Supply chains have been challenged in recent months like never before. FM Global, which annually publishes the Global Resilience Index, presented a further analysis identifying the six drivers of the current supply chain crisis.
- COVID-19: the pandemic has caused interruptions in both the demand and supply of products, due to the suspension of production, creating a boomerang effect, a misalignment between supply and demand.
- CYBER RISK: In May, a cyber attack on the Colonial Pipeline (one of the most important oil pipeline companies in the USA) caused an interruption of almost a week in the supply of fuel, revealing an important vulnerability of modern supply chains, namely the close interdependence with digital systems. A situation that the advent of 5G will make even more sensitive. Cybercrime has become a real business and represents a geopolitical risk. Cyber security must therefore become an integral part of corporate strategy.
- ACCUMULATIONS AND DELAYS IN PORTS: Goldman Sachs has estimated that, considering the ports of California alone, there are goods worth 24 billion dollars in storage outside, because the lack of port operators has caused accumulations and delays. There are currently no guarantees that the situation will be resolved before the middle of next year, according to FM Global.
- LACK OF TRANSPORTERS: many countries around the world are facing a significant shortage of people willing to work as transporters. According to the International Road Transport Union, 20% of demand in Eurasia does not find available workforce, and in the United States alone 80,000 jobs are vacant. According to FM Global, if this trend continues, it will drive the development of self-driving vehicles on the one hand, and the choice of lowering the minimum age for driving heavy vehicles on the other.
- FLOODS: the floods that hit various Chinese and European areas have destroyed entire communities, interrupted railway connections, blocked production. The effects of climate change are bound to increase, leading to increasingly frequent extreme manifestations.
- CHIPS SORTAGE: it is a situation originated by a combination of different factors. First of all, the car manufacturers, which in the Covid period had made sales forecasts much more prudent than what actually occurred, and this ended up shifting volumes and demand for semiconductors - in which the automotive industry historically only affects for 10% of global volumes. There has also been a surge in demand for technology, based on chips, in the last two years. All while supply chains struggled with adverse weather conditions, shipping and storage backlogs. According to FM Global, the situation will not normalize until the end of 2023.
