limited capacity, according


to Xeneta. "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.," van de Wouw said. "Available capacity in the market is already limited so airlines are going to struggle to move cargo tomorrow that


should have been moved today. Pete Buttigieg, U.S. Secretary of Transportation, told CNBC on Friday morning that what the government is watching for over the course of the day, as the issue


has been identified, is "the kind of ripple or cascade effects as they get everything back in their networks back to normal." "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," Buttigieg said. He said the FAA's operational


systems, like air traffic control or most systems within the U.S. Department of Transportation, as well as major urban transit systems, such as New York City's MTA, were operating


though there could be "spot" issues throughout the day. But "as far as the airlines themselves we are going to definitely be expecting more there," he said. FedEx said in


a statement that it has activated contingency plans, but added that "potential delays are possible for package deliveries" expected Friday. UPS said in a statement that computer


systems in the U.S. and Europe were affected, but its airline continues to operate effectively, and drivers are on the roads delivering for customers. "We are continuing to work to


resolve all issues as quickly as possible; there may be some service delays," UPS stated. PORTS, FREIGHT RAILS, REPORT SOME ISSUES, BUT NORMAL OPERATIONS Most rails and ports were


faring better after some early morning disruptions. Only one major U.S. freight railroad reported issues related to the IT outage on Friday morning, with Union Pacific suffering varying


levels of impact across its network, and some processing delays in customer shipments. By Friday afternoon, Union Pacific said it was "back open for business" and the majority of


its customers' freight was moving, with full fluidity returning to its network.  Other major freight operators, including CSX, Norfolk Southern and BNSF, a subsidiary of Berkshire


Hathaway said their operations are not currently affected. Buttigieg said that at the ports, small issues can turn into a big issue, noting that even with ships and cranes operational, gates


were affected, which meant the trucks couldn't come in or out, which led to delays at certain ports, but they are "up and running and open for business today," he added. The


Port of Houston, the fifth-largest port in the U.S., said it experienced "major system outages" overnight, but said that all of its systems are now up and running with


"minimal delay to operations." The Port of Los Angeles, the nation's largest port, confirmed to CNBC that one of its terminals, APM Terminals, was down temporarily, but came


back up in the early morning. In an email to clients, APM, a subsidiary of Maersk, notified trucking clients that the port was "able to recover rather quickly," and it restarted


operations around 2 a.m. Any drivers not able to complete their pickups were told to contact the company's import group so they could secure a new appointment to have a demurrage waiver


for those containers. Mario Cordero, executive director of the Port of Long Beach, said there were minimal impacts to some of its terminals, but systems are up or in the process of being


restored. The Port of New York and New Jersey reported a delay in the opening of two terminals, but within a few hours, the terminals were back up and running. "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 of New York and New Jersey. She said the port was able to initiate "a quick


and efficient response to get cargo moving again." All marine terminals were open by 8 a.m. The Port Authority agency was not impacted by the outage. Not all ports use systems that


incorporate CrowdStrike software, with the Port of Savannah and the Port of Virginia both reporting "normal operations." Emily Stausbøll, Xeneta senior shipping analyst, told CNBC


that the IT outage has the potential to cause significant disruption at ports if ships are prevented from offloading and loading containers, and that can cascade through 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," Stausbøll said. She noted that In


May, Charleston Port on the U.S. East Coast shut for two days due to a software failure, which resulted in a port congestion increase of 200%. "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," she said. Maritime intelligence company Kpler told CNBC


early indications showed the global IT outage affecting operations at global ports including Poland's Gdansk, and Dover, Felixstowe and Liverpool in the U.K. Rotterdam, the largest port


in Europe, informed customers on its website of possible disruptions, but In an email to CNBC, a port spokesman said critical port operations of the Harbour Master Division and nautical


service providers remain operational. "However, some companies in the port, including a container terminal, are experiencing issues due to the disruption and have adjusted their


processes. They are working on a solution." Matt Wright, senior freight analyst at Kpler, said the outage could lead to some delays at the affected ports, but with Microsoft and


Crowdstrike reporting a fix being implemented, resumption of normal operations later today would mean it is unlikely to cause any significant backlog.