A new year typically begins with hopes and ambitions for the coming months. But in Los Angeles, 2025 began with devastating wildfires. On our screens we’ve seen the charred remains of homes, businesses, vehicles and greenery, but the impacts extend well beyond the affected communities and even the state of California.
As of mid-January, the Ports of Los Angeles and Long Beach had not been affected. But evacuations of residents created chaos on the roads. Factor in some highway closures, the smoke and the intense Santa Ana winds that fueled the fires, and you’ve got very challenging conditions for trucks operating in the region. Some air traffic delays, warehouse closures and labor shortages also resulted from the fires. Collectively, these developments spelled trouble for supply chains, at least in the short term.
There will be other disruptions throughout the year, and preparedness and the ability to quickly pivot will be key for supply chain resiliency. Visibility is crucial. Supply chain and procurement managers need the latest information for decision-making.
Sphera Supply Chain Risk Report 2025
Our recently published Supply Chain Risk Report 2025 provides a detailed look at the risk events that affected supply chains in 2024, as well as possible developments we might want to watch for this year. The report is based on data collected from Sphera’s Supply Chain Risk Management Solution — specifically its AI-powered Risk Intelligence component — and Sphera’s Supply Chain Sustainability Solution.
Our dive into last year’s data tells us that many of the risks that threatened supply chains in 2023 persisted last year, though some emerged as bigger risks and others receded slightly.
For example, the total volume of delivery-related risks decreased by 7% last year, but the frequency of these disruptions was still high. In 2024, the average company experienced roughly 15 disruptive delivery-related incidents. Developments caused by humans, such as labor strikes, accounted for the majority of these events, and natural hazards continued to increase. These fall within just one of several risk categories.
Sustainability-related regulations are bringing greater scrutiny to supply chains, and this creates new challenges and risks, especially for companies with complex supply chains. ESG-related risk indicators went up by 6% last year, with human rights issues increasing by a significant 29% within this category.
In fact, in the last two years we’ve witnessed an eight-fold increase in the total volume of customer-issued recommendations and actions as a follow-up to information provided by suppliers. Requests for human-rights-related clarifications and corrections grew by over 2,000% in 2024 alone.
Download our report for more facts and valuable insights into the supply chain risks of 2024 and what to watch for in 2025.
Visibility is crucial
Before I look ahead, a few more words on visibility… An awareness of events and developments that could impact your supply chain and visibility into the various layers of your supply chain are equally important.
How much do you know about your suppliers’ suppliers? Your compliance obligations require you to really pull back the curtain to see what’s going on within every layer. And business continuity demands that you’ve got eyes in every corner of the world. A typhoon in the South China Sea may not affect your supplier, but what about its suppliers?
What’s next?
As we rolled into the new year, we knew that tariffs imposed on goods entering the U.S. from China, Mexico and Canada were a possibility. We’ll see what happens in the coming months.
In the Middle East, we’ve seen some progress toward a ceasefire between Israel and Hamas. Will Houthi attacks on ships in the Red Sea dissipate if the ceasefire holds?
On another front, undersea cables in the Baltic Sea (and off the coast of Taiwan) were recently damaged, likely by saboteurs. If this activity spreads, it could threaten energy supplies in Europe. Norway is the largest supplier of natural gas to Europe, and its oil and gas sector relies heavily on undersea electricity cables. Any damage to these cables by state or non-state actors could affect the region’s energy supplies, and the ripple effects could be huge. This is yet another story to be monitored in the coming months.
There’s a lot to keep an eye on, but that will always be the case. Effective supply chain risk management demands information from a wide variety of sources, and by optimizing and streamlining the flow of relevant data and information, you’ll improve your risk management capabilities. Better risk management enables more “business as usual,” which is music to the ears of most business leaders.
— Paul
