Supply chain disruption and cargo theft contributed to a global rise in business losses last year, according to research.
The Global Supply Chain Intelligence Report from BSI Supply Chain Solutions says that globally, over $23 billion (£15 billion) was lost to cargo theft in 2014.
The report is based on data from BSI’s Supply Chain Risk Exposure Evaluation Network (SCREEN), which measures 20 risk factors in 203 countries.
Cargo shipments were heavily affected by a rapid growth in supply chain terrorism. In Europe, the Middle East and Africa, cargo disruption rates were stable, while in the Americas an increase in illegal drug introduction, spikes in thefts, terrorist plots and incidents, increased cargo disruption.
The Asia-Pacific region saw a rise in disruption, from a growing methamphetamine trade, and the long-term challenges of counterfeit production and piracy, BSI said.
While the report highlighted cargo theft as a growing risk, it is still outweighed by the economic impact of natural disasters. Last year’s four biggest natural disasters caused $32.8 billion (£21.8 billion) of damage to businesses, with flooding across Pakistan and India making up a third of this figure.
Three quarters, 75 per cent, of the top exporters across the Asia-Pacific region are rated as high or severe for natural disaster risk. The report said a third, 36 per cent, of the fastest-growing exporters are based in countries rated as high or severe risk for human rights or environmental violations. Some two fifths, 40 per cent, of Asia’s current top 20 exporters are rated as high or severe risk for environmental violations.
The business costs of violations are rising, the report said. Last year a Chinese court imposed the country’s heaviest environmental fine to date, with six firms penalised $26 million (£17.3 million) for dumping acid waste into waterways.
Port congestion and strikes continued to severely affect business continuity across Asia Pacific, the west coast of the United States and Germany throughout last year, the report said.
Mike Bailey, EMEA director of professional services, BSI said: “Companies are facing an increasingly wide range of challenges to their supply chain, from human rights issues to natural disasters. Such complexity creates black holes of risk for organisations, both directly affecting the bottom line but perhaps more seriously, hidden supply chain risk, damaging a company’s hard-earned reputation.”