Supply Chain

A supply chain is the sequence of processes involved in the production and distribution of raw materials, products, services, finances, or information. Usually complex and dynamic, supply chain activities transform resources into a finished product that is ultimately delivered to a customer. A typical supply chain begins with the collection of natural resources by a supplier followed by several production links such as component construction, assembly, and merging, followed by distribution to several layers of storage facilities before finally reaching the customer. At any point along this journey, the business could be interrupted, or products or materials could be destroyed or compromised. Any of these events could have devastating impacts on the rest of the supply chain line or to the end product. Several types of insurance are available to cover the many risks related to supply chains. The hazards are significant and further complicated by globalization, which has triggered an examination of corporate social responsibility. Applicable regulations are many and complex. Natural catastrophes can give rise to massive supply chain issues. Litigation is expensive and insurance is essential.

Background

Most supply chain networks work on tight sets of interdependencies in which just-in-time and “lean manufacturing” are standard practices. Just-in-time manufacturing is a strategy that increases efficiency by receiving goods only as they are needed in the production process, thereby reducing inventory costs; this method requires that producers accurately forecast demand. Lean manufacturing is a customer-centric strategy used to continuously improve processes through the elimination of waste, striving for heightened value for the customer. These processes, while potentially beneficial, mean that if something goes wrong in one stage it will likely affect the next stage in the supply chain. This leads to greater cost losses such as for the acquisition of materials needed to continue operating, and efficiency losses such as the shutdown of facilities suddenly lacking the resources to operate.

Injuries and Damages

Contingent exposures are a major component of supply chain risk, referring to things that can happen elsewhere that might disrupt operations at an organization’s supply chain locations. The exposures include problems with raw materials or finished products as well as with services such as call centers, technical support, and order processing.

Some supply chain risks are easily mitigated with adequate prevention measures. Others are uncontrollable. Examples of supply chain risks include the following:
• Legal, such as a shutdown under an injunction order
• Social, such as a strike, sabotage, criminal activity, discrimination
• Environmental, such as natural or man-made disasters, weather, pandemic diseases, port/transportation shutdowns
• Technical, such as damage to or breakdown of equipment, IT failure, key staff losses, product tampering, quality problems, or utility failure
• Economic, such as bankruptcy, failure of a tier-2 supplier, exchange rate fluctuations
• Political, such as political instability, unrest, re-nationalization, closing of borders, or tariffs
• Downstream partner risks
• Intellectual property risks
• Logistics delays/interruptions for internal reasons
• Other disruptions due to external risks, such as a fire at an adjacent building, closing of a key bridge, or utility interruptions
Globalization
As the world has become more globalized, companies have taken advantage of international sourcing opportunities to become more efficient. As trade barriers have fallen and logistics have improved, production has shifted to countries that offer lower sourcing costs. This has opened new markets and made company reach virtually limitless. Some potential costs and risks companies must consider when going global, however, include the following:

• Transportation concerns, including shipping methods, shipping time, storage cost
• Workplace concerns, including training, time to hire, wages, workplace conditions, security problems
• Local concerns, including local business practices, government policies, political or economic instability, natural disasters
• Output concerns, including workforce output, quality, traceability, sustainability
• Product concerns, including quality and safety challenges, intellectual property theft
• Communication concerns, including decreased access to information; coordination across a complex supply chain is difficult

There is the risk of a disruption during any stage in the supply chain process. A globalized manufacturing process is infinitely more complex than a localized one, with manufacturers managing logistics and demand and overseeing multiple product lines coming from different suppliers around the world.

Recently, consumers have been demanding increased transparency from companies and their manufacturers and suppliers about worker conditions and environmental laws compliance. If companies do not know from where their products are sourced or who makes them, or if they are sourcing in irresponsible ways, they are at risk of a public relations crisis that could quickly turn consumers against them. Bad news spreads quickly via the internet and social media, and companies are increasingly being held immediately accountable for supply chain decisions.
Case Study: Bangladesh
The Savar building in Dhaka, Bangladesh, collapsed in 2013. The structural failure of the eight-story commercial Rana Plaza building killed 1,134 people and injured approximately 2,500. The building contained a bank, apartments, several shops, and clothing factories serving well-known brands. Bangladesh civil authorities said that the upper four floors had been built without a permit.
Architects stressed the risks involved in placing factories inside a building designed only for shops and offices, noting the structure was not strong enough to bear the weight and vibration of heavy machinery. On April 23, when cracks were discovered in the structure, the shops and the bank on the lower floors were immediately closed, but garment workers were ordered to return the following day or risk losing pay. The building collapsed the next morning.

The Savar building collapse became the centerpiece of discussions about corporate social responsibility across global supply chains. After the collapse, some major retailers announced plans to improve safety conditions in Bangladesh garment factories and a “safety accord” was created. Retailers from many countries signed it, however, many large North American companies refused. The accord would have made the retailers pay more for apparel and ultimately charge more, with the goal of helping Bangladesh factories improve safety standards. Instead, several major North American retailers formed a “29-brand alliance” called the “Alliance for Bangladesh Worker Safety” with the intention of bringing about “a sea change in factory safety in Bangladesh.” The Alliance was to exist for five years with a termination date at the end of 2018. The manufacturers plan to form a successor safety monitoring organization to continue the factory inspections, safety monitoring, training and helpline services which were instituted by the Alliance.

Legislation and Regulation

Certain federal governmental regulations impact nearly every type of supply chain. There are rules restricting the use of certain chemicals and substances, including lead, mercury, cadmium and chromium that are found in everyday electronic products such as appliances, computers, lamps and power tools, particularly chemicals that are substances of very high concern. Certain laws mandate that electronic equipment, such as computers, be recyclable. Public companies involved in mineral mining must prove that their supply of specific minerals is not coming from a place that finances conflict in certain African nations. The U.S. government has issued complicated regulations dealing with the traceability of raw materials and the keeping of delivery records regarding certain foods, pharmaceuticals and medical equipment. As globalization grows, the proper observance of supply chain rules in different countries will become increasingly complex.

Liability and Insurance

While a standard commercial general liability policy may offer some protection against bodily injury tied to the failure or contamination of a product, there is much more to consider in relation to supply chain risks. In recent years, the growing prevalence of such risks, combined with a rise in disruptive natural catastrophes and increased globalization, has led to significant growth in Business Interruption (BI), Contingent Business Interruption (CBI) and “Extra Expense” insurance.

Business Interruption Insurance
Business Interruption (BI) insurance covers the loss of income that a business suffers after a disaster, usually due to the disaster-related closing of the business facility or the rebuilding process after a disaster. BI insurance provides additional funds for losses related to fixed costs such as operating expenses, temporary relocation, commission and training costs, extra expenses, and government-mandated or forced closures that directly cause loss of revenue.

Contingent Business Interruption Insurance
Contingent Business Interruption (CBI) insurance operates as an extension to other insurance to reimburse lost profits and extra expenses resulting from a business interruption caused by a covered peril at the specified location of a policyholder’s supplier, distributor, or receiver. Some policies may provide coverage for interruption loss at the premises of a “dependent property,” which can include other operations relied upon to transport or distribute goods, manufacture products, or even attract customers to the policyholder’s business. While the basic idea of CBI insurance is simple, the documentation and analyses needed to validate a claim can be complex, as there are many exclusions, and policy language can be complicated.

Extra Expense Insurance
In addition to BI or CBI coverage, many insurance policies provide “Extra Expense” coverage. This insurance covers reasonable and necessary extra costs a company incurs in excess of the normal operating costs in order to keep its business running after damage to its property. Often, these policies cover additional incremental costs incurred because of damage to the facilities of a supplier, receiver, and/or distributor. Such costs include the increased costs to receive goods for sale, the increased costs to transport and distribute goods, and increased labor costs to re-establish logistics systems.

Product Liability Insurance
Product liability insurance protects manufacturers and sellers from liability for losses or injuries to consumers or others that is the result of a product defect or failure. Product liability coverage can easily be connected to the supply chain. For example, there may be a question as to who is responsible if a company has unwittingly sourced counterfeit parts and those parts fail. The insurance helps mitigate the loss regardless of whether it comes from corporate or a supply chain manufacturer.

Case Study: Superstorm Sandy
Superstorm Sandy was the 2012 hurricane that affected the entire U.S. eastern seaboard, producing especially severe damage in New York and New Jersey. Sandy’s storm surge hit New York City, flooding streets, tunnels, and subway lines, destroying homes, and cutting power in and around the city.

Superstorm Sandy disrupted supply chains all along the East Coast. The biggest disruptions were to public transportation, power and telecommunications providers. Because of closed public transportation and road inaccessibility, many workers were unable to commute to work. Fuel shortages further impacted transportation. Power to lower Manhattan was cut by Con Edison on October 31 to protect their own electrical equipment. Air traffic and shipments to and from important ports in New York, New Jersey, and Philadelphia were halted. Companies and manufacturing plants in the affected areas faced structural damage and damaged inventory. Because of the timing, month-end processing of operational events was adversely impacted. The combination of these elements meant that not only were materials unable to be delivered or processed, but that manpower and resources to initially facilitate production were severely limited.

Certain large companies made supply chain changes to quickly move essential products in spite of the storm. For example, prior to the storm, Home Depot pre-loaded trucks and sent them into locations expected to be affected. Other retailers, such as Walmart, avoided long-term consequences by opening disaster distribution centers to ship supplies to where they were most needed. Some smaller companies, however, faced 100% losses of business for a few days during the storm and immediately after, and a slowdown for the following months.

Superstorm Sandy illustrates how a changing climate will significantly impact weather patterns, a fact which puts pressure on supply chain management and makes it imperative for insurers to be adequately prepared when disasters strike.

Litigation

The automobile manufacturing industry is especially susceptible to supply chain litigation because in many cases there is just a single supplier for a specific automotive product. Price disagreements, product recalls and suppliers that terminate production of an item can lead to expensive large-scale legal disputes. Lawsuits have also been filed against U.S. companies operating in other areas, alleging unethical practices in their supply chains, such as claims of trafficked labor in the fishing industries, child labor at African cocoa plantations, unethical animal care practices and poor labor policies in several manufacturing endeavors. The suits often contend that defendant company’s practices are not what they publicly represent them to be.

Future Outlook

Companies are faced with many options for how they want to conduct business as globalization expands. The options bring the potential for increased efficiency --along with more risks -- for companies dependent on intricate domestic and overseas supply chains. A carefully drafted and frequently-reviewed insurance policy is essential to be ready for the inevitable issues that arise.

In the News

2022

• Freight Labor Unrest Is Going Global and Weighing on Supply Chains - Paul Berger & Liz Young, The Wall Street Journal (09/21/2022)
  From seaport docks in Los Angeles and Liverpool to rail yards in Chicago and warehouses in Europe and the U.S., clashes between cargo workers and management have been rising this year, adding complications and uncertainty to the flow of goods around the world.
  
  

   

• Shippers prepare for worst as Rhine levels near critical low - The Associated Press, The Associated Press (08/13/2022)
  Shipping companies prepared to halt the transport of goods on the Rhine as water levels in Germany’s biggest river neared a critically low point Saturday. An ongoing drought affecting much of Europe has lowered rivers such as the Rhine, preventing large ships with heavy loads from passing key waypoints and forcing them to use smaller vessels or to split cargoes into multiple shipments.

   

• Europe's mightiest river is drying up amid a record heatwave, causing shipping issues and deepening the continent's energy woes - Grace Dean, Business Insider (07/19/2022)
  The River Rhine, one of Europe's most important rivers which is used to transport cargo including chemicals, grains, and coal across the continent, is drying up amid record-breaking summer heatwaves.
  
  

   

• US to diversify infant formula industry to avoid shortages - Zeke Miller, The Associated Press (07/06/2022)
  The Biden administration is trying to help foreign makers of baby formula stay on the U.S. market for the long term, in an effort to diversify the industry after the closure of the largest domestic plant sparked a nationwide shortage.

   

• Companies Face Rising Supply-Chain Costs Amid Inventory Challenges - Liz Young, The Wall Street Journal (06/21/2022)
  Companies face new increases in logistics costs this year as they try to reset their supply chains and rebuild inventories amid continuing disruptions and rising inflation, freight-sector experts say.
  
  

   

• Your Sriracha panic was caused by bad weather in a single region of Mexico - Jenn Harris, The Los Angeles Times (06/10/2022)
  Huy Fong Foods, maker of the Sriracha hot sauce with the green cap and the rooster on the bottle, is warning of a shortage of its popular condiment. That shortage can be attributed to weather conditions in a single region of Mexico, according to Donna Lam, executive operations officer for the company.
  
  

   

• Judge signs off on steps troubled baby formula manufacturer must take to restart closed plant - Brenda Goodman, CNN (05/17/2022)
  A federal judge has signed off on a legally binding agreement between the United States Food and Drug Administration and the baby formula manufacturer Abbott Nutrition, the company at the heart of a nationwide formula recall.

   

• House Dems propose $28 million to address formula shortage - Kevin Freking, The Associated Press (05/17/2022)
  House Democrats unveiled a $28 million emergency spending bill Tuesday to address the shortage of infant formula in the United States.

   

• A Baby Formula Shortage Leaves Desperate Parents Searching for Food - Edgar Sandoval et al, The New York Times (05/10/2022)
  Maricella Marquez looked at the last can of baby formula in her kitchen on Tuesday and handed her 3-year-old daughter, who suffers from a rare allergic esophageal disorder, a smaller-than-usual portion of the special nutrition she needs to stay healthy.

   

• Biden to require US-made steel, iron for infrastructure - Josh Boak, The Associated Press (04/18/2022)
  The Biden administration is taking a key step toward ensuring that federal dollars will support U.S. manufacturing — issuing requirements for how projects funded by the $1 trillion bipartisan infrastructure package source their construction material.
  
  

   

• Traffic Snarled at Texas-Mexico Border by New Security Measures, Protests - Elizabeth Findell, The Wall Street Journal (04/12/2022)
  Two major international bridges were effectively shut down after Mexican truckers blocked lanes in both directions to protest a new border security initiative from Texas Gov. Greg Abbott that forced them to wait hours or days to bring products into the U.S.

   

• Port delays are getting worse in Shanghai. That's very bad news for global supply chains - Laura He, CNN Business (04/01/2022)
  China's strict lockdown in Shanghai is heaping even more pressure on global supply chains. On Friday, Shanghai extended restrictions in many parts of the city, which is home to China's financial hub and one of the world's busiest ports. The Port of Shanghai had already been suffering from major holdups, and the extension may worsen congestion and increase transportation costs further, experts said.

   

• Costco’s Rotisserie Chicken Supply Threatened By Bird Flu - Chloe Sorvino, Forbes (04/01/2022)
  Chickens, many of them destined for the spit, have vastly outnumbered humans in Nebraska’s Butler County since Costco spent half a billion dollars on poultry production in the state a few years ago. Now that a highly contagious virus called avian flu has infected flocks in the area, neighboring farmers are realizing they may have a Costco problem.
  
  

   

• Prices of fertilizer — the backbone of the global food supply — hit record highs as Western sanctions on Russia stall the world's biggest exporter - Natasha Dailey, Markets Insider (03/24/2022)
  A key resource for the world's food supply is facing surging prices and a shortage amid Russia's war in Ukraine.
  
  

   

• Dredging seeks to free grounded cargo ship in Chesapeake Bay - The Associated Press, The Associated Press (03/21/2022)
  Dredging has begun to free a cargo ship stranded in the Chesapeake Bay for more than a week, the U.S. Coast Guard said Monday.

   

• A Year After Suez Blockage, Another Evergreen Ship Is Mired in the Chesapeake - Maria Cramer, The New York Times (03/15/2022)
  A container ship operated by the same company whose vessel blocked the Suez Canal last year, holding up billions of dollars in global trade for nearly a week, has been stuck in the Chesapeake Bay since Sunday night, according to officials in Maryland.
  
  

   

• Biden Bans Oil Imports From Russia, Calling It a ‘Blow to Putin’s War Machine’ - Michael D. Shear, The New York Times (03/08/2022)
  President Biden on Tuesday banned imports of Russian oil, gas and coal in response to what he called President Vladimir V. Putin’s “vicious war of choice” in Ukraine, but warned Americans that the decision to inflict economic pain on Russia would inevitably mean higher gas prices at home.
  
  

   

• Food Companies, Long Symbols of the West in Russia, Pause Operations - Julie Creswell, The New York Times (03/08/2022)
  When McDonald’s opened its doors in Moscow’s Pushkin Square in 1990, it was welcomed by more than 30,000 Russians who happily waited hours in line, eager to spend a sizable chunk of their daily wages for a taste of America.
  
  

   

• Massive cargo ship carrying cars sinks in mid-Atlantic - The Associated Press, The Associated Press (03/01/2022)
  A large cargo vessel carrying cars from Germany to the United States sank Tuesday in the mid-Atlantic, 13 days after a fire broke out on board, the ship’s manager and the Portuguese navy said.

   

• What the Russia-Ukraine Crisis Means for Businesses - Alistair MacDonald & Peter Stiff, The Wall Street Journal (02/28/2022)
  Russia’s assault on Ukraine has left Western companies scrambling to ensure the safety of their workers, while girding for disruption stemming from Western sanctions.
  
  

   

• Surging Omicron cases on board container ships threaten to hamper recovery of the supply chain - Abby Wallace, Business Insider (02/23/2022)
  An increase in outbreaks of Omicron aboard cargo ships could slow down a recovery in the global supply chain, Bloomberg reported.
  
  

   

• Weather Delays Effort to Steady Burning Ship Carrying Porsche, Bentley, VW Cars - William Boston et al., The Wall Street Journal (02/21/2022)
  Heavy tugboats reached the Felicity Ace, a merchant ship with a hold full of German luxury cars that has been drifting ablaze in the Atlantic for nearly a week, but bad weather delayed the arrival of other ships needed to steady the vessel and stop the blaze.
  
  

   

• US warns that chip shortage could shut down factories - The Associated Press, The Associated Press (01/25/2022)
  The U.S. supply of computer chips has fallen to alarmingly low levels, raising the prospect of factory shutdowns, the Commerce Department reported Tuesday.

   

• Supply-chain snafus renew interest in reviving US manufacturing. Some analysts aren't so sure - Andrew Maykuth, The Gazette (01/25/2022)
  Michael Araten knows a thing or two about bringing manufacturing back to the United States. Araten and his company, the Rodon Group, got many accolades and a visit from President Barack Obama a few years ago after shifting assembly of its K'nex brand of plastic construction toys from China to Rodon's plant in Montgomery County, Pennsylvania.
  
  

   

2021

• The Next Wave of the Supply-Chain Crisis Is Building - James H. Gellert, Barron's (12/27/2021)
  Those expecting a quick end to the supply-chain crisis are going to be sorely disappointed.
  
  

   

• Global supply chain crisis could last another two years, warn experts - Martin Farrer, The Guardian (12/18/2021)
  In Britain it’s alcohol, in Canada it’s maple syrup, while in Australia it’s a crucial additive for diesel trucks, and in New Zealand it’s brown sugar. These are just some of the many shortages affecting consumers and businesses around the world as industry experts warn that the supply chain crisis prompted by the coronavirus pandemic could last for many more months and even up to two years.
  
  

   

• Cream cheese shortage: Supply chain problem has reached bagels, cheesecakes - Taylor Avery, USA Today (12/11/2021)
  For the first time in its 71 year history, the production line for Junior's Cheesecake sputtered and came to a halt on Friday, Dec. 3.
  
  
• Carmakers get inventive as global chip crisis bites - Christina Amann, Reuters (11/26/2021)
  Whether buying computer chips directly from manufacturers, reconfiguring cars, or producing them with parts missing, automakers are having to get creative to cope with the global shortage of semiconductors.

   

• Supply-Chain Problems Show Signs of Easing - Stella Yifan Xie et al, The Wall Street Journal (11/21/2021)
  Global supply-chain woes are beginning to recede, but shipping, manufacturing and retail executives say that they don’t expect a return to more-normal operations until next year and that cargo will continue to be delayed if Covid-19 outbreaks disrupt key distribution hubs.
  
  

   

• Truckers Steer Clear of 24-Hour Operations at Southern California Ports - Paul Berger, The Wall Street Journal (11/17/2021)
  The Biden administration pressed ports in Southern California to open 24 hours a day to help ease supply-chain bottlenecks. The move has barely made a ripple.
  
  

   

• Energy Companies Turn to 3-D Printing to Bypass Snarled Supply Chains - Stuart Condie, The Wall Street Journal (11/11/2021)
  With global supply chains gumming up due to the Covid-19 pandemic, Chevron Corp. feared a lack of parts could cause a costly delay to planned maintenance at its $54 billion Gorgon gas-export project in Australia.
  
  

   

• Suez Canal to raise fees, heaping pressure on global supply chains - Graeme Wearden, The Guardian (11/05/2021)
  The Suez Canal Authority is increasing the fees it charges ships passing through the critical waterway, in a move expected to pile further inflationary pressure on global supply chains.
  
  

   

• Supply-Chain Crisis Has Companies Asking: Should We Still Advertise? - Suzanne Vranica & Alexandra Bruell, The Wall Street Journal (10/30/2021)
  The global supply-chain crisis is spreading to Madison Avenue. Many companies have been struggling for months to get products to consumers, as they face shortages in everything from raw materials to labor to cargo containers, among other problems. Some are questioning whether it makes sense to promote products they can’t adequately stock.

   

• Why supply chain chaos and inflation could last into 2022 - Ellen Loanes, Vox (10/24/2021)
  Federal Reserve chair Jerome Powell said on Friday that Americans should be prepared for the global supply chain to remain in crisis through 2022 — and that the central bank is preparing to deal with the attendant challenges for the US economy.
  
  

   

• Cargo backlog creates traffic headaches on sea and land - Christopher Weber, The Associated Press (10/21/2021)
  A Los Angeles neighborhood just outside the nation’s busiest port complex has become a perpetual traffic jam, with trucks hauling cargo containers backed up day and night as workers try to break through an unprecedented backlog of ships waiting to unload.

   

• Wanted: 80,000 truck drivers to help fix the supply chain - Vanessa Yurkevich, CNN (10/19/2021)
  The trucking industry is short 80,000 drivers, a record high, Chris Spear, President and CEO of the American Trucking Associations, tells CNN.

   

• Global Supply-Chain Problems Escalate, Threatening Economic Recovery - Chuin-Wei Yap et al, The Wall Street Journal (10/08/2021)
  Global supply-chain bottlenecks are feeding on one another, with shortages of components and surging prices of critical raw materials squeezing manufacturers around the world.
  
  

   

• Shipping companies are tapping the brakes on skyrocketing container prices - Aurora Almendral, Yahoo News (10/07/2021)
  Shipping container prices may be leveling off after a year of worsening service, threats of regulation, and complaints from retailers as prices skyrocketed.
  
  

   

• ‘A perfect storm’: supply chain crisis could blow world economy off course - Martin Farrer, The Guardian (10/02/2021)
  It was all going so well. Successful vaccination programmes were driving the post-pandemic recovery of the global economy, stock markets were back at record highs, and prices were rising just enough to make deflation fears a thing of the past.
  
  

   

• Car Companies Buckle Up for Extended Chip Shortage - Mike Colias, The Wall Street Journal (09/30/2021)
  The global chip shortage has slammed the auto sector this year, cutting factory output by several million vehicles and erasing billions in revenue for car companies.
  

   

• The workers who fuel the global supply chain warned of a possible 'systems collapse' if solutions aren't found - Grace Kay, Business Insider (09/30/2021)
  Workers from across the supply chain warned world leaders on Wednesday that global trade is facing a possible "system collapse" if solutions aren't quickly reached.
  
  

   

• UK: Soldiers to start driving fuel tankers in coming days - Sylvia Hui, The Associated Press (09/29/2021)
  The British government’s reserve tanker fleet was deployed Wednesday to help deliver gasoline to empty pumps across the U.K., and military drivers will begin operating fuel tankers in the coming days to ease the country’s fuel-supply crisis, a top official said.

   

• Port Logjams Reach Savannah as Container Ships Idle off Georgia Coast - Paul Page, The Wall Street Journal (09/29/2021)
  The Port of Savannah, Ga., the fourth-largest U.S. gateway for seaborne imports, is trying to clear a backlog of more than 20 container ships that has grown in the waters outside the port, in the latest logjam to hit the country’s swamped supply chains.
  
  

   

• New outlook says semiconductor chip shortage will cost auto industry $210B - Clyde Hughes, UPI (09/23/2021)
  The global semiconductor chip shortage will cost the automotive industry $210 billion in revenue this year, nearly twice the cost projected just a few months ago, consulting firm AlixPartners said Thursday.

   

• U.S. Ports See Shipping Logjams Likely Extending Far Into 2022 - Paul Berger, The Wall Street Journal (09/05/2021)
  Leaders of some of the busiest U.S. ports expect congestion snarling maritime gateways to continue deep into next year, as the crush of goods from manufacturers and retailers looking to replenish depleted inventories pushes past shipping’s usual seasonal lulls.
  
  

   

• The Chip Shortage Has Made a Star of This Little-Known Component - Asa Fitch, The Wall Street Journal (09/04/2021)
  The global chip shortage is giving rise to a small group of little-known companies whose products are increasingly essential to the plans of semiconductor industry titans.
  
  

   

• GM, Ford halt some production as chip shortage worsens - Tom Krisher, The Associated Press (09/02/2021)
  The global shortage of computer chips is getting worse, forcing automakers to temporarily close factories including those that build popular pickup trucks.

   

• Bosses fear supply chain disruption as one of top threats to growth – poll - Holly Williams, The Independent (09/01/2021)
  Nearly two thirds of UK chief executives have seen their supply chains come under strain during the pandemic, while bosses globally now fear supply disruption as one of the biggest risks to growth, a survey has revealed.
  
  

   

• Unfinished Tractors, Pickup Trucks Pile Up as Components Run Short - Bob Tita, The Wall Street Journal (08/30/2021)
  Manufacturers are stacking up unfinished goods on factory floors and parking incomplete vehicles in airport parking lots while waiting for missing parts, made scarce by supply-chain problems.
  
  

   

• Another top source says global chip shortage could drag on - Mike Moore, Tech Radar (05/13/2021)
  The global chip shortage is nowhere near its end, and could in fact drag on for some time now, experts have suggested.
  
  

   

• 50 days after the Ever Given blocked the Suez canal, supply chains still have not recovered - Alex Hersham, City A.M. (05/12/2021)
  On the 29th of March, tug boats and dredgers freed the Ever Given from the banks of the Suez Canal. In just six days the blockage obstructed over $60 billion of global trade, sending disruptive ripples to every corner of the world.
  
  

   

• Egypt offered to drop $300 million of its $916 million lawsuit over the Ever Given, which is still impounded 30 miles from where it got stuck - Mia Jankowicz, Business Insider (05/10/2021)
  Egypt offered to drop $300 million from its claim against the owners of the Ever Given container ship, according to local media reports.
  
  

   

• Egypt court upholds seizure of ship that blocked Suez Canal - Samy Magdy, The Washington Post (05/04/2021)
  An Egyptian court Tuesday rejected an appeal by the owner of a massive container ship of the court-ordered seizure of the vessel over a financial dispute.

   

• Japan shipowner asks cargo owners to share Suez damage cost - Mari Yamaguchi, The Associated Press (04/30/2021)
  The Japanese owner of a massive container ship that blocked the Suez Canal for nearly a week, halting billions of dollars in maritime commerce, is asking owners of the freight it is carrying to share the cost of the damages demanded by Egyptian authorities.

   

• Global Chip Shortage Set to Worsen for Car Makers - William Boston, The Wall Street Journal (04/29/2021)
  Global auto makers who had expected the semiconductor supply crisis to subside in the spring are now warning that chips will remain scarce for months while a second-half recovery is fraught with uncertainty.
  
  

   

• A mini replica of the Suez Canal in a French lake is helping mariners learn the lessons of the Ever Given blockage - Sophia Ankel, Business Insider (04/25/2021)
  A training facility in a lake in eastern France, which replicates some of the busiest trading routes in the world, has seen a surge in interest after the colossal container ship, the Ever Given, became wedged in the Suez Canal last month.
  
  

   

• Snarled Supply Chain Trips Up Small Businesses - Ruth Simon, Dave Sebastian, The Wall Street Journal (04/21/2021)
  An Oklahoma restaurant is paying nearly $200 for a case of gloves that normally costs $40. A medical-device maker in Colorado is tweaking the way it manufactures its products to offset higher plastic costs. A clothing wholesaler in Michigan has hundreds of hoodies it has yet to sell because winter was over by the time they arrived from Bangladesh.
  
  

   

• Biden Pushes to Protect Power Companies’ Supply Chains - David Uberti, The Wall Street Journal (04/20/2021)
  The Biden administration said it will resume implementation of a suspended Trump-era executive order to shore up the cybersecurity of the power grid, imposing restrictions on electric equipment from countries such as China and Russia.
  
  

   

• Why the Chip Shortage Is So Hard to Overcome - Eun-Young Jeong, Dan Strumpf, The Wall Street Journal (04/19/2021)
  The world’s leading suppliers of semiconductors are pushing to overcome the prolonged chip shortage that has hampered production of everything from home appliances to PCs to autos.
  
  

   

• The operators of the Ever Given may be forced to unload its 18,000 cargo containers onto other ships, report says - Sophia Ankel, Yahoo News (04/18/2021)
  The operators of the Ever Given ship are exploring the possibility of transferring its 18,000 cargo-filled containers to other vessels as it remains stuck in legal limbo, according to a report by The Wall Street Journal.
  
  

   

• Companies that have containers on the Ever Given could have to help pay the up to $1 billion Egyptian authorities are demanding before the ship leaves the Suez Canal - Madison Hall, Yahoo News (04/13/2021)
  Though three weeks have passed since the Ever Given first got stuck in the Suez Canal, the massive container ship is still anchored after Egyptian authorities announced that $1 billion must be paid before it can leave.
  
  

   

• GM to Halt Production at Several North American Plants Due to Chip Shortage - Mike Colias, The Wall Street Journal (04/08/2021)
  General Motors Co. will halt production at several North American factories and extend shutdowns at others because of a chip shortage that has been worsening for U.S. auto giants and poses a threat to a strong sales rebound.
  
  

   

• The New Shortage: Ketchup Can’t Catch Up - Heather Haddon, Annie Gasparro, The Wall Street Journal (04/05/2021)
  Supply chain problems are reaching into a far corner of the business universe: Ketchup packets.
  
  

   

• Suez Canal Authorities Say Backlog of Ships Is Now Cleared - Greg Chang, Bloomberg (04/03/2021)
  The queue of hundreds of ships that built up around the Suez Canal after the grounding of the Ever Given vessel has been cleared, according to Egyptian authorities.
  
  

   

• Egypt expects $1 billion in damages over stuck ship in Suez - Samy Magdy, The Associated Press (04/01/2021)
  Egypt is expecting more than $1 billion in compensation after a cargo ship blocked the Suez Canal for nearly a week, according to the top canal official. He also warned the ship and its cargo will not be allowed leave Egypt if the issue of damages goes to court.

   

• The Suez Canal has reopened, but experts say you'll still have to wait 9 months for that couch to be delivered - Grace Kay, Business Insider (03/30/2021)
  The Suez Canal blockage may be cleared, but experts warn the impact will be seen on the supply chain for months to come.
  
  

   

• Suez Canal Insurance Claims Loom as Ever Given Blocks Shipping - Leslie Scism, Benoit Faucon, The Wall Street Journal (03/27/2021)
  More than $3 billion of insurance is in place for liability claims against the owner of the grounded container ship Ever Given, officials with its insurance program said Friday.
  
  

   

• Suez Canal Backlog Grows as Efforts Resume to Free Trapped Ship - Costas Paris, Benoit Faucon, The Wall Street Journal (03/25/2021)
  The Suez Canal remained shut Thursday as Egyptian authorities worked to clear a ship blocking the critical waterway and shipping experts warned a resumption of traffic through the channel could still be days, if not weeks, away.
  
  

   

• Suez canal traffic jam costing global trade almost $10bn a day - Louis Ashworth, James Cook The Telegraph, MSN (03/24/2021)
  The ongoing blockage of the Suez Canal threatens to wreak havoc on global trade with the value of goods stuck in an intercontinental traffic jam rising by about $10bn a day.
  
  

   

2018

• H&M, Columbia, and others are accused of ignoring disturbing abuses at a large Indian supplier - Marc Bain, Quartz Media (06/25/2018)
  A report by an international watchdog group is alleging that retailers including H&M, Abercrombie & Fitch, Columbia Sportswear, and Benetton have largely ignored reports of violence and other serious abuses against workers at an Indian factory making their clothes.
  According to the report (pdf), from late March through mid-April, managers at a Bangalore factory owned by Shahi Exports, which claims to be India’s largest clothing manufacturer, brutally repressed attempts by workers to unionize and stifled an increase in the workers’ wages. The campaign, it says, included “physical beatings; death threats; gender, caste, and religion-based abuse; threats of mass termination; and the expulsion from the factory of 15 worker activists.”
• 'Disruption events' rising in global auto supply chain - Dave Leggett, JustAuto (06/12/2018)
  The global automotive industry is coming under increasing pressure from rising incidents of supply chain disruption, according to the latest research from global insurance broker JLT Specialty (JLT). . . . JLT says the global automotive industry had a significant rise in supply chain disruptions last year, with the number of disruption events – typically factory fires, hurricanes and labour strikes – increasing thirty per cent from 1,306 in 2016 to 1,699 the following year. Taken together, these disruptions affected a total of 5,585 suppliers across 10,809 sites, according to the analysis. . . . Factory fires and explosions caused the largest disruption to the automotive supply chain last year, with 318 incidents – compared to 180 in 2016. Merger & Acquisition (M&A) activity – which only appeared in the top five disruptors in 2016 – was the second highest with 247 incidents, followed by hurricane/typhoon activity at 116. . . . JLT's Automotive Supply Chain Disruption Report, produced in conjunction with supply chain data analytics specialist Resilinc, provides a picture on the risks suppliers are exposed to in order to help auto manufacturers pinpoint weak links in their supply chain. As well as looking at the number of disruptive events, the report also identified the highest impact events, the prevalence of man-made and natural events, the main emerging risks, geographical spread and sub-tier penetration. . . . North America tops the table with more disruption events than Asia and Europe combined - 777 disruptions – having suffered Hurricanes Harvey and Irma last year. The latter took an average of 33 weeks in terms of affected sites' time to recover.
• Brands including Ikea shun new safety accord after Rana Plaza disaster - Michael Safi, The Guardian (06/06/2018)
  American retailer Abercrombie and Fitch, Swedish furniture giant Ikea and the clothing label of rapper Sean “Diddy” Combs are among the brands yet to sign a new accord to uphold the safety of millions of garment workers in Bangladesh. . . . The pact follows on from the Bangladesh Accord, the largest of the safety agreements signed between brands and unions five years ago after 1,134 garment industry workers were killed in the collapse of the Rana Plaza building on the outskirts of Dhaka. . . . The accord expired on Thursday, and another similar agreement, the Alliance for Worker Safety, will run out at the end of the year. Under both, factory owners were made to improve the structural and fire safety of their buildings in order to keep supplying to major western brands.
• Cyber Attacks on Supply Chains Up Significantly in 2017 - JAMES HENDERSON, SUPPLY CHAIN (05/18/2018)
  2017 saw a worrying increase in ransomware and other cyberattacks targeting the supply chain, with the business and professional services sector receiving a significant increase of attacks, particularly in the EMEA region, which saw 20% of all attacks targeting this sector.
• Supply Chain Adoption of Blockchain Continues to Gain Steam and Generates Many Legal Issues - Jeffrey Neuburger and Tiffany Quach, , Proskauer (01/26/2018)
  While there has been a great deal of attention being paid lately to the use of blockchain for the issuance and investment (or speculation) in cryptocurrencies, other enterprise-based applications of blockchain continue to be deployed with increasing frequency but less fanfare.
  One of the more recent deployments of blockchain – viewed as a milestone in the world of supply chain logistics – is based on Easy Trading Connect (“ETC”), a blockchain-based system developed by a consortium of companies led by Dutch financial institution ING. The system was initially designed to manage commodity trading funds transactions. The most recent transaction, involving a shipment of soybean cargo, is believed to be the first agricultural commodity sale processed completely “on chain” (e.g., on a blockchain-based system). The ETC was used to process all steps of the transaction, and reportedly no paper contracts, certificates or other similar documents changed hands. According to ING, the system reduced what is traditionally a process of 11-14 days to only four days.
• Types of Risks Impacting Supply Chains in 2018 - Material Handling and Logistics (01/08/2018)
  To look at what risks will affect the supply chain in 2018, Rob Savitsky of AIR Worldwide (a member of the MIT Center for Transportation & Logistics Supply Chain Exchange program), wrote a blog for MIT discussing three broad categories of supply chain risk. . . . Natural Catastrophes . . . . Hurricane Maria, which slammed into Puerto Rico on September 20, 2017, is a prime example of a catastrophe that reverberates through supply chains. It’s been reported, for example, that the destruction of medical device manufacturing capacity in Puerto Rico wrought by the hurricane has led to a national shortage of medical IVs, which has forced some hospitals to use alternative products and find new suppliers. . . . Man-Made . . . . Man-made events such as fire, product defects, cyber-attacks, labor and civil unrest, terrorism, utility failure, and piracy, are more frequent disruptors of supply chains but typically have a lower severity than natural catastrophes. . . . Economic . . . .Economic situation can cause product or labor shortages. Examples include sub-suppliers that perform poorly, financial insolvency, and trade or tariff. For example the 2016 Hanjin maritime carrier bankruptcy left workers, ships, containers, and product stranded at sea and in ports around the world.

2017

• Slavery in supply chains - Antislavery (11/13/2017)
  Typically the final product you purchase has passed through a long chain of producers, manufacturers, distributors and retailers who have all participated in its production, delivery and sale. It can be very difficult to track a component of an end product back to a particular producer, for example cotton in a T-shirt back to a particular cotton farm. . . . Because of the complexity of supply chains, it is rarely possible to be certain that a product has or has not been produced using slavery. . . . However, the way in which companies operate can increase the likelihood of slavery in the final product. If a brand gives its supplier a large order with a short turnaround time beyond the suppliers’ capacity, this could increase the risk of slavery as the supplier may subcontract work to factories that are not regulated by the same standards as the supplier. . . . Company buyers may negotiate such low prices that suppliers are forced to push down the price it pays for the materials it needs, which can have a knock-on effect on those involved in the production of raw materials, increasing the likelihood of the use of slavery. . . . Companies have a moral responsibility of ensuring that no slavery has been used in producing the products they sell. This should apply not only to goods produced in their own factories but also to their suppliers, and suppliers of their suppliers, all the way down the supply chain. . . . In the UK, the Modern Slavery Act passed in 2015 obliged businesses with annual turnover of £36m or higher to disclose the steps they take to tackle slavery in their supply chains under the Transparency in Supply Chains Provision (TISC). While the Act was largely welcomed by civil society, serious concerns have been raised about its limitations.
• Supply Chain Experiencing High Rate of Terrorist Attacks - MH&L Staff, Material Handling & Logistics (09/30/2017)
  

  Attacks on global supply chains by terrorist groups have hit the highest rate ever as have associated costs, according to a report recently released by BSI. . . . The variety of attacks include targeting the oil infrastructure, hijacking and cargo theft through to contraband smuggling, extortion and kidnapping schemes.  . . . Over the past 10 years, an average of 3.1 attacks have occurred each week. In 2016 a total of 346 attacks took place, according to analysis conducted by BSI’s SCREEN Intelligence program.

• Hyundai hit again by supply disruption in China, one plant halted - Reuters (09/04/2017)
  

  South Korea’s Hyundai Motor said it had suspended production at one of its China factories on Tuesday after a supplier refused to provide parts due to delays in payment - its second such incident in as many weeks. . . . Frayed relations with suppliers to its venture with BAIC Motor Corp Ltd are adding to headaches for Hyundai in China, where it has seen sales slump due to diplomatic tensions between the two nations and fierce competition from local brands.

• BMW Slows Some Production Due to Parts Shortage From Supplier Bosch - William Boston, The Wall Street Journal (05/29/2017)
  BMW AG, the German luxury car maker, is slowing or halting production of certain models in response to a shortage of parts caused by delivery problems from supplier Bosch GmbH. The hiccups in the normally smooth operation show how dependent manufacturers are on a global, smoothly running supply chain. Even small disruptions anywhere along the line can cascade into delays in getting the company's big money-making products off the assembly line and into showrooms. In BMW's case, the culprit is a "Lenkergetriebe," or steering gears manufactured by Stuttgart-based auto-parts giant Bosch and used in BMW's 1-Series, 2-Series, 3-Series and 4-Series compact cars.
• Vendor sues Kraft Heinz over upside-down bottle caps - Torsten Ove, Pittsburgh Post-Gazette (04/27/2017)
  A food container fight is under way between Pittsburgh giant Kraft Heinz and an Illinois vendor that supplies the caps for those upside-down Heinz ketchup bottles.
• Protests in Bangladesh Shake a Global Workshop for Apparel - Rachel Abrams, NY Times (01/22/2017)
  Protests over low wages had erupted at dozens of garment factories in Bangladesh, one of the top suppliers of clothing for global brands like H&M and Gap, and officers had come to question Jahangir Alam, the president of a local trade union in Ashulia, a suburb of the capital, Dhaka...Both Gap and H&M said that they supported a regular wage review mechanism to ensure stability in the future, and that they were monitoring the situation closely. Labor advocates, though, say the global companies should be doing more, since billion-dollar brands like H&M have a lot of leverage with local factories and the government.

2016

• Trucking insurance: It’s a new ballgame - Sean Kilcarr , FleetOwner (10/21/2016)
  With trucking insurance firms hiking premiums 10% to 30% in the wake of big claims, and with major companies such as Zurich Insurance Group AG and American International Group Inc. exiting the for-hire insurance market, it’s suddenly much tougher – and much more expensive – for truckers to obtain adequate coverage. This follows a two-year effort by the Federal Motor Carrier Safety Administration (FMCSA) to raise minimum insurance coverage amounts to $750,000, with new food transportation requirements due for implementation next year opening the door to more liability exposure for trucking companies as well. In short, the risk exposure is suddenly a whole lot bigger for motor carriers, which is not a good thing as our ever-more litigious society is putting trucking firmly in its legal crosshairs.
• ‘Nuclear’ Verdicts Have Insurers Running From Trucks - Brian Baskin , The Wall Street Journal (10/14/2016)
  Truckers are finding it harder and costlier to line up coverage for their fleets, as a wave of blockbuster payouts over accidents pushes insurers out of the market. The number of people killed in accidents involving large trucks fell 20% in the last decade, according to the Transportation Department, though it ticked higher last year. But a string of so-called “nuclear” verdicts, where juries award tens or even hundreds of millions of dollars to families of accident victims, have made the financial consequences of those crashes harder to predict… Unwilling to bear the risk of large settlements and verdicts, Zurich Insurance Group AG and American International Group Inc. dropped coverage of most for-hire fleets earlier this year. Both insurers still cover trucks operated directly by retailers and manufacturers, brokers say. They had been two of the biggest underwriters for the business. Other insurers hiked premiums anywhere from 10% to 30%.
• Increasing cargo theft risk recorded in Rio de Janeiro, Brazil - PR Newswire (09/13/2016)
  Brazil topped the list of countries suffering from heightened cargo theft risks, according to the latest Global Supply Chain Security and Business Continuity Risk Index report from BSI Supply Chain Services and Solutions, closely followed by Venezuela and Germany… In Brazil, Rio de Janeiro saw its highest rate of cargo theft in the last 23 years in 2015, with 7,225 incidents taking place – a 23% increase. Likely reasons for this include the severe impact of Brazil's overall economic crisis in Rio, and the increased law enforcement efforts in Sao Paulo, traditionally the leading area for theft in Brazil, driving a shift in more organized criminal activity to Rio…Thieves have been able to target a range of product types, covering everything from food and beverages to cigarettes, electronics, pharmaceuticals. This increase in theft forced companies to either relocate or adopt additional costly security measures, with figures showing cargo transportation companies in Rio de Janeiro devoting an average of 15-20% of their budget to security measures.
• 41 Indicted in Bangladesh Rana Plaza collapse case - DNAIndia.com (07/18/2016)
  A Dhaka court on Monday indicted 41 people, including owner Sohel Rana in a case filed over the Rana Plaza collapse in 2013 which killed over 1,000 people.

2015

• Knockout in Round One: Court Dismisses California Supply Chains Act Class Action -  Dan Herling and Joshua Foust, Consumer Product Matters (12/29/2015)
  The first round goes to the industry: on December 9, 2015, the Central District of California dismissed the complaint in Barbar v. Nestle USA, a key bellwether case in a new wave of class action litigation related to California's Transparency in Supply Chains Act.
• Controlling the supply chain is key to preventing E coli outbreaks - Wade Winters, fastcasual.com (12/07/2015)
  The influx of recent E.coli outbreaks is certainly not good press for the food service industry, and as food service operators prepare to navigate the challenges tied to another outbreak, consumer confidence continues to erode.
• African nations work together to rid supply chains of conflict materials - Alison Moodie, The Guardian (09/14/2015)
  A growing number of mines in the Democratic Republic of Congo have now been validated as conflict-free, making it easier for companies to keep conflict minerals out of their supply chains.
• Latest chicken recalls highlight a big gap in supply chain transparency - Chris Morrison , The Guardian (07/21/2015)
  The US Department of Agriculture announced two major recalls last week... due to possible salmonella contamination. Together, the recalls affected nearly 4m pounds of chicken sold in the US.
• Financial Firms Grapple With Cyber Risk in the Supply Chain - Rachel King, Wall Street Journal (05/25/2015)
  In a connected world, business survival depends on communicating with partners. But increasingly those same partners, which include technology services providers and suppliers, can prove to be a company’s downfall if the systems they share are compromised.
• Common-sense, low-cost fix for truck-train crashes rejected - Seattle Times (03/25/2015)
  America’s railroads want five more years to stop train wrecks using a high-tech system costing more than $9 billion. But experts tell The Associated Press that it won’t keep trains and trucks from crashing together unless both industries use a common-sense solution available right away: actually talking with each other before crossing into each other’s territory.
• Sears says paying vendors early doesn't indicate supply chain troubles - Alexia Elejalde-Ruiz, Chicago Tribune (03/19/2015)
  Sears took to its blog Thursday to say paying its vendors early doesn't indicate trouble in its supply chain. But one corporate restructuring expert says that's often exactly what it means.

2014

• Costs and risk bring companies closer to home - Munich Re (12/01/2014)
  Natural disasters, political unrest, the quality of product components, the lack of transparency in managing second or third tier suppliers and the sheer distance between production facilities and markets, among other issues, have prompted some companies to move their operations closer to local markets.
• Sustained response to Somalia piracy requires effective State governance – UN political chief - UN (10/22/2014)
  The decline in pirate attacks off the coast of Somalia is an opportunity to review current efforts and take a long-term perspective on how best to contain Somali piracy including by addressing underlying conditions conducive to breeding piracy, such as political instability and the lack of alternative livelihoods.
• Fire exposes illegal Chinese factories in Italy - AP, San Francisco Chronicle (10/17/2014)
  The fire that destroyed the Teresa Moda factory on Dec. 1, 2013, and killed seven people, was the deadliest in living memory in Prato.

2013

• Managing the Risk of Disruption in Your Supply Chain - Christopher Monk and Jim DeLoach, SupplyDemandChain Executive (12/10/2013)
  Chief financial officers (CFOs) know that supply chain performance has a direct impact on the bottom line. From balancing supply with demand to managing availability of inventory to managing a global distribution network, even the slightest miscalculation or interruption can be the deciding factor in announcing a profitable or unprofitable quarter

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