Global supply chain lost $23 bn cargo to theft in 2015

26 Mar '16

5 min read

In 2016, BSI has identified emerging health crises, such as the Zika virus, could also pose a significant threat to the global supply chain and may lead to work stoppages and protests similar to the supply chain disruptions seen in conjunction with the Ebola epidemic.

Labour unrest and factory strikes have also caused considerable financial damage across the world. Factory strikes in China increased by 58.3 per cent from the previous year due to pay disputes, as factory owners struggled to pay workers due to a slowing economy, leading to protests. The withholding of wages was cited as a major cause in 75 per cent of protests and generated losses of up to $27 million in the footwear industry. Labour unrest is likely to continue in China in 2016, regardless of whether the economy improves.

Numerous cases of child and forced labour were exposed in 2015, highlighting the need for visibility into corporate supply chain to mitigate the risk of human rights abuses. Nearly 80 per cent of Argentina's textile industry was found to be sourcing from unregulated facilities, where forced, child labour and poor working conditions are common. BSI also noted an increase in the risk of child labour use in India due to the existence of loopholes in labor reforms approved in 2015. In response to these and other recent concerns, European countries and the United States last year moved to pass laws mandating reporting on corporate social responsibility issues in corporate supply chains.

Jim Yarbrough, Global Intelligence Programme Manager at BSI said, "Companies are facing an increasingly wide range of challenges to their supply chain, from human rights issues to acts of violent theft and natural disasters. Such complexity creates extreme levels of risk for organisations, both directly affecting the bottom line but perhaps more seriously, hidden threats to the supply chain which, if ignored, could do serious harm to a company's hard-earned reputation."

According to BSI, the biggest threats to the global supply chain in 2016 include global cargo theft estimated to grow by a further $1 billion. Continued tensions in South China Sea predicted to lead to further protests and disruptions while the on-going conflict in Syria will continue to impact supply chains, including port disruptions.

Other threats to supply chains include the ISIS, labour unrest in China, weather disruptions such as the La Nina phenomenon and global health crises like Zika and Ebola. (SH)

Fibre2Fashion News Desk – India

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