According to the Chartered Institute of Procurement and Supply (CIPS) Risk Index for the third quarter (Q3) of 2015, global supply chain risk remains stubbornly high.
Factors taken into account include the cross-border presence of the terrorist organisation ISIS throughout the Middle East, the subsequent re-introduction of border controls within Europe’s Schengen zone, a more assertive Russia and the easing of sanctions by the United States with regard to Iran and Cuba.
For CIPS, Dun & Bradstreet analysed 132 countries against a number of criteria, including level of exports, to assess issues and challenges along the supply chain to produce a global risk score.
This showed the global supply chain risk standing at 79.1, only slightly down from the record high of 82.4 two years ago and nearly double the pre-financial crisis level of 40.4 in Q4 of 2003.
One particular problem highlighted in the latest report is the threat to the Schengen area.
Nearly all the EU’s Member States (and a number who are not members such as Norway and Switzerland) signed up some years ago to the Schengen Agreement by which they eliminated internal border controls.
While this has produced considerable benefits for the free movement of goods over the last 20 years, the system is now coming under real strain with various Member States demanding a return to controls in order to restrict the numbers of migrants and asylum seekers trying to cross from one Schengen country (say Hungary or Greece) in order to reach their eventual goal (say Germany).
Although border crossings are taking as long as 90 minutes in the countries involved, traders who were in business before Schengen will remember that lorries could sometimes be delayed at customs crossings for several hours or even days.
