Supply chain hotspots
Supply chain hotspots

The world’s riskiest supply zones

23 February 2018

With supply chains becoming increasingly complex, one thing is clear: the world isn’t getting any safer

SM teamed up with Paul Hunt, IHS Markit’s director, country risk, to crunch the data on the most dangerous areas for supply and logistics operations...

MEXICO

Supply chain operations in Mexico face high cargo theft risks, especially across south and central regions. Government statistics show 2,303 incidents reported from January to October 2017, compared to 1,489 in 2016 – but the real numbers are likely to be even higher. The highest rates were recorded in Guanajuato state, while Estado de México, Michoacán, Puebla, Sinaloa, and Tamaulipas all had above-average rates.

Most theft occurs on highways, but robbers in some states are also stealing cargo transported by rail, by blockading the routes. This leads to long delays and knock-on disruption at cargo ports such as Veracruz. The most prized targets? Domestic appliances, electronic goods, consumables and agricultural items.

Guanajuato

Mexico’s highest rates of cargo theft are recorded in this region. Robbers are also increasingly stealing cargo transported by rail, using blockades on rail routes.

Puebla

Official government data reveals that, in 2017, cargo transportation thefts in Puebla had increased by 112% compared to 2016.

Veracruz

Of the 167 tanker lorry thefts in 2017, 39% – the highest proportion in the country – were at this port. It is also impacted by knock-on cargo delays from road and rail theft.

 

BANGLADESH

Political unrest ahead of 2019 elections brings the risk of nationwide strikes and blockades, which are likely to cause extensive transport disruption, particularly between Chittagong and Dhaka. Political parties often use enforced shutdowns (‘hartals’), prohibiting transport and forcing businesses to close.

Striking garment workers may also blockade roads – in November 2017, a group blocked a highway in Mirpur for more than two hours to demand unpaid wages. And strikes by port and transport workers often cause operational delays. In September 2016, 40,000 containers at the Port of Chittagong were left stranded after truck drivers went on strike. Vessels at this port are also at risk from armed robberies; turnaround times are high, making ships waiting to unload an attractive target, so foreign shipping firms charge premiums to discharge cargo, pushing up costs.

Dhaka

Extensive transport disruption is likely, due to political unrest. Roadblocks by striking garment-sector workers are a risk, with routes in and out of Dhaka likely to be targeted.

Khulna & Chuadanga

Both areas carry a business and cargo extortion risk from the Purba Banglar Communist Party, a Maoist organisation seeking to overthrow the country’s current political system.

Chittagong

Strike action by transportation employees is a risk here. In February 2017, workers went on strike for three days, stranding 100 vessels carrying commodities.

 

Democratic Republic of Congo

Cargo risks are high in the Democratic Republic of Congo, particularly in Matadi and Kinshasa, where one-to three-day general strikes, known as ville morte (‘dead city’) protests, are likely in response to delayed elections and insecurity. Cargo also faces disruption at railways, ports, border crossings and army checkpoints, especially in mining areas.

Tax and political risk could prove an issue for mining companies. The government is looking to stabilise the economy, so needs to secure revenue streams such as those proposed in the new mining code, which subjects mining firms to royalty charges and a profits tax. While mining companies in DRC operate under separate conventions that insulate them from this code, it is likely to become the baseline for contract renegotiation.

Lake Tanganyika

Piracy risks in the Democratic Republic of Congo are low, with the exception of Lake Tanganyika.

Kinshasa & Matadi

Cargo faces disruption from strikes in these cities, and on the route between them. There is a disruption risk at railways, ports, border crossings and army checkpoints.

Kasumbalesa border

Militant attacks and civil disorder in the Haut-Katanga region could result in the closure of this crossing. Military checkpoints and cargo attacks are more likely in the east

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