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Tag: risk

Supply Chain Shortages Have Eased

Posted on by David Priestman

Global supply chains have largely recovered from the shocks experienced by the onset of the Russia-Ukraine war, with industries such as energy and food witnessing price and supply shortages ease significantly compared to the highs of 2022. This is according to Efficio’s latest report, Category Insights & Outlook H2 2023 which provides a summary of global supply chains as of Q3 2023. The report highlights that while there have been signs of recovery – the external challenges that hindered growth over the last year still remain, emphasising the need for global markets to remain vigilant against future risk.

The Category Insights & Outlook H2 2023 report is the second release in Efficio’s research series, which takes an in-depth look into key categories that have experienced significant changes over the last six months: this time, energy, food & agriculture, logistics, and metals. The report outlines the trends and challenges that these different categories pose and outlines what affected organisations can expect over the short and medium term, and how they can overcome, and even prosper, in these uncertain times.

The report found that, while prices of electricity and gas have trended downwards from their record highs last summer, global supply/demand dynamics remain unstable – with weather extremes and the slow transition to renewables cited as additional risks on the horizon. The cost of fuel continues to lead to a pattern of instability, with continued geopolitical uncertainty.

The high commodity prices and supply shortages in the food and agriculture industry have also eased considerably compared to last year. However, the market remains volatile and continues to be marked by supply chain risks and macroeconomic pressures.

Simon Whatson (pictured), Vice President at Efficio, comments:

“After the turbulent few years all industries have faced, 2023 has shown promising signs of how conditions might improve across even the most impacted of categories. Nonetheless, the situation remains volatile, uncertain, complex, and ambiguous. The development of future-proofing strategies, investment in and access to the right talent, and increased investment in digital innovation will continue to benefit those businesses amid the unpredictable environment we continue to face. We expect to see more business announcements of long-term strategy choices to weather future disruptions, particularly in relation to potential geopolitical uncertainty and environmental risks.”

Other key findings from the report include:

• Gas and oil prices have fallen by 51% and 9% respectively since the start of Q1 this year, as economic recovery has wavered in Europe and South-East Asia. However, the market remains vulnerable to various supply and demand-side uncertainties.
• Global electricity observed a return to growth, as demand has increased by 2% above the pre-pandemic average.
• Metal prices are forecast to fall by 8% in 2023 and a further 3% in 2024. Prices are expected to remain volatile, although many have been easing with the recovering Chinese economy.
• The transport and logistics sector is expected to grow 4% in 2023 and a further 3% in 2024, albeit still being affected by the ongoing war in Ukraine and a slower-than-expected recovery of global demand, particularly from China.
• Ocean freight rates have seen a dramatic decrease compared to 2021 and 2022 highs (down 77% YoY in Q2, according to the Shanghai Containerised Freight Index), with global trade including shipping, now entering a period of slower growth. Meanwhile, the air freight market has stabilised significantly from the volatility experienced up until Q2 2022.
• The UN Food and Agriculture Organisation’s (FAO) global food price index fell to 122.3 points, its lowest level in more than two years and 23.4% below an all-time peak reached in March 2022.

Find out more insights and advice on each of these four key sectors, and get support from procurement and supply chain experts on how to navigate these uncertain times, here

Death in Confined Spaces: Hidden Danger

Posted on by David Priestman

International freight transport insurer TT Club is seeking to draw attention to the hidden danger and life-threatening hazards caused by enclosed and confined spaces prevalent throughout the global supply chain. Toxic gases produced by some cargoes as well as leakages, residual fumigants and other causes of a reduced oxygen environment are the chief problems, with 60% of fatalities suffered by would be rescuers.

Confined or enclosed spaces are common in the supply chain industry. Such spaces exist across all freight modalities; from tank containers to cargo hold stairwells and holds, to road tankers and sealed cargo units. A lack of understanding of the danger present may have fatal consequences.

Without sufficient oxygen the human body starts to shut down very quickly. Any rescue operations are therefore time critical. The primary cause of reduced oxygen levels is the increased presence of other gases, such as carbon dioxide. This may arise from rusting of the ship’s structure or metal cargoes, oxidation of cargoes such as coal or the decomposition of biodegradable cargoes, for example fish meal, logs, bark, or wood pellets. All these lead to carbon dioxide – and potentially other gases – being released, simultaneously depleting the oxygen. Other associated hazards include flammable or toxic vapours from leaking cargoes or leaking pipes or hoses.

Peregrine Storrs-Fox, Risk Management Director at TT explains that a lack of awareness of these, often hidden dangers is surprisingly high. “The key risk is that workers may not readily recognise spaces that could present danger,” he states. “The cargo hold of a ship is a leading example, but containers and other cargo transport units pose similar risks; there may be a lack of knowledge of the cargo packed or whether fumigants have been used. Similarly, tanks units, whether a road barrel or tank container, certainly qualify as enclosed spaces.”

The speed with which the effects of oxygen depletion can become debilitating require thorough and regular communication to ensure that operatives understand the risks. When entering a lethal space there are no obvious red flags. In terms of symptoms there are no warning signs such as coughing or feeling breathless or nauseous. An individual can pass out without having the opportunity to raise an alarm or escape.

The quick onset and catastrophic nature of these symptoms often leads to others rushing to the aid of the casualty, unaware of the reason for their collapse. Statistically, over 60% of fatalities connected to confined and enclosed spaces are suffered by would be rescuers.

“The silent and invisible nature of this killer emphasises the importance of raising awareness of the risk,” stresses Storrs-Fox. “Developing and undertaking drills to practice rescues are crucial steps in mitigating the risks, as are a number of other strategies including risk assessments of working in potentially hazardous spaces, discouraging short cuts in work practices and testing, monitoring and venting air in confined areas.”

While not exhaustive, TT has developed a checklist of risk mitigation strategies that can be applied across all modes, whether on land or at sea.

Webinar: Engineering Risk out of Insurance Transactions

Posted on by Keith McKinley

Insurance of freight is about managing risk. Listen and learn about the Redkik revolution of the logistics insurance industry. The panel – Chris Kalinski of Redkik and Tom Ptacek of Lockton Industries, moderated by Editor Peter MacLeod, discuss how insurance calculation predictions and rates per mile are now possible, as is integration with transport management and brokering platforms. Freight insurance is becoming a variable, rather than a fixed cost. Marine risk insurance is the oldest in the world but has come a long way since Lloyds began.

Watch the 30 minute webinar here or choose from all our recent podcasts and webinars here.

Redkik is a global Insurtech company with the mission to transform and improve the insurance industry for all parties within logistics and transportation. Redkik’s platform eliminates the need for annual and complex policies. Through Redkik’s embedded integration with licensed cargo insurance providers, transport intermediaries can offer their customers on-demand per-shipment, customized cargo insurance when their freight is booked.

“Redkik has enjoyed expanding to the Asian market with ERGO; they have been nothing but knowledgeable in supporting this partnership and imminent launch across Asia. Redkik’s technology and ERGO’s well established insurance capabilities has led to a transformative partnership that will change the way we think of cargo insurance,” said Chris Kalinski, CEO and founder of Redkik.

“ERGO is excited to partner with Redkik. We want to transform the way Marine Cargo business is done in our region and offer instant quotes and issuance of the certificate of insurance to our customers in seconds,” said Karl-Heinz Jung, Chief Executive of ERGO Singapore.

This SaaS solution for cargo insurance is now available for transport intermediaries to distribute in Singapore and will soon expand through the rest of Asia. This follows a successful launch in the US in 2021 and Europe and Brazil in 2022.

Governments grapple with Supply Chain Disruption

Posted on by David Priestman

Today, BSI, the business improvement and standards company and leading global provider of supply chain intelligence, unveiled its annual Supply Chain Risk Insights Report which indicates that organizations that manage supply chain disruption effectively in 2023 will be best equipped to weather the financial challenges ahead.

In terms of major trends within the supply chain environment, the report observed that thefts from hijacking have fallen as a proportion of cargo theft from 24.4% to 17.0%. These are now second to theft from facilities, which now account for more than a quarter of total thefts, having increased from 24.2% to 26.0%. Food and beverages remain the most commonly stolen commodity and the report highlighted that this has increased considerably in 2022, increasing share by 2.8%. The proportion of automotive and fuel thefts is also rising, whereas the proportion of electronics, agriculture and construction theft has fallen. While hijacking has also fallen as a proportion of cargo theft, BSI observed that this continues to exert a real impact on global supply chains – with food, pharmaceuticals and construction materials most effected.

Another of the report’s key findings is that unprecedented price inflation, exacerbated by the Russia-Ukraine war, but also an enduring legacy of COVID-19-related shutdowns and the resulting prolonged shortage of key manufacturing components, has awakened governments to the importance of global supply chains to national interests. This has led to the launch of new legislation such as the CHIPS Act and the Bipartisan Infrastructure Law in the US, and increased GPDR regulations across the EU, the combination of which is placing greater accountability on suppliers and purchasers. Government intervention spans efforts to bolster domestic supply chains, reduce carbon emissions, and enhance governance.

Monitoring rapidly changing regulatory agendas is highlighted as one business imperative that decision-makers need to be aware of if organizations are to succeed in the face of the ongoing global disruptions.

The report identifies five additional imperatives that organizations will need to address to enable future growth and provide financial sustainability:
– Leadership: Supply chain continuity requires investment from the top down and what organizations really need right now is strong buy-in from top level leadership
– Digital: Organizations need to urgently address their digital risk, with 73% significantly concerned about the risks posed by the digitization of supply chains, but not one organization having resolved the risk
– Self-knowledge: Organizations need to invest in tools and technology which help them form a comprehensive understanding of their supply chain environment, such as data analysis, IoT, cloud computing, information security and predictive analysis
– A tailored approach: An awareness of the different, unique challenges facing each sector’s supply chain is key
– New technologies: Data, the metaverse, and cybersecurity are segments of technology that will differentiate organizations’ approaches to building strong supply chains

Susan Taylor Martin, Chief Executive of the British Standards Institution (BSI), which compiled the report, said: “2022 saw volatility in global supply chains that many would never have expected in their lifetime. Successive crises, including a global pandemic followed by a war in Europe, have resulted in continued uncertainty on many fronts and have demonstrated to governments the benefit of ensuring a robust global supply chain. Given the turbulence of the last twelve months, 2023 will be an important watershed for many organizations – with those that successfully manage their supply chain risks being more likely to thrive.”

Jim Yarbrough, Global Intelligence Program Manager at BSI, said: “The threats facing global supply chains vary from region to region and are distributed unequally, but in the face of rampant global price inflation, all countries ended 2022 in conditions more precarious than they were at the outset. Without intervention, businesses will see dramatic impacts on their bottom line, meaning that discussing supply chain issues at the C-suite level can help to ensure investments are funnelled to suppliers, building resilience to threats and supporting financial sustainability.”

80% say Brexit is biggest disruption

Posted on by David Priestman

Research from Ivalua, a leading global spend management cloud provider, has revealed that 80% of UK businesses say that Brexit has been the biggest disrupter to supply chains in the last 12 months, while 83% fear the biggest disruption from Brexit is yet to come.

The Ivalua-commissioned study, conducted by Coleman Parkes, found that Brexit was having a bigger impact on supply chains than the war in Ukraine (76%), rising energy costs (71%) and COVID-19 (59%). Increasing supply chain disruption meant that 28% of UK businesses lost revenue in the last 12 months, with these businesses estimating an average drop in revenue of 18%. Supply chain disruption has also resulted in products arriving late, resulting in SLA fines (68%) and reputational damage (64%).

Moreover, 80% of UK businesses say that Black Swan events such as Brexit, COVID-19 and the War in Ukraine have “left supply continuity on life support”.

“These findings lay bare the significant toll of supply chain disruption on UK businesses,” comments Alex Saric, smart procurement expert at Ivalua. “Supply continuity has been left on life support after repeated blockages and restarts, resulting in supplier failure and organisations struggling to onboard new suppliers to kick-start supply. With supply chains being shocked at shrinking intervals, organisations must work to future-proof supply chains. A digitised, data-driven approach to supply chain management is a prerequisite for actionable scenario planning and agility. Yet, according to a study from Procurious, only 24% of executive teams have fast-tracked investments in new technology for procurement.”

Disruption to continue

On average, UK businesses estimate supply chain disruption will impact them for the next six months, with 31% saying the impact will continue for the next year. Over half (59%) believe supply chain disruption has become normal, and that we’ll see more Black Swan events in the future.

The effect of this disruption could be severe, with 69% of UK businesses concerned that more supply chain disruption will put suppliers out of business, while 51% fear they will go out of business. A further 83% say disruption has also slowed down their ability to innovate and develop new products.

“As Black Swan events accelerate, UK businesses must bolster resilience by ensuring they have total visibility into all suppliers, including tier-2 and 3. Collaboration is critical too – supply chains are only as resilient as your ability to work with suppliers to mitigate the impact of any disruption.” added Saric.

“But to do this, supply chain management must be digitalised. This is essential for continually assessing risk exposure, building a complete view of your supplier ecosystem and sharing information. Doing so will help organisations to better handle disruption, and cope with growing pressure that recession and inflation will pile on procurement teams in the next 12 months.”

 

The three biggest risks in logistics

Posted on by Keith McKinley

A survey series by the Logistics Hall of Fame in cooperation with the logistics insurance broker Schunk Group looks at the current risks facing the logistics industry and how companies are preparing against them.

Logistics is a volatile business worldwide. More than ever, current trends and global political developments are creating new challenges and putting pressure on supply chains. But which risks are decisive and demand a rethink for the future? The first survey as part of a new survey series, which the Logistics Hall of Fame has initiated together with the Schunk Group, shows a clear result: The ongoing shortage of skilled workers, cybercrime and supply chain disruptions are currently causing the most problems for the logistics industry in the DACH region.

According to the respondents, the biggest risks currently confronting the logistics industry worldwide are the shortage of skilled workers (71.8%), followed by cybercrime (64.1%) and, in third place, supply chain disruptions (48.7%).

The picture is similar when it comes to the specific risks to the individual company. Here, the shortage of skilled workers also occupies first place in the individual risk ranking (62.5%). However, supply chain interruptions (47.5%) rank ahead of cybercrime (45%).

Political risks (43.6%) and climate change (18%) followed as general dangers, as did political risks (37.5%) when asked about their own companies. In contrast, business interruptions, the outbreak of a pandemic, market changes and loss of reputation played a lesser role.

“Topical issues such as supply chain problems and a shortage of skilled workers dominate the logistics risk ranking, but logistics executives have also realised that data-driven business models in logistics offer more and more gateways for cyber criminals to infiltrate logistics chains, reroute flows of goods or paralyse operations,” says Thomas Wicke, Managing Director of the Schunk Group.

“However, the fact that cyber attacks can become a problem for companies of all sizes is often forgotten or ignored. Even for small companies, damage in the millions can quickly occur. That’s why it’s important to be well protected against the effects of the risks.”

To fight the risks, the executives surveyed specified a number of ongoing measures, including early employee retention activities, comprehensive training programmes, work on top employer branding, and the formation of task forces to motivate in-house staff and recruit external forces, among others.

“Existing measures can be supported by suitable solutions that pay off in retaining employees and increasing employer attractiveness,” says Wicke, describing the possible approach. To protect against cybercrime, companies said they consciously invest in IT security, regularly hack themselves to detect security vulnerabilities, purchase monitoring systems, and secure processes and install regular backups.

The survey, which involves an executive C-level panel of selected managing directors, board members and entrepreneurs from the Logistics Hall of Fame network and the Schunk Group, will be conducted quarterly in the future on changing topics.

Interested parties can be added to the distribution list by sending an e-mail to stefanie.nonnenmann@impact.mp. The survey shows the current mood in the logistics industry and is not representative of the industry as a whole.

Background: The Logistics Hall of Fame was founded in 2003 and honours leading figures who have made outstanding efforts to promote the further development of logistics and supply chain management. This eternal pantheon is also designed to remind future generations of the achievements of these individuals in the service of logistics. The aim of the Logistics Hall of Fame is to act as a worldwide platform to publicise the performance capability of logistics and its importance for society. The Logistics Hall of Fame also presents the TRATON Logistics Leader of the Year Award to current pacesetters in logistics. It is sponsored by TRATON SE.

In addition, the Logistics Hall of Fame recognises innovative logistics projects by humanitarian organisations with the Lynn C. Fritz Medal for Excellence in Humanitarian Logistics. The donor is the Fritz Institute. The Logistics Hall of Fame is a non-profit initiative supported by the world of politics, associations, the logistics industry and logistics science. The patron is Dr. Volker Wissing, German Federal Minister for Digital and Transport.

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