Theft, Weather Cost Global Supply Chains $56 Billion In 2015

The British Standards Institution found that the year's five largest natural disasters resulted in an economic impact of $33 billion on supply chains, while cargo theft resulted in losses of $22.6 billion.

Supply chains lost nearly $56 billion worldwide last year due in large part to cargo theft and extreme weather, according to a new report.

The British Standards Institution found that the year's five largest natural disasters resulted in an economic impact of $33 billion on supply chains, while cargo theft resulted in losses of $22.6 billion.

The BSI report particularly pointed to a 30 percent increase in cargo truck hijackings in South Africa and rising vehicle shipment thefts in China. In India, meanwhile, gangs were able to steal goods and escape detection by conducting thefts without breaking customs seals.

The analysis also said terrorism resulted in billions in losses for global shippers. In addition to security concerns causing disruptions — particularly in the wake of the November attacks in Paris — terrorist-linked smuggling rings between Spain and the Middle East shipped stolen electronics in addition to drugs and weapons.

The refugee crisis in Europe, meanwhile, interrupted supply chains across the continent.

BSI analysts also said that shippers suffered due to sluggish economies in several countries and poor enforcement of labor relations. In China, an economic downturn helped fuel a nearly 60 percent increase in factory strikes.

"Such complexity creates extreme levels of risk for organizations, 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," said Jim Yarbrough, BSI's Global Intelligence Program Manager.

The report expects the cost of cargo theft to increase by another $1 billion this year, while the Syrian conflict and tensions in the South China Sea will continue to reverberate throughout the shipping industry

In addition, analysts expect that emerging health crises — most notably the Zika virus — could mirror problems caused by the Ebola epidemic in West Africa two years ago.

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