August 2024 - Interos

The Latest Supply Chain Shockwave: Labor Strikes Loom in Canada and India

Posted on August 27, 2024August 27, 2024 by Interos

Report Authors: Mackenzie Clark, Andrea Little Limbago, and Caralyn Welliver.

In 2023, labor strike activity increased 280%, with last summer referred to as the ‘Summer of Strikes’ due to the spike in labor activity. This trend seems to persist into 2024. Last Thursday, two of Canada’s major railways briefly shutdown, with a lockout that could have cost hundreds of millions of dollars. A forced arbitration has trains running again, but it is unclear how long that will last. At the same time, Indian port workers are threatening a strike starting tomorrow, August 28th, with negotiations scheduled for today.

Significant and simultaneous strikes at two of the top ten largest economies in the world would cause significant supply chain disruption at a time when they are already undergoing significant transformation. Geopolitically driven export controls are reshaping supply chains, while political instability in the Red Sea has forced new risk assessments and rerouting at the same time as the Panama Canal drought has created bottlenecks and restrictions. The addition of labor strikes in two major economies has been compared to an ‘earthquake’ disruption to the US economy. Of course, not all disruptions are created equally, and each has a unique impact on companies and the global economy. Below is a short overview of the potential impact of these labor strikes.

Canadian Rail Strikes: Potential for Significant Disruption to US Supply Chains

Prior to the binding arbitration, the short-lived rail labor strike shut down 75% of Canadian railways and had the potential to impose costs exceeding $251 million dollars per day, by one estimate. This would be a blow to Canada’s economy, but also would have global impact. Within the US-Mexico-Canada agreement area alone, these strikes threaten to upend the free trade region at a time when these countries work to reduce reliance on geopolitically risky exporters of vehicles and vehicle parts and semiconductors and electronic components.

These key industries are at risk if a strike occurs. While petroleum makes up the largest portion of Canada’s exports, companies in the United States and Mexico also import many goods from Canadian suppliers. Since 2023, Interos’ data shows that the top Canadian commodities imported by companies in the U.S. and Mexico include:

From 2023 to present, Interos‘ data shows that over 74,000 companies in the United States and Mexico have been directly supplied by a Canadian company. In the US and Mexico, customers of Canadian suppliers are concentrated in the following industries:

The industries most impacted are widespread across various diverse sectors with far-reaching potential shockwaves to the US economy.

Even without a strike, some disruptions occurred as pre-emptive stoppages were underway in preparation for the strikes. For instance, the two major rail carriers stopped shipments of hazardous materials in anticipation of the strike. In addition, with 20% of US trade first arriving in the Ports of Vancouver and Prince Rupert, a longer strike would have ripple effects across the interdependent economies. Although arbitration forced a return to work, the threat of strikes still looms.

India’s Planned Strike Looms Large Over Global Economies

India has a history of workers’ strikes and protests, with truckers striking earlier this year leading to a drop in goods such as fuel and fruit. Similarly, the farmers’ protests over new legislation had disruptive supply chain impacts. Despite this history, the risk of strikes at the major ports could lead to unprecedented disruption. Three years of labor negotiations may be coming to a halt, as twenty thousand workers at 12 major Indian ports are threatening to strike tomorrow, on August 28th.

As the fifth largest economy, and most populated country, a labor strike in India certainly would have global ramifications. Since the beginning of 2023, India has accounted for well over one hundred million individual export shipments. Based on Interos data, the United States and United Arab Emirates combine for over 30% of Indian exports, while Hong Kong, and several European countries hold other top spots.

Since 2023, Interos’ data shows that India’s top exported goods encompass a wide range of products:

The Port of Nhava Sheva and New Delhi accounted for roughly one third of India’s total number of exports since 2023, while the Ports of Chennai, Mumbai, Bangalore, and Mundra also serve as key corridors. A closure to any of these could exacerbate already strained supply chains.

Looking Ahead: Labor Strikes Positioned for Significant Disruptions to Supply Chains

India and Canada are far from alone in the risk of labor strikes. On August 25, the Fremantle Ports in Australia were expecting a second weekend of stoppages due to strikes and just today thousands of Australian construction workers protested, leading to the disruption of projects in major cities. The Fremantle Port strikes were halted on Friday when an agreement was reached. Germany and Belgium also have had recent labor strikes at their ports, and earlier this year, labor strikes also impacted German railways and airports. The number of striking workers in the US more than doubled in 2023, as labor strikes impacted ports on both the East and West Coasts of the US. China is not immune from this trend, as strikes and protests have increased in response to the economy and demanding higher wages, with 80% of the strikes within manufacturing and property.

In some cases, forwarding leaning companies who have adjusted to the new norm of supply chain disruptions may be less impacted by these labor strikes. For instance, in response to instability in the Red Sea, some companies placed their orders much earlier, potentially shifting peak shipping season to earlier in the year.

For others, reshoring and geographic diversification is a growing strategy to build more resilient supply chains. This requires a holistic view of risk as new locations may pose different, but potentially equally disruptive, challenges. For instance, many companies look to India as a viable alternative to China but must be aware of the localized benefits and risks at the subnational level.

Get Ahead of Labor Strikes with Interos

Interos’ continuous monitoring alerts quickly identify the potential impact of disruptions across their extended supply chain. This visibility empowers companies to get ahead of potential disruptions both upstream and downstream in their supply chain.

For instance, a bi-coastal strike by the International Longshoreman’s Association in October in the US looms large pending contract negotiation. Interos will be watching the ongoing risk of labor strikes in Canada, India, and the US closely, as well as the broader trend of global labor strikes.

For a more detailed analysis of the potential impact of labor strikes in Canada and India, download our report below:

Why AI Risk Intelligence Is Key to Strengthening Digital Supply Chain Cybersecurity

Posted on August 16, 2024August 16, 2024 by Interos

Image: NOIRLab/NSF/AURA/T. Slovinský

Story by Alea Marks & Dianna ONeill

The second episode of Interos’s executive insights series, “Voices of Innovation,” explored how AI is enhancing digital supply chain cybersecurity – with former CISA Chief of Staff Kiersten E. Todt calling the issue an “urgent challenge.”

“The AI Revolution in Supply Chain Cyber Defense” discussion between Todt and Dave DeWalt, founder and CEO, NightDragon, comes against a backdrop of soaring software supply chain attacks that make today’s complex digital ecosystems acutely vulnerable to breaches, attacks, failures and other cascading disruptions.

Here are five key takeaways from their conversation:

1-Understanding and Managing Supply Chain Risk
The rise in software supply chain attacks has highlighted persistent and costly risks in interconnected digital supply chains, particularly as cybercriminals exploit vulnerabilities in third-party software components. Gartner projects that by 2025, 45% of global organizations will have experienced a supply chain attack, which is three times higher than in 2021

Todt stressed the need for visibility and transparency in managing latent third-party vulnerabilities:

“I do think it’s one of the most urgent challenges to be addressed because we don’t know all the interdependencies [that exist] and we have to have greater visibility into all of the touchpoints that we have. Understanding our third-party risk, understanding where third-party supplier vendors are not as strong or resilient as we need them to be, is critical.”

Recent data shows that 61% of businesses have been impacted by supply chain attacks in the past year, highlighting the extensive attack surface and the urgent need for proactive measures. AI-driven intelligence – which has the power to continuously monitor supply chain lifecycle risk at scale – is vital amid these realities.

2- Government and Industry Partnership

The collaboration between government and industry has led to approaches like Secure by Design, which emphasizes integrating security measures into the development process from the beginning, rather than adding them later, and ensuring a careful balance between security and innovation:

“The prioritization of security over getting something out there is what needs to happen. Secure innovation doesn’t have to be an oxymoron,” Todt said. “If we think about cybersecurity, progress is security, it is safety. That is the principle […] that we’ve seen from the government leaders, but importantly as partners with industry, that we’ve seen prioritized.”

3- Opportunity Over Sophistication

DeWalt noted the importance of identifying “choke points” in the supply chain, as demonstrated by third party cyber vendor incidents in companies like Change Healthcare and auto dealership software company CDK. Todt emphasized that risk is often about opportunity rather than sophistication:

“When you look at Colonial Pipeline, that company for all we know was not targeted because it was transferring 45 percent of fuel along the East coast, it was targeted because it didn’t use multifactor authentication and in a broad sweep its vulnerabilities percolated to the top. A lot of this activity is just looking for where the vulnerabilities are. It’s so important to appreciate not just where they are, but what do you need to function? What do you need to be efficient? What does your supply chain and your manufacturing process need to actually operate?”

Interos Watchtower™: The Necessary Visibility

DeWalt emphasized the complexity of global supply chains, where today’s large enterprises can easily maintain tens of thousands of suppliers across their extended global networks. Identifying and understanding supplier risk across these interdependent ecosystems is crucial, and new technology such as Interos Watchtower™ utilizes AI to continuously map and monitor relationships across the risk lifecycle to help enterprises mitigate supplier failures before they escalate to crisis.

By leveraging AI and real-time critical risk intelligence, companies can enhance their resilience against cyber, regulatory, ESG, and other threats, ensuring that their digital supply chains remain secure and efficient.

Enabling the Future with AI Supply Chain Intelligence

AI technologies are revolutionizing supply chain security by enabling advanced analytics and real-time risk detection, monitoring, and other advantages. These capabilities allow organizations to anticipate potential supply chain disruptions in advance to rapidly mitigate threats and optimize resource allocation.

To watch the replay of Todt and DeWalt’s conversation click HERE.

To learn more about how Interos can fortify your supply chain contact us HERE.

“It’s Going to Get Worse Before It Gets Better” Navigating Supply Chain Geopolitical Risks: Insights from National Security Experts

Posted on August 4, 2024August 27, 2024 by Interos

by Alea Marks & Dianna ONeill

Interos’s new executive insights series, “Voices of Innovation,” hosted a critical conversation on escalating geopolitical threats to supply chain security.

The inaugural session brought together former NSA Director and US Cyber Command head, Admiral Mike Rogers (Ret.) and Andrea Little Limbago, Ph.D., Head of Applied AI, Interos, and a frequent speaker on geopolitical risk and cybersecurity.

Five Key Quotes

1-Supply Chain Vulnerabilities

In an era of global interconnectedness, supply chains have become increasingly complex and efficient. However, this integration introduces acute new vulnerabilities. Today’s multinational ecosystems can easily encompass thousands of sub-tier suppliers, fueling continued supply chain disruptions that cost the global economy $3 trillion in annual losses.

Admiral Rogers highlighted this double-edge sword, noting the ripple effect across interconnected systems:

“There’s definitely been a tradeoff,” Rogers observed. “The downside is we have to acknowledge, as we can see with CrowdStrike being the latest issue, that we’ve got fundamental vulnerability inherent in the system.”

2-Geopolitics and Corporate Boards

Given the global footprint of many large enterprises, Admiral Rogers highlighted the growing concern among corporate boards regarding geopolitical risk:

“I spend a lot of time talking to corporate boards on geopolitics. They are trying to understand, the world around me seems to be changing. That has implications for my business model, and it has implications for my liability and responsibility.”

Rogers emphasized that companies are increasingly recognizing the need to better understand the global context and for their supply chain operations, identify risks, and develop strategies for risk mitigation and prioritization.

3-Criminals Targeting Supply Chains

In discussing evolving digital cyber threats, Admiral Rogers expressed surprise at the recent trend of criminals targeting digital supply chains:

“I never thought I would see criminals go into supply chain, supply chain route in terms of an attack vector. That was true until about 15 months ago, but we’re now seeing criminals going down this route. So, organizations now are routinely asking themselves, do I understand the dimensions of my supply chain? And what steps am I taking to try to mitigate that risk?”

4-Proactive Risk Mitigation

Anticipating and preparing for potential disruptions emerged as a critical theme. Rogers emphasized the value of proactive planning and regular practice in enhancing an organization’s resilience:

“The more time you put up front in thinking through and anticipating, the better your performance in crisis,” he advised. “I can’t anticipate every scenario, but the more I train, the more I simulate, the more I practice, the more efficient and effective I’ll be in responding to disruption and generating resilience.”

5-Evolving National Security Landscape

The conversation addressed the changing nature of national security, which now encompasses economic security and digital advantage. Rogers highlighted how this shift is leading to increased government involvement in previously private sector domains.

“Governments are getting much more directive and much more broadly involved,” Rogers observed. He noted a significant shift in cybersecurity strategy: “The biggest shifts in [cybersecurity] strategy were, number one, it’s no longer the individual user to hold accountable – it’s the entities that are in the best position to achieve a broad impact.”

Interos Watchtower™: A Strategic Solution

Rogers and Little Limbago also discussed Interos Watchtower™, AI-driven technology that provides personalized risk models to defend against geopolitical threats. Rogers noted the criticality of mapping and prioritizing threats, emphasizing:

“We have got to get to prioritization. Because if we can’t prioritize, if we can’t figure out the best use of limited resources, we got real problems.”

Watchtower highlights vulnerable suppliers based on potential business impact, allowing organizations to prioritize and remediate regulatory, cyber, government intervention, and foreign ownership risks, among others.

Looking Ahead

Admiral Rogers concluded with a sobering yet hopeful outlook:

“It’s going to get worse before it gets better.” However, he noted that more businesses and senior leaders are acknowledging the challenge, stating, “You can’t solve a problem if you don’t acknowledge it.”

The conversation made clear the pervasive nature of geopolitical supply chains impacts. From trade tensions to shifting nation-state alliances, a host of changing global dynamics present new opportunities for disruption. Organizations that fail to adopt a proactive, technology-driven approach to these realities risk falling behind.

Technologies like Interos Watchtower™ are a significant advancement, offering the personalized, actionable intelligence necessary to enhance supply chain strength and security in a volatile landscape.

Learn more HERE.