Cargo theft and terrorism remain the top supply chain risks for 2016

Cargo theft, terrorism and labour unrest will remain the top risks supply chains face in 2016, according to the BSI’s Global Supply Chain Intelligence Report.

In 2015, cargo theft resulted in damages worth $22.6bn, BSI said. South Africa saw a 30% increase in cargo truck hijackings over the last year, with thieves using a lot of violence and switching from targeting only high value goods to also targeting lower value items. In China and India, daring vehicle shipment thefts have become increasingly commonplace.

Terrorism is another risk that has contributed to billions of dollars of losses to global shipping companies in 2015, while last year’s top five natural disasters resulted in a $33bn loss for businesses globally. Additionally, the migrant crisis has harmed supply chain integrity across Europe; Argentina, Brazil and China experienced economic downturns; and issues of political transparency fuelled social unrest in Africa and Central America.

Labour unrest and factory strikes have also caused considerable financial damage across the world. Factory strikes in China increased by 58.3% from the previous year due to pay disputes, as factory owners struggled to pay workers due to a slowing economy, leading to protests. The withholding of wages was cited as a major cause in 75% of protests and generated losses of up to $27m in the footwear industry.

For 2016, BSI predicts that the biggest threats to the global supply chain include:

1. Global cargo theft cost will grow by a further $1bn in 2016
2. Continued tensions in South China Sea will lead to further protests and disruptions
3. On-going conflict in Syria will continue to impact supply chains, with the migrant crisis continuing to lead to port disruptions, and the EU border controls having a far-reaching impact
4. ISIS will remain a significant threat to supply chains
5. Labour unrest in China will persist, as a slowdown in the Chinese economy continues and more jobs move to neighbouring countries
6. Weather disruptions e.g. La Nina phenomenon
7. Global health crises e.g. Zika and Ebola

Jim Yarbrough, global intelligence program manager at BSI, said: “Companies are facing an increasingly wide range of challenges to their supply chain, from human rights issues to acts of violent theft and natural disasters. Such complexity creates extreme levels of risk for organisations, both directly affecting the bottom line but perhaps more seriously, hidden threats to the supply chain which, if ignored, could do serious harm to a company’s hard-earned reputation.”