Transport and logistics group Deutsche Post DHL has identified 10 major risk trends that are seen to post a significant challenge for companies in all supply chain sectors in 2019.
The DHL Resilience360’s first annual risk report is based on risk and incident data collected by DHL’s cloud-based risk management provider Resilience360 and examines last year’s major supply chain challenges and identifies trends that will shape the risk landscape in 2019.
The report examines the major supply chain risks that companies experienced in 2018. The world’s top three risks were uncertainties concerning trade flows, cyber security incidents, and climate change paired with extreme weather conditions.
Uncertainty in trade increased due to disputes between the U.S. and other countries, in particular China, including new unilateral import tariffs. The still-open question of the UK’s withdrawal from the EU is also contributing to uncertainty, as companies fear border congestions and delays at ports in the event of a disorderly departure.
In the realm of cyber security, a rising number of incidents involving supply chain and transport infrastructure showed how actors are intent on obtaining trade secrets, engaging in blackmail, or causing economic disruption.
Lastly, 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.
The report also highlights an array of threats that may become particularly salient for businesses in 2019 and beyond.
In addition to ongoing global risks like the international tensions that characterized trade in 2018, companies may also face additional costs and uncertainty due to raw material shortages, recalls and safety scares, or tougher environmental regulations.
The top 10 risk trends to watch out for this year:
- Trade wars, new import tariffs and other trade barriers may drive manufacturing network restructuring.
- Rising demand, coupled with fragile supply that is a result of political instability and supplier shutdowns, may create critical raw material shortages such as those for lithium, cobalt and adiponitrile.
- Recalls, safety scares, and stricter regulations and quality requirements may put pharmaceutical and medical companies under pressure.
- Climate change impact will heat up as 2019 is forecasted to be the warmest year on record.
- Tougher environmental regulations may be expanded in 2019 to a broader range of industries across Asia. The US Environmental Protection Agency is also expected to announce new requirements. All of these developments could put suppliers under threat and force significant changes throughout supply chains.
- Economic uncertainty and structural change are seen to lead to supplier insolvencies as small producers continue to be casualties of economic uncertainty and structural change.
- Cargo may get caught up in industrial unrest as disputes threaten to disrupt transport operations.
- Container ship fires are seen as another risk due to insufficient firefighting capabilities and a trend towards large container ships.
- Battles at the border may increase wait times and costs.
- Drones could strike a blow to aviation logistics safety as close-proximity drone incidents are likely to become more frequent.
Photo: CC BY-SA 3.0
