Major Ports, Airports Highly Exposed to Supply Chain Shocks

Trade resilience has deteriorated in 157 countries over the last five years, according to new research from Verisk Maplecroft.

The findings from a new Trade Resilience Index confirm the extensive and growing challenges facing organizations with global footprints. Countries accounting for more than 90% of global trade face increasing levels of risk, including the United States, Asian manufacturing hubs, and natural resource heavyweights Chile, Peru, DR Congo and Saudi Arabia. The index measures a country's ability to withstand shocks by assessing trade balances, diversity of trading relationships and the risk environment of key trading partners.

“The findings underline a core challenge for global supply chains: resilience can no longer be assessed only by looking at direct suppliers or obvious high-risk countries and chokepoints,” says Jimena Blanco, chief analyst at Verisk Maplecroft. “It depends on the viability of the entire network of trade routes and the logistics hubs that connect them.”

Key takeaways:

·        Verisk Maplecroft’s analysis also suggests potential shocks to supply chains extend well beyond the world’s primary chokepoints, such as the Strait of Hormuz, the Malacca Strait and the Panama Canal. Its assessment of the world’s 500 busiest ports and 50 busiest airports found that approximately one-third (176 out of the 500 ports assessed) are exposed to “high” or “very high” risks of disruption from one or more acute threats stemming from geopolitical risk and conflict, natural hazards and domestic security.

·        Only 5% of ports are rated “high” or “very high” risk overall, including Rio de Janeiro (1^st), Lagos (6^th), Cape Town (10^th), Houston (18^th) and Baltimore (19^th). However, drilling into the data shows that exactly half of the world’s 500 busiest ports face elevated levels of exposure to civil unrest.

·        The 10 highest-risk ports for civil unrest include the major trade hubs of Barcelona (1^st), Naples (2^nd), Los Angeles (4^th), Rio de Janeiro (5^th), New York (6^th), Houston (7^th), and Buenos Aires (9^th).

·        Air freight accounts for an estimated 25-35% of world trade by value for urgent, costly and perishable goods, including semiconductors, pharmaceuticals, fresh produce and e-commerce shipping.

·        The conflict in the Gulf has driven a 52% year-on-year decline in cargo transported in March-April across nine of the region’s major airports, according to Airports Council International. As a direct impact of the war, half of the 10 highest-risk airports for geopolitical risk and conflict in the Verisk Maplecroft assessment are in the Middle East countries of Qatar, UAE, Saudi Arabia and Turkey.

·        Global territory affected by armed fighting has more than doubled over the last five years, covering 6.1% of the world’s inhabited land mass, roughly equal to the size of the United States. Shocks from these factors are, therefore, more likely now than in any point in recent decades and global organizations need to be prepared.