COVID-19 continues to wreak havoc on supply chains

The COVID-19 pandemic has brought about complex and varying responses by governments and businesses, in turn wreaking havoc on supply chain continuity. This week, BSI's latest quarterly review reveals that cargo theft, smuggling, and child labour are all persistent themes in global supply chain threats and trends.

When BSI published its annual Supply Chain Risk Insights Report at the beginning of March 2020, the global business impact of COVID-19 was still in its initial stage. Some seven months down the line, and the situation has worsened, with an increase globally of illegal drug smuggling and cargo theft of pharmaceuticals and medical supplies; a global increase of warehouse and facility theft (particularly throughout Europe as the world approaches peak shipping season); an increase of human smuggling and stowaway incidents in supply chain modalities as many economies remain weak; and ongoing issues with food fraud due to global movement restrictions.

“As expected, COVID-19’s continued impact to the global supply chain remains significant,” said BSI's Jim Yarbrough. “Unfortunately, we are seeing it’s most significant impact on vulnerable populations including migrant workers and children. For example, through the data collected by our SCREEN intelligence tool, we’ve found that COVID-19’s negative impact on global economies has led to exploitation of vulnerable migrants who may be stranded in detention centres due to mobility restrictions and an increased use of child labour due to lockdowns and school closures.”

Key themes: COVID and the global supply chain (Source: BSI)

Throughout the year, cargo theft has continued globally. Several trends influenced Q3 this year including:

-An uptick in cargo theft incidents involving pharmaceuticals in Mexico
-Warehouse facilities were the most frequently targeted for cargo theft in Europe
-Food and beverage products were the most stolen commodities in Asia
-Thieves increasingly targeted medical supplies in the Middle East and Africa
Rail freight theft in Mexico continues to pose a significant threat to supply chains in the country
-Since the lockdown in India, there is an uptick in cargo thefts, rebounding back to pre-COVID levels.

Economic hardships worldwide hit migrants and children especially hard​, with restrictions on movement stranding thousands​. COVID-19 deterred some migration through border closures; however, the movement of migrants has continued, and stowaway detections picked back up during May/June. In addition, challenges of labour rights enforcement across Latin America and parts of Asia highlight the importance for organisations to monitor their supply chains to identify where typical factors that are conducive to labour exploitation​ may be. This year, US Customs and Border Protection issued an unprecedented number of Withhold Release Orders over products believed to be produced with forced labour. Additionally, as the global pandemic and falling oil revenues challenge Gulf countries’ economies, many are responding by protecting their local labour markets, resulting in both opportunities and vulnerabilities for migrants​.

Corruption by government officials was also a highlighted issue during Q3. In Mexico, the military took over customs administrations due to the high risk of corruption, although this is predicted to be a temporary fix for the problem. Similar issues of corruption occurred in supply chains throughout Q3 in Brazil and Thailand, with supply chain workers at ports participating in trafficking illegal drugs as well as border officials participating in illegitimate schemes.

COVID-19 movement restrictions continue to drive food fraud trends in Latin America throughout Q3. Criminals in Latin America continue to smuggle and divert food products in large quantities, especially as certain types of goods increased in both value and consumption during the spread of COVID-19​. It is likely that current border controls in many countries in the region are preventing the movement of passengers and smuggling of food products will likely continue as long as restrictions remain in place. In India, there was an uptick in food fraud during COVID-19 as lockdowns reduced access to food rations.

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