How the CrowdStrike Tech Outage Impacted Global Supply Chains

On Friday, July 19, a tiny software update from CrowdStrike, a cyber security tool used primarily by large organizations, caused Microsoft Windows computers around the world to crash.

It was the largest global IT outage meltdown ever recorded. The outage impacted millions of people, businesses, and organizations and crippled millions of Windows computers worldwide. Join us as we explore how this event brought global businesses to a halt, and what effect it had on supply chains.

Rapid Recovery

Severe disruptions were reported in multiple countries, including Australia, New Zealand, Japan, India, the United States and the United Kingdom and across Europe. Many businesses were unable to access critical systems and data, leading to significant delays and financial losses.

Airports were in chaos, supermarket check-outs malfunctioned, and journalists scrambled without the basic tools of the trade to report on a major issue causing havoc worldwide. Highly complex air freight operations were hit the hardest.

Many airlines were forced to ground flights and face a recovery period that could last weeks. Thousands of flights at the largest air freight hubs in Europe, Asia and North America were grounded or delayed. No industry sector was left unscathed.

The Microsoft IT outage saw many air cargo operations go dark after computer systems failed at airlines and airports worldwide. However, for many companies affected, the impact was short-lived.

Major US ports faced similar challenges, including New York, Houston , and Los Angeles, when the overnight container terminals shutdown. Shipping companies worldwide were at a standstill. However, by Saturday, July 30, many reported they were up and running. 

The global supply chain is facing growing demand, with shipments up 13% year-over-year in June 2024. However, air freight supply has increased by only 3% year-on-year, which is increasing costs for shippers due to limited capacity, according to Xeneta. 

On Friday, July 19, the day after the crash, only one U.S. freight railroad, Union Pacific, reported issues across its network related to the IT outage, and some processing delays in customer shipments. Union Pacific was doing business, and the majority of its customers’ freight was moving. 

Other major freight operators, such as CSX, Norfolk Southern, and BNSF, a subsidiary of Berkshire Hathaway, said their operations were not affected.

The Impact on Ports

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 was only a minimal impact on some of its terminals. 

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 worked overnight with terminal operators, assisting in the recovery while communicating updates over multitude channels to the community of stakeholders. This allowed the Port to initiate “a plan to get cargo moving again,” Rooney said.

Not all ports use systems that incorporate CrowdStrike software. For instance, both the Port of Savannah and the Port of Virginia reported normal operations. IT outages have the potential to cause significant disruption at ports if ships cannot offload and load containers.

Rotterdam, the largest port in Europe, reported critical port operations of the Harbor Master Division and nautical service providers remain operational. However, some companies in the port, including a container terminal, experienced disruption and have adjusted their processes. They are working on a solution.

There are indications that show how the IT outage affected operations in Gdansk, Poland, and Dover, Felixstowe, and Liverpool, U.K.

The outage could continue to cause some delays at ports around the world, but with Microsoft and CrowdStrike both implementing fixes, the resumption of normal operations on Friday, July 19, was complete and unlikely to cause any significant backlog.

A Short-Lived Digital Crisis

Ground handler Swissport told Air Cargo News (ACN) on July 22 that the IT outage only had a minor impact on its business worldwide. “Our cargo operations are running smoothly globally. We only saw a few delays and cancellations by some airlines in the first 24 hours after the incident occurred early Friday.”

Germany’s Lufthansa Cargo confirmed to ACN on July 22 that the IT outage had a minor impact only: “Our teams were able to return to normal operations on Friday afternoon already. We only had minor delays in the transport of single shipments but, fortunately, no flight cancellations.”

On July 22, Saudi Arabian airline Saudia Cargo reported its flights operated as planned, due to a successful business continuity plan, which is in line with GACA and in the process of receiving ISO certification. 

Yet Another Example of Unforeseen Risk

While recovery has been relatively swift in the wake of the outage, this serves as yet another example of how unforeseen risk can have a ripple effect across supply chains and industries.

In an article on Cybersecurity Dive, principle cybersecurity engineer at Immersive Labs, Rob Reeves, said in a statement that the heavy reliance on Crowdstrike’s Falcon platform is a “double-edged sword.”

Supply chain professionals are all too aware of the risk associated with dependency on single sources. Whether it’s suppliers or cybersecurity, a lack of diversification can lead to catastrophic results when risk strikes.