DP World: Revealing Regions with Biggest Supply Chain Threat

As climate-related disruption, geopolitical volatility, port congestion and customs delays spark major concerns, it is clear global trade is facing a period of constant disruption. 

While disruption is hitting supply chains everywhere, some are facing worse impacts than others.

DP World has released its 'World Without Logistics: Global Report', a piece bringing together the cost of disruption, sector-specific challenges and what companies are doing to ensure they stay ahead.

Major concerns

DP World is a global leader in logistics, uniting global infrastructure with local expertise in order to develop efficient end-to-end supply chain solutions. Its 'World Without Logistics: Global Report' acts as the conclusion to its 'Without Logistics' series, bringing together all of its findings in one cohesive report.

The study has identified five major trends through the results: 

• Disruption impacts regions differently, with the Global South facing the most disruption - 83% of firms experiencing disruption in Sub-Saharan Africa (SSA) say operational time is impacted by more than a month within disrupted years, as opposed to 50% in North America, 41% in Germany and 36% in the UK.
• There are two major factors within disruption: chronic and catastrophic - high-volume sectors like perishables, healthcare and retail face constant and repeated shocks, whereas automotive faces less but more costly disruption.
• Resilience requires broad investment - firms that spread logistics investments across their supply chain see more resilience. Consumer goods companies that have invested in four or more logistics areas report approximately 76% lower disruption costs than their low-investment counterparts.
• Disruption is a customer and reputation problem - most regions and sectors report an increase in customer complaints following disruption (80-95%), with around 80% of companies in France and Sub-Saharan Africa reporting an impact on brand image following disruptions.
• There is an alignment on resilience from C-suite and below - C-suite cargo owners and those below C-suite agree that resilient supply chains will outperform peers in the near-future, with 81-89% expecting higher investment in AI, robotics and automation.

"To get closer to an answer, we spoke to hundreds of beneficial cargo owners (Cargo owners) across eight major industries, every major trade region, at both C-suite level and below," explains Beat Simon, COO for Logistics at DP World.

"Their responses paint an unsettling picture of disruption that is no longer exceptional but common.

"The consequences of geopolitics, climate events, labour shortages, congestion and critical infrastructure failures are keeping cargo owners in firefighting mode with little time to recover. It’s a pattern of strain that impacts everyone involved and demands a different way of thinking about logistics." 

Regional differences

The report has found that different regions around the world have different resilience and face differing scales of disruption.

North America
38% of respondents said they face disruption costs of US$1m or more, while 50% says they lose more than one month of operational time in a year. Firms in North America are facing disruption but they have more resilience and see less brand impact than firms in other places around the world. They are putting investment in logistics spend (65%) and in AI, automation and digital tools (78%).

Europe
Europe undergoes high disruption, but some countries are affected more than others. The UK and Germany are confident in their resilience strategies, but France faces more brand damage. 90% of German firms are confident with their partners, whereas only 41% of French firms say the same. 62% of European companies say their brand image has suffered due to delays during disruption.

Middle East and North Africa
MENA is one of the most stressed regions, with 72% of firms saying they lose more than one month of operational time every year and 43% reporting annual disruption costs of more than US$1m. 100% of firms have said that disruptions have led to a loss of brand image but they are also confident in their partners.

"In many African and Middle Eastern gateways, a single extreme weather event or conflict flare up can ripple quickly through already tight networks," explains Beat.

"The encouraging signal in this data is that the same regions under the most pressure are also pushing hardest on modern terminals, inland connectivity and digital platforms. The task now is to quickly turn that investment into resilience infrastructure, with the end goal of creating genuinely more predictable corridors rather than just more capacity.”

Sub-Saharan Africa
SSA sees the worst disruption with the longest outages and bran impacts. 83% of brands report losing more than one month of operational time, with 86% reporting their brand image has suffered as a result. However, these firms also display the strongest intentions to improve, with 97% planning to invest in logistics and AI.

All supply chain, sustainability, Scope 3 and net zero leaders should attend:

• Procurement and Supply Chain LIVE: The Net Zero Summit - QEII Centre, London, March 4-5
• Procurement and Supply Chain LIVE: The US Summit - Navy Pier, Chicago, April 21-22

Co-located with Sustainability LIVE, these events brings together CSCOs, CSOs and senior decision-makers at a moment when sustainability, supply chains and commercial performance are increasingly interconnected.
Tickets can be booked online today for The Net Zero Summit and The US Summit. Group discounts available.

The impact of disruption

The cost of disruption has demonstrated itself to be a huge concern, particularly for those in the Global South. However, industry disruptions also need to be considered. For the automotive industry, the annual disruption cost is as US$13bn, but it only has 13,0000 incidents per year. This is in contrast to the retail sector which has 18,000 incidents per year but only a cost of US$7.5bn. 

Though these disruptions are significant, firms are working to tackle these losses. The majority of forms have plans to make investments in their supply chain and logistics over the next 12 months. Much of this is to do with the implementation of AI and other digital tools, as well as more diverse logistics partners. These investments are particularly high in the 'stressed' regions, though France acts as an anomaly with high disruption and low drive to invest.

"Without Logistics is not an attempt to predict the next crisis or claim that disruption can be eliminated with a few quick fixes; trade will inevitably remain exposed to geopolitics, climate and macroeconomic shocks, as it always is to varying degrees," adds Beat.

"Instead, it offers a way of seeing the system as it is today: where disruption stress is highest, where momentum for change is strongest, and what kinds of investment actually move the needle on resilience."

The priorities for change focus on ensuring resilience strategies can be built up from the beginning. Leader need to prioritise the routes and markets were disruption causes the biggest operational damage, focusing on building reliable infrastructure before adding extra technology, as digital tools cannot reach their full potential if they are battling a weak foundation.

Finally, leaders need to consider their interactions with supply chain partners and customers in order to enable trust and ensure operations remain strong.

To hear from experts on supply chain excellence, come to Procurement & Supply Chain LIVE: The Net Zero Event, co-located with Sustainability LIVE.

Here, you will be able to witness a Keynote Presentation by John Trenchard, VP Sustainable International Supply Chains, Europe Region at DP World, titled Leading the Shift: Sustainability, Scale and Competitive Advantage. This will take place on Day 1 of the event at 10:00am on the Sustainability stage. 

DP World is also sponsoring the Sustainable Supply Chains Panel Discussion on Day 2 of the event, at 2:20pm on the Procurement & Supply Chain Stage.