Takeaways from BSI Connect SCREEN’s Quarterly Risk Intelligence Outlook: Part 3

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February 14, 2024 - BSI Connect SCREEN’s Quarterly Risk Intelligence Outlook webinar on January 23, 2024, provided insight into how the supply chain risk landscape is evolving, based on BSI data and trends from Q4 2023.

An overview was shared of notable developments related to corporate social responsibility and how those may impact supply chains, as well as regulatory updates that can significantly impact supply chain management.

Let’s look at four webinar takeaways for organizations who are preparing for a resilient remainder of Q1 2024 and beyond.

Maritime shipping disruptions

Maritime shipping experienced several notable disruptions in Q4 2023, including:

  • Diversions away from the Panama Canal. In early November last year, shipping companies began rerouting ships to the Suez Canal because of drought-induced low water levels in the Panama Canal that contributed to increased wait times. Ships must transit through these waterways to access the Suez Canal (an important route for connecting European and Asian markets.)
  • Attacks on ships in the Red Sea. In response to the attacks in mid-November, shipping companies began diverting ships away from the Suez Canal to travel around the Cape of Good Hope and leveraging other modalities, including rail and air transportation, which will likely see increased usage in 2024 as the security risks persist.

The rising transportation costs to companies diverting the Suez Canal will likely be reflected in consumer prices, potentially worsening inflation. In addition to rising costs, route diversions are already causing some delays in shipments, container shortages, and port congestion, particularly in Asia.

  • Sea piracy increased off the coast of Somalia and the Gulf of Guinea. At least fourteen vessels have been hijacked off the Somali coast since late November, with pirates potentially taking advantage of the insecurity risk in the Red Sea.

Cargo theft increases

BSI has tracked an increase in thefts of food and beverage products since 2022. These products accounted for 17 percent of thefts in 2022, rising to 22 percent in 2023.

In Q4 2023, food and beverage were the top product type stolen, just as it was throughout the rest of the year. This tracks with higher than usual inflation rates, which can increase the price of basic goods. However, food price increases are predicted to decelerate but not decline in 2024.

During this time, BSI traced steady thefts of electronics and automotive goods, which typically account for the top products stolen, due to being high value. In line with previous quarters, Q4 2023 saw cargo thieves most frequently target the trucking modality—more than tripling facility thefts. As such, theft of vehicle was the top theft type in Q4, with theft from facility the next highest.

Due diligence regulations

BSI has tracked several proposals for new due diligence regulations and updates to existing regulations. In December 2023, governing bodies in the EU came to a provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD) requiring due diligence procedures for large companies in Europe to work to mitigate adverse impacts on the environment and human rights.

The US Customs and Border Patrol (CBP) continued its enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), adding ten companies to the entity list in FY 2023, bringing the total to 30. (Read more on the UFLPA in Understanding the UFLPA by Jim Yarbrough.) In 2023, CBP detained electronics the most, making up over a quarter of all inquiries compared to other industries. While many detained electronic products were eventually released, this differs from the other two highest industries—industrial and manufacturing materials and apparel, footwear, and textiles—which were more likely to have their imports denied.

Looking ahead

Asia is experiencing signs of container shortages and port congestions due to shipping delays from the extra travel time from diverting around the African continent. This is predicted to continue and increase through Q1 2024, especially as the Chinese Lunar New Year compounds supply chain disruptions.

We expect to see an uptake of rail and air freight alternatives to sea transportation through Q1. However, the high rates for these modalities and the additional operational costs from rerouting ships will likely compound inflationary pressures.

Keep a look out for the upcoming 2024 Supply chain risks and opportunities report: The road to progress is built on trust. To see the full presentation 'Quarterly Risk Intelligence Outlook', please download the slides in our Special Reports section on SCREEN News and watch our webinar on demand.

Visit BSI’s Experts Corner for more insights from industry experts. Subscribe to our Experts-Corner-2-Go LinkedIn newsletters for a fortnightly roundup of the latest thought leadership content: Digital trust, EHS, supply chain.

Jason Willoughby

Jason Willoughby

Jason has been an Intelligence Analyst at BSI for over three years. He joined the company through SCREEN's Research Associate program after obtaining a bachelor’s degree in international affairs and completing a master's in international policy and security. As an Intelligence Analyst, his responsibilities include analyzing and extrapolating quantitative data and qualitative reporting on various supply chain risks as well as supporting clients and their operational goals. Additionally, Jason has contributed to creating some of the standardized methodologies behind BSI's threat ratings.

Heather Mullen

Heather Mullen

Heather Mullen is an Intelligence Analyst on the BSI Connect SCREEN Platform. She first joined BSI as a SCREEN Research Associate in 2019 while earning her Bachelor of Arts in International Affairs at the University of Georgia. After almost two years in the role, she left BSI to pursue other professional experiences in Washington, D.C., where she earned her Master of Arts in International Development from American University with a concentration in corporate social responsibility. Now returning to BSI as an Analyst, Heather covers the Asia-Pacific region and continues to pursue her interest in supporting an ethical global economy through her research and her support to corporate clients. 

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