Quantifying the macroeconomics impacts of satellite failure on global supply chains

Abstract

Global supply chains have grown hand-in-hand with modern telecommunication systems,
particularly satellite communication services which can provide connectivity anywhere in the
world. Satellite communication services have thus become indispensable to the functioning of
modern economies. However, the potential macroeconomic impacts of satellite failures on these
supply chains remain underexplored. This research addresses the knowledge gap by examining
how satellite disruptions influence global trade, production, and economic stability.

Recent studies have underscored the critical role of satellites in tracking shipments, managing
inventories, and facilitating financial transactions. Yet, comprehensive analyses on the economic
ripple effects stemming from satellite malfunctions are scarce. To fill this gap, a Multi Regional
Input-Output (MRIO) model is used, combining econometric modeling with case studies of past
satellite failures. The methodology integrates satellite data interruption scenarios with global
trade models to simulate potential outcomes on supply chain efficiency and economic indicators.

The study reveals that satellite failures can cause significant delays in shipping, increased costs
due to rerouting and manual tracking, and disruptions in communication channels critical for
just-in-time production systems. For instance, a one-week satellite outage risks an estimated
global trade loss of $50 billion, highlighting the vulnerability of interconnected economies.
Additionally, industries heavily reliant on real-time data exhibited the most pronounced
disruptions.

The findings suggest that satellite failures can cause significant congestion in global supply
chains. This research underscores the interconnectedness of modern supply systems and the
propagating effects of one point of failure.