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The CrowdStrike Software Error crashed the Microsoft operating system and caused The biggest IT outage in history causing disruptions at U.S. and global ports, with the incredibly complex air cargo systems being hit hardest, according to logistics experts, as global airlines flight suspended.
“Aircraft and cargo are not where they are supposed to be and will take days or even weeks to fully resolve,” Niall van de Wouw, director of air freight at supply chain consultancy Xeneta, said in a statement shared with CNBC. “This is a reminder of how vulnerable our air and maritime supply chains are to IT disruption.”
Thousands of flights were canceled or delayed at the world’s largest air transport hubs in Europe, Asia and North America.
The new problems for global supply chains come amid rising global demand, with cargo volumes up 13% year-on-year in June. Air freight supply has increased, but only by 3% year-on-year, according to Xeneta, which has pushed up costs for carriers due to capacity constraints. “Carriers are already concerned about air freight capacity due to the strong demand growth through 2024, driven largely by the phenomenal growth in e-commerce exports from China to Europe and the US,” said van de Wouw. “The capacity available in the market is already constrained, so airlines will struggle to deliver cargo tomorrow that should be delivered today.
Pete Buttigieg, the U.S. Secretary of Transportation, told CNBC on Friday morning that what the government is watching for throughout the day, as the problem is identified, is “the ripple effect or the domino effect as they get things back to normal across their network.”
“These systems, these flights, operate so tightly, so continuously, that even if the root cause is addressed, you can still feel those impacts throughout the day,” Buttigieg said.
He said FAA operations systems, like air traffic control or most systems within the U.S. Department of Transportation, as well as major urban transit systems, like New York City’s MTA, are operating, although there may be “spot issues” throughout the day. But “for airlines, we certainly expect more there,” he said.
FedEx said in a statement that it had activated contingency plans, but added that “there will likely be delays in deliveries” scheduled for Friday.
UPS said in a statement that computer systems in the United States and Europe were affected, but its air cargo operations remained operational and drivers were still making deliveries to customers. “We continue to work to resolve any issues as quickly as possible; there may be some service delays,” UPS said.
Port, freight rail report some problems, but operations normal
Most rail lines and ports are operating better after some disruptions in the early morning.
Only one major U.S. freight railroad reported an incident related to the IT outage, while Union Pacific confirmed in an email to CNBC that the outage affected to varying degrees across its network.
“Our backup protocols allow us to communicate with our teams and dispatchers. We are doing everything we can to continue moving freight, but there have been some delays in processing customer shipments as we work to address impacted target areas on our network. We will continue to update stakeholders as we resolve the outage over the next 24 hours,” Union Pacific said in an emailed statement.
Other major freight companies, including CSX, Norfolk Southern and BNSF, a subsidiary of Berkshire Hathaway, said their operations are currently unaffected.
Buttigieg said that at ports, small problems can become big problems, noting that even with boats and cranes operating, gates were still affected, meaning trucks could not get in and out, leading to delays at some ports, but he added that they were “back up and running and open for business today.”
The Port of Houston, the fifth-largest port in the United States, said it experienced a “major system outage” overnight, but all systems are now back online with “minimal operational delays”.
The Port of Los Angeles, the nation’s largest port, confirmed to CNBC that one of its terminals, APM Terminals, had temporarily shut down but was back up and running by early morning. In an email to customers, APM, a subsidiary of Maersk, told shipping customers that the port “should recover fairly quickly” and resumed operations around 2 a.m. Any drivers who were unable to complete their pickups were asked to contact the company’s import team so they could secure a new appointment to have those containers free of storage charges.
Mario Cordero, executive director of the Port of Long Beach, said some terminals had only minimal impacts, but the system was back up and running or in the process of being restored.
The Port of New York and New Jersey reported delays in opening two terminals, but the terminals were back up and running within hours.
“The Port Authority has been working closely with affected port operators since last night, assisting them with their recovery while also communicating updates through multiple channels to the port’s broader stakeholder community,” 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 effective response to get cargo moving again.”
All ports open at 8 a.m. The Port Authority was not affected by the power outage.
Not all ports are using the CrowdStrike software integration system, while the Port of Savannah and the Port of Virginia both reported “normal operations.”
Emily Stausbøll, senior shipping analyst at Xeneta, told CNBC that an IT outage could potentially cause significant disruption at ports if ships were unable to unload and load containers, which could impact the entire supply chain.
“There are also spillover effects to the entire inland supply chain if truck and rail services are unable to pick up and drop off goods at ports,” says Stausbøll.
She noted that in May, the Port of Charleston on the US East Coast was closed for two days due to a software glitch, causing port congestion to increase by 200%. “Port congestion is a major issue in 2024. While it is easing now, the system is not slowing down and any disruption would push the clock back into the red,” she said.
Maritime intelligence firm Kpler told CNBC that early signs suggest a global IT outage is affecting operations at global ports including Gdansk in Poland and Dover, Felixstowe and Liverpool in the United Kingdom.
Rotterdam, Europe’s largest port, has notified customers on its website of potential disruptions, but a port spokesperson said in an email to CNBC that key port operations at the Harbour Master Division and maritime 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 solutions.”
Matt Wright, senior freight analyst at Kpler, said the outage could lead to some delays at affected ports, but with Microsoft and Crowdstrike reporting that a fix is being rolled out, the return to normal operations later today means the issue is unlikely to cause any significant backlogs.
