The 10 Biggest Global Threats to the Supply Chain

Let's reflect on what could be the crucial curve balls that could affect the entire world and paralyze global logistics.

10. Cyber Threats

Every week, the news reports on computer viruses, denial-of-service attacks, and malware.

Did you know that a ransomware attack crippled the largest oil pipeline in the United States in 2021?

I was working as an Account manager for TNT when a global virus, called Petya, spread through Ukrainian customs software. Everything came to a halt for a moment, and supply chain management was nonexistent. On the positive side, for instance, that company was fully operational again in just a few days. Faxes were sent, new equipment was purchased, and waybills were filled out by hand.

9. Climate Change

Weather matters and extreme weather events have especially increased and will continue to increase.

A recent report shows that the wind speeds of Hurricane Helene (September 2024) were 11% higher, and rainfall was 10% greater due to climate change. Researchers observed the same behavior in Hurricane Milton.

In the United States, weather events causing damages worth a billion dollars occur on average every three weeks.

For example, last year, drought in the Panama Canal led to a reduction in the daily number of ships passing through, which in turn caused transportation costs to rise.

In addition to drought, hurricanes, floods, heavy rains, heat waves, earthquakes, and the warming of our environment are leading to entirely new scenarios that we must prepare for.

In the future, agriculture will be hit hardest by these changes.
Preparation can be done by setting an example of environmental responsibility. You can ask your supply partners about their contingency plans and consider decentralizing production.

8. Energy Markets

From personal experience, I know that fluctuations in energy market prices and sudden changes in gas and electricity prices have caused unexpected shifts in production, logistics, and company finances.

The price fluctuations in energy markets are often caused by complex factors that are difficult to predict. It’s important to have contingency plans, a diversified fleet, flexible contracts, and various hedging mechanisms in place for energy preparedness, as the markets will undoubtedly experience several changes across different commodities.

There is no silver bullet—diversification and discussing such topics with partners is the most important thing.

7. Political Climate

The war in Ukraine, Houthi rebels in Yemen, the U.S. presidential elections, the rise of far-right movements, and the everlasting global greed are inevitably toxic to supply chains.

Additionally, the U.S., EU, and China are engaged in a trade war over issues like the import of electric vehicles and cheap goods.

Expect fluctuations in energy prices, availability issues, and new challenges facing the supply chain.

A useful tip for preparation would be to closely monitor changes and gather local sources of information that provide the most important insights for your business, depending on your position in the market. In my opinion, diversification and flexible supply chains are also effective strategies.

For example, companies like Nike and Apple are gradually shifting more of their production from China to other parts of Asia. A lot of companies are closely monitoring the behavior of China regarding its activities towards Taiwan.

6. Regulations

Regulation often causes headaches, especially when things have always been done in a certain way and suddenly there’s a need to change practices, particularly if the change comes as a surprise.

Governments in different countries can introduce new rules and requirements that impact production, trade, and distribution.

Tightening environmental standards and data security regulations can significantly affect the day-to-day operations of a business. Keeping track of these changes in real time is certainly not easy.

5. Pandemic

An example of this is the COVID-19 pandemic, which completely reshaped the world and the routines of mankind, and now there are reports about monkeypox and pigpox It was the latest one discovered in Germany.

E-commerce businesses sprang up like mushrooms after rain, and production was swiftly moved out of China. The impacts of pandemics throughout history have been significant. Manufacturing plants have been relocated or shut down, and securing labor has been difficult in certain countries.

Pandemics have proven to be extremely destructive to global supply chains. They can cause widespread disruptions in production and logistics, requiring businesses to take special precautions.

According to an Ernst & Young study, only 2% of respondents had prepared for a pandemic, while 72% of the respondents’ companies experienced negative effects. The biggest challenges were in supply chain management!

As part of the preparation, businesses can create a preliminary plan or integrate this into another contingency strategy. A simple approach is to diversify the partner network.

4. The Scarcity of Critical Materials

Resource shortages and material availability are significant risks for supply chains. Examples include spare parts for the industrial and aviation sectors, semiconductors, critical metals, and many other materials whose availability can be challenging.

Boeing has invested 4 billion dollars to improve its supply chain, and they are retrofitting parts into airplanes.

The semiconductor shortage that began during the pandemic is still affecting global industries.

Currently, with the acceleration of electrification, lithium, and cobalt are particularly relevant, and the question remains how well the availability of these limited raw materials truly matches the growing demand.

In this case, too, a company must have a guiding "plan B."

3. Immigration

Let's take Brexit as an example, which revealed the harsh reality that there were jobs the British weren't willing to do, with the labor instead coming from Eastern and Central Europe. Similar situations exist already in the United States.

I consider it a significant realization that beyond our borders, there may be smarter and better workers who can enable greater productivity in our society.

Perhaps the best remedy for this is to ensure that the industry and the company are highly attractive in the job market.

2. Technology is Also a Threat

Skynet is coming… well, not quite, but if a company doesn’t keep up with the rapid pace of development, it could lose its competitiveness. Efficiently utilizing new technologies is recommended, but the most critical aspect is to consider their impact on your business.

Do you remember the story of Kodak or perhaps Nokia? Let’s not open old wounds any further.

The best remedy for this is curiosity about customers, competitors, and the industry, combined with the ability to stop and think. Decisions made based on this reflection must then be put into action.

1. Solidarity

"Solidarity (Latin: in solidum) means shared responsibility, a sense of belonging, and goodwill toward fellow human beings. The concept is not limited only to people near each other but can also refer to worldwide respect for others." – Wikipedia

As we face a global energy challenge, nothing is more important than fostering solidarity. Creating a culture that understands that without cooperation, there will soon be nothing sustainable left.

In logistics, this could mean, for example, ensuring that workers' rights are protected and that the production chain is as sustainable and responsible as possible.

Thank you so much for reading and have a wonderful day!