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Xeneta has identified the biggest supply chain risks this year, including widespread geopolitical unrest and weaker global economic conditions
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Other risks are extreme weather events, cyber attacks and talent gaps
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Organizations must now ‘find ways of reducing disruption in ocean freight, embracing risk (not just mitigating), and successfully building an anti-fragile supply chain’
Xeneta has identified the biggest supply chain risks this year, including widespread geopolitical unrest and weaker global economic conditions.
Xeneta in a blog cited A.P. Moller-Maersk which noted that more than three out of four European shippers experienced supply chain disruptions last year, while almost one in four saw 20 or more disruptive incidents. One in three also had difficulty sourcing materials needed for production.
This year may be no different. Organizations must now “find ways of reducing disruption in ocean freight, embracing risk (not just mitigating), and successfully building an anti-fragile supply chain,” Xeneta, creators of the ocean and air freight rate benchmarking and market analytics platform, said.
It added: “Change is inevitable in modern supply chain management. As 2024 showed us, risks rapidly evolve and become more prevalent with time. Pure risk avoidance is no longer possible. So, proactive, agile, and adaptive risk management is essential to success.”
Xeneta said, “Poor supply chain visibility and an insufficient understanding of risk will only create additional risks, so this is where companies’ focus should be. Without that visibility, it’s too easy to increase freight spend, jeopardize relationships with suppliers and customers, and miss valuable opportunities as the market moves. Not to mention, exposing one’s self to unnecessary and entirely avoidable disruption.”
The top 10 global supply chain risks (in no particular order) for the short term, according to Xeneta, are:
- Geopolitics
- Economic instability
- AI and emerging technologies
- The evolving priorities of CFOs
- Extreme weather events
- Environmental, social, and governance
- Procurement transformation
- Cyber attacks
- Data integrity and quality
- Ongoing talent gaps
For each of the risks, Xeneta has recommended steps that can be taken.
To address the widespread geopolitical unrest, those who can may want to consider shifting to a more regional focus, or in some cases move significant volumes to safer territories.
With top chief economists expecting weaker global economic conditions this year, Xeneta recommends developing an agile procurement strategy that allows for quick adjustments, such as shorter contract terms, diversifying transport modes, or dynamic pricing models during times of economic instability.
It is a given that AI and emerging technologies will be key drivers of supply chain growth. The best course of action is to proceed with caution. Build use cases, conduct pilots, and focus on delivering demonstrable ROI from AI in areas of specific relevance to your business, says Xeneta.
As for the evolving priorities of CFOs presently navigating a complex landscape, the pressure is on to forecast smarter and to avoid budget surprises. Locking in the right deals can also help stabilize costs, protect working capital, and avoid overpaying upfront.
Today’s extreme weather represents one of the most significant global risks to ocean freight. Shippers must evaluate their preferred routes and determine which carriers can increase shipping in anticipation of extreme weather events. This allows for flexibility to scale back operations or shift modes during tumultuous times.
Shippers must evaluate their preferred routes and determine which carriers can increase shipping in anticipation of extreme weather events. This allows for flexibility to scale back operations or shift modes during tumultuous times.
Rising emissions make the International Maritime Organization’s (IMO) target of net zero by or around 2050 seem extremely ambitious. Xeneta chief analyst Peter Sand believes that data will be key to supporting the industry on the path to net zero and further regulation may be required to achieve the lofty emissions targets.
While many areas of the modern business have completely transformed over the past two decades, procurement functions have (generally) seen far less transformation. As procurement functions evolve to better manage continuous disruption, they need three key things to succeed:
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Reliable, timely insights and intelligence which enable proactive decision-making to break free from a continuous stream of purely reactive actions.
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Operations which are aligned with wider business objectives, to ensure all supply chain executives understand the relationship between freight rates and factors such as schedules, capacity, and carrier strategies.
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Metrics and autonomy to pursue outcomes other than final dollar savings and prioritize other important goals such as business continuity, sustainability, or the avoidance of schedule disruption.
Cyber attacks are a predominant risk in modern supply chain management. As such, companies should choose supply chain systems vendors with a proven record of maintaining stringent cybersecurity protocols.
With AI rising up many organizations’ agendas, high quality data is more important than ever. When using AI and Machine Learning models, what you get out is only as good as what you put in. Validate data for accuracy and timeliness. Bad or outdated data is worse than having no data at all, said Xeneta.
Finally, The Great Resignation of 2021 and the following recession-like tailwinds caused a skills gap in the procurement function and supply chain industry. DHL Supply Chain indicated the procurement skills shortage falls to four main issues: demographics, a need for modern skills, cost cutting measures, and a lack of training programs.
With this in mind, recognize where you have skills gaps (presently or forecasted) and invest in education, mentorship, and training.
In an era of continuous disruption, being reactive to risks is no longer enough to ensure the success of your business and the stability and efficiency of your supply chain and freight operations, according to Xeneta.
“To mitigate these risks effectively, and transform some of them into powerful value creation opportunities, you need to enable well-informed, proactive decision-making — and that demands full market transparency and predictability,” according to the creators of the world’s largest ocean and air freight benchmarking and market analytics platform.
Its advice: Discover solutions as dynamic as your procurement challenges and start modernizing the way you buy and sell freight today.
