When air cargo pays the price for terrorism
TERRORISM attacks on global supply chains cost the air cargo and logistics industries billions of dollars and yet, bizarrely, companies are not investing adequately in supply chain security, a major report reveals.
Incidents ranging from aircraft hijackings and cargo theft, to contraband smuggling, extortion, kidnapping and targeting the oil and gas infrastructure, reached their worst levels last year – up by 16 per cent year on year – according to The British Standards Institution (BSI).
Data contained in a BSI supply chain terrorism report shows such occurrences resulted in considerable direct and indirect economic costs to private companies and national organisations, writes Thelma Etim.
Physical attacks against supply chains include arson, bombings or armed assaults and they directly disrupt the international movement of freight. Tampering with international cargo shipments can also compromise the integrity of the entire load, resulting in the seizure or destruction of goods by Customs authorities, as well as placing businesses’ reputations at risk, the study warns.
“The significantly increased use of intermodal freight in recent decades, while improving logistical efficiency, has increased the average number of ‘touch points’ (at which the custody for a cargo shipment is transferred to a different entity) in a given supply line that can be targeted by hostile actors such as criminals and terrorists,” highlights the report.
In the month following the recent Paris terrorism attacks, shippers in Belgium had to abruptly absorb $3.5 million in immediate additional costs
New procedures slow the movement of freight and increase shipping costs where companies have responded by re-routing their cargo or by modifying shipping arrangements.
Following the series of terror attacks in Paris on 13 November 2015, which left 130 people dead and hundreds wounded, France imposed stricter controls along its borders with Belgium and Luxembourg, a decision which cost an additional US$59 per delayed vehicle.
The total additional cost to shippers in Belgium was estimated at $3.5m within the first month immediately after the terrorist incidents.
“When companies have to unexpectedly divert or re-route shipments the costs can reach massive figures,” warns the BSI. “For example, the terrorism related to the Syrian conflict forced Lebanese officials to re-route US$1billion worth of exports. This resulted in the loss of $754m in revenue for the Jordanian trucking industry.”
In the last decade, terrorists have attacked supply chains in 58 countries, illustrating the global nature of the problem. Supply chain terror attacks occur at alarming rates in a number of countries. Columbia is one of worst affected, along with some major airfreight markets including India, Pakistan, Turkey, Kenya, Nigeria, Thailand, Egypt and Saudi Arabia.
Most disturbingly, the BSI report targets the inadequate spending on supply chain security. “For example, in India, cargo throughput has increased sharply over the past decade, with airfreight volume alone increasing by nearly 120 per cent. However, this growth in shipping volume has not been met with a matching investment in supply chain security,” it claims.
Similar concerns exist in Bangladesh and have led the European Union to recently prohibit the direct importation of airfreight from Bangladeshi airports.
The BSI has made a number of recommendations for businesses committed to augmenting their efforts to protect supply chains against the threat of terrorism. They include: minimising container drop times; re-assessing risk factors for shipments originating in or transiting through regions facing significant terrorism risks; and considering the use of dedicated containers versus consolidations.
David Fairnie, principal consultant of supply chain security at BSI, believes the direct impact from acts of terrorism, along with the indirect effects from terrorist organisations’ exploitation of supply chains, will continue to be critically felt across Europe, for example.
“Terrorist attacks in major cities and against key transportation nodes in the UK, Belgium, France, Germany and the Netherlands have triggered heightened security levels and emergency border controls across the continent, leading to significant commercial impact on our clients’ businesses,” he observes.
“BSI witnessed significant spikes in customer support requests for our supply chain security advisory, resilience and business continuity services, after major terrorist events.
“I believe supply chain terrorism will continue to significantly impact Europe for decades to come,” he concludes.
Jim Yarbrough, global intelligence programme manager at BSI, argues: “It is a common misconception that terrorism is strictly a national security issue and that counter-terrorism is solely the responsibility of governments.
“Corporations must take notice and prepare their organisations accordingly.”
(Main image courtesy of BSI)
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