Terror attacks on global supply chains, and the associated costs to businesses, have reached their highest levels ever, according to analysis by the British Standards Institution (BSI).
In 2016 a total of 346 attacks were carried out, ranging from hijacking and cargo theft to contraband smuggling, infrastructure targeting, extortion, and kidnapping schemes. That number represents a 16% increase over 2015 and a doubling of the average annual frequency tallied over the past decade.
BSI's report, Terrorist Threats to International Trade and the Supply Chain, found that terrorists are targeting a wider range of industries and modes of transport than in any previous year. Over three years of data, terrorist attacks against the agriculture and food and beverage sectors more than tripled, while attacks on the industrial and manufacturing materials and pharmaceuticals sectors more than doubled. In particular, terrorists are increasingly setting their sights on industries generally associated with private or corporate supply chains rather than state-owned supply chain infrastructure, BSI says.
"It is a common misconception that terrorism is strictly a national security issue and that counterterrorism is solely the responsibility of governments," cautions Jim Yarbrough, global intelligence program manager at BSI. "Our analysis clearly shows that commercial interests and private organizations are increasingly threatened, extorted, and directly targeted by terrorist organizations all over the world."
Costs to the supply chain as a result of attacks are both direct and indirect. Physical attacks against the supply chain, such as arson, bombings, and armed assaults, create direct disruptions and often result in the destruction or loss of cargo in transit. Additionally, attempts to tamper with international cargo shipments can compromise the integrity of a load and result in the seizure or destruction of goods by customs authorities.
When companies are forced to reroute shipments to avoid a terror hotspot, however, the costs can spiral. According to BSI, terrorism related to the Syrian conflict forced Lebanese officials to reroute $1 billion worth of exports, resulting in the loss of $754 million in revenue for the Jordanian trucking industry.
Increased security measures implemented to mitigate the risk of attacks—particularly for cross-border shipments—are also slowing the movement of freight and increasing shipping costs. For example, following the Paris attack in November 2015, France imposed stricter controls along its borders with Belgium and Luxembourg that cost companies an additional $59 per delayed vehicle. BSI says the total cost to shippers in Belgium amounted to an estimated $3.5 million within the first month following the attack.
"Terrorist attacks in major cities and against key transportation nodes in the UK, Belgium, France, Germany, and the Netherlands have triggered heightened security levels and emergency border controls across the continent, leading to significant commercial impact on our clients' businesses," says David Fairnie, principal consultant, supply chain security, at BSI. "I believe supply chain terrorism will continue to significantly impact Europe for decades to come."
Despite the upward trend in attacks, BSI's report found that there is inadequate spending on supply chain security. For example, in India, cargo throughput has increased sharply over the past decade, with air freight volume alone increasing nearly 120%. However, this growth in shipping volume has not been met with a matching investment in supply chain security. Similar concerns in Bangladesh have led the European Union to recently prohibit the direct importation of air freight from Bangladeshi airports.
CTPAT: Working to Curb Threats to Global Supply Chains
North American manufacturers—as well as logistics and other companies operating along global supply chains that service U.S. ports—can cooperate to bolster defenses against such attacks by participating in the Customs Trade Partnership Against Terrorism (CTPAT). Born in the aftermath of the September 11 terror attacks, CTPAT is public-private partnership through which U.S. Customs and Border Protection (CBP) works with the trade community to strengthen international supply chains and improve border security. CTPAT membership now numbers 11,400 entities that collectively account for over half (by value) of all cargo imported into the United States, including U.S. importers/exporters; U.S./Canada highway carriers; U.S./Mexico highway carriers; rail and sea carriers; licensed U.S. Customs brokers; U.S. marine port authority/terminal operators; U.S. freight consolidators; ocean transportation intermediaries and non‐operating common carriers; Mexican and Canadian manufacturers; and Mexican long‐haul carriers.
When an entity joins CTPAT, agreement is made to work with CBP to protect the supply chain, identify security gaps, and implement specific security measures and best practices. Applicants must address a broad range of security topics and present security profiles that list action plans to align security throughout the supply chain.
CTPAT partners are considered to be of low risk and are therefore less likely to be examined at U.S. ports of entry. Members derive a number of benefits, including:
- Reduced number of CBP examinations
- Front-of-the-line inspections
- Possible exemption from stratified exams
- Shorter wait times at the border
- Business resumption priority following a terrorist attack