Business, Freight News, Logistics

DHL report sees new threats to the supply chain

[ March 25, 2019   //   ]

Trade wars, cyber security incidents and climate change paired with extreme weather conditions will be the top three threats to the supply chain in 2019, according to the latest DHL Resilience360 annual risk report, published today (25 March).

The report examines last year’s major supply chain challenges and identifies trends that will shape the risk landscape in 2019.

Disputes between the US and other countries, in particular China, including new unilateral import tariffs and the still-open question of the UK’s withdrawal from the EU are contributing to uncertainty.

A rising number of incidents involving supply chain and transport infrastructure showed how criminal elements might obtain trade secrets, engage in blackmail or cause economic disruption. Climate change presented a myriad of severe weather-related disruptions in 2018, which was the fourth warmest year on record. Wildfires, droughts, low water levels and melting ice had the most significant impacts on supply chains.

Resilience360 recorded the most incidents in Germany and the UK. Two-thirds of high-impact events were caused by cargo theft, industrial fires and explosions and train Air and ground transportation incidents represented the majority of incidents, at 44.7%.

Civil unrest accounted for the second-highest portion of events at 12.9%. Labour Day and the Yellow Vests protests in France and Belgium disrupted roads, ports and border crossings A month-long drought in summer and autumn resulted in record-low levels of water on the Rhine River which hit inland shipping traffic, in Germany, France and the Netherlands. Greece was struck by an earthquake near Zakynthos Island, while Italy, Spain, France, and the UK experienced heavy floods.

Looking ahead to 2019, the report says that companies may also face additional costs and uncertainty due to raw material shortages, recalls and safety scares or tougher environmental regulations. Rising demand for raw materials, coupled with a fragile supply caused by political instability and supplier shutdowns, may result in shortages of crucial materials such as lithium, cobalt, and adiponitrile.

Recalls and safety scares may increase, as wider public awareness of quality issues and stricter enforcement by regulators in highly regulated sectors such as pharmaceuticals and medical devices subject products to higher scrutiny.

Anti-pollution measures may be expanded in 2019 to a broader range of industries in Asia and the US Environmental Protection Agency is also expected to announce new requirements.