How Predictable are the 7 Types of Logistics Risk?

Logistics risk management is not just about building supply chain resilience; it is about protecting your bottom line. Most shipments arrive on time without incident. The ones that don’t cost time, money, and a fair amount of frustration for both you and your customers. 

Potential disruptions are everywhere: from severe weather to port congestion or even carrier insolvencies. 

Many of these risks are predictable. That means with forewarning, you can navigate around disruptive events. Predictive analytics give you a first mover advantage. You can book alternative lanes or modes of transportation before prices spiral, and capacity becomes constrained.  

Some risks are more predictable than others. However, even unpredictable events can have very predictable cascading disruptions. Getting ahead of these saves you both time and money. 

Here we examine the seven types of logistics risk, their predictability, and potential knock-on effects that increase disruption. 

Physical Infrastructure Risks 

Bridge, Tunnel or Road Collapse

Predictability: Not Predictable 

Collapses and infrastructure failures can disrupt major transportation corridors for extended periods. This forces logistics managers to develop alternative routing strategies that may involve significantly longer transit times and higher costs.  

These disruptions are particularly challenging because they often affect multiple transportation modes simultaneously. A bridge collapse can impact both trucking and rail transportation. Similarly, port infrastructure failures can affect both ocean and inland waterway transportation. 

Predictable cascading disruptions: 

• Congestion across alternative routes 
• Increased transit and delivery times 

Port Congestion 

Predictability: Predictable 

Port congestion represents a persistent and growing challenge within this category. Ports become overwhelmed when cargo volumes exceed their processing capacity. The resulting delays affect not just immediate shipments but also future capacity planning and schedule reliability.  

Various factors can cause port congestion. These include weather, labor strikes, equipment failures, cyber-attacks, or disruptions at connecting transportation nodes.   

Predictable cascading disruptions: 

• High volumes and longer dwell times at nearby ports 
• Capacity constraints 
• Greater demand for alternative modes of transportation 
• Price hikes for expedited freight 
• Higher than expected detention and demurrage charges 

Figure 1: Predictive analytics can warn you of upcoming logistics risks allowing you to mitigate them before they become disruptions 

Weather and Natural Disaster Risks 

Weather-related disruptions and environmental risks are some of the most predictable yet impactful risks in logistics operations. The frequency and severity of extreme weather events have increased dramatically over the past two decades. Severe weather events increased by 83% since the turn of the century. The resulting economic losses increased by the same percentage. 

This trend has made weather risk management an increasingly critical component of logistics planning. 

Hurricanes, Typhoons and Storms 

Predictability: Predictable 

Typhoons and hurricanes not only force the closure of transportation facilities during the event itself but can also cause infrastructure damage that extends the disruption period.  

The predictable nature of many weather events creates opportunities for proactive risk management. By leveraging advanced forecasting, you have time for contingency planning to mitigate risks. This could mean shipping before or after a storm, or choosing a different route, lane or mode of transport. 

Predictable cascading disruptions: 

• Flooding leading to closed roads 
• High winds causing port and airport stoppages 
• Increased transit and delivery times 
• Price hikes for expedited freight 

Wildfires

Predictability: Unpredictable 

Wildfires can disrupt major trucking routes and transportation corridors. Unlike hurricanes, which typically provide several days of advance warning, wildfires can develop and spread rapidly. The smoke and air quality issues associated with wildfires can also affect airport operations and driver safety, creating additional complications for logistics planning.  

Predictable cascading disruptions: 

• Road closures due to wind patterns directing the path of wildfires 
• Port and airport stoppages due to smoke 
• Increased transit and delivery times 

Drought 

Predictability: Predictable 

Drought conditions can reduce water levels to the point where barge operations become impossible or severely restricted. 

Predictable cascading disruptions: 

• Increased dwell times at waterways 
• Higher waterway transit fees 
• Increased demand for alternative modes of transportation 

Earthquakes 

Predictability: Unpredictable 

Certain regions of the world are prone to earthquakes. Unfortunately, these are unpredictable. However, using the magnitude of the earthquake it is possible to see which regions will be most affected in its aftermath. 

Predictable cascading disruptions: 

• Tsunami warnings closing ports 
• Greater demand for alternative modes of transportation 
• Capacity constraints 
• Price hikes for expedited freight 

Operational and Human Resource Risks 

Labor Strikes 

Predictability: Predictable 

Labor disputes and strikes can halt logistics operations across entire regions or industry segments. Driver strikes can affect trucking operations across broad geographic areas. Port strikes can create bottlenecks that affect global shipping networks.   

Rail strikes can be very disruptive. This is because rail transportation often serves as a critical link in intermodal transportation networks.  

Many logistics networks depend on air cargo for time-sensitive shipments. Aviation strikes can force shippers to use slower transportation modes that may not meet customer delivery requirements. 

The predictability of many labor disputes creates opportunities for proactive risk management. By monitoring labor negotiations and contract expiration dates, you can often anticipate potential strikes. Therefore, you can implement mitigation strategies before work stoppages occur.  

Predictable cascading disruptions: 

• Increased transit and delivery times 
• Greater demand for alternative modes of transportation 

Financial and Business Risks 

Carrier Insolvency 

Predictability: Predictable 

The financial stability of carriers and logistics service providers is an often-overlooked category of risk. The immediate impact extends beyond just the stranding of current shipments by reducing the overall capacity available in the market. This can lead to capacity constraints and premium pricing.  

Companies that have concentrated their logistics operations with a single provider or a small number of providers are particularly vulnerable to this type of risk.  

Predictable cascading disruptions: 

• Stranded shipments 
• Capacity constraints 
• High spot rates for alternative carriers 
• Higher than expected detention and demurrage charges 

Mergers & Acquisitions

Predictability: Predictable 

Mergers and acquisitions can affect logistics operations in subtle but significant ways. These could cause changes to service capabilities, geographic coverage, and customer priorities which force shippers to adjust their logistics strategies and relationships. These changes may not create immediate disruptions, but they can affect long-term logistics planning and relationship management. 

Predictable cascading disruptions: 

• None 

Cyber Security  

Cyber-Attacks 

Predictability: Unpredictable 

The digitization of logistics operations has created new categories of risk related to technology and cyber security. Cyber-attacks on port operators, shipping companies, and LSPs can impact operations as severely as physical disruptions, impacting multiple organizations simultaneously.  

The impact of cyber-attacks may also include potential data breaches that can compromise sensitive customer and business information. The recovery can be challenging. Firstly, you need to restore both systems and data. Secondly, you also need to confirm that systems are secure and free from further threats. 

Predictable cascading disruptions: 

• Increased transit and delivery times 
• High volumes and longer dwell times at nearby ports  
• Capacity constraints  
• Greater demand for alternative modes of transportation 
• Price hikes for expedited freight 
• Higher than expected detention and demurrage charges

Geopolitical and Trade Risks 

Geopolitical tensions increasingly affect international trade and logistics operations. Trade policy changes can create significant disruptions to established transportation routes and procedures. As a result, logistics managers must develop new strategies and relationships in response to geopolitical risk and changing regulatory environments.  

Regulatory Changes 

Predictability: Predictable 

Changes in customs procedures, increased inspection requirements, or processing backlogs can create delays and additional costs. The complexity of international trade regulations means that even minor changes in customs procedures can have significant operational impacts. 

Predictable cascading disruptions: 

• Increased transit and delivery times 
• Higher than expected detention and demurrage charges 

Regional Instability 

Predictability: Generally Predictable  

Regional instability can force carriers to avoid certain routes or implement security measures that increase costs and transit times. The Red Sea crisis provides a clear example of how geopolitical instability can force major changes in global shipping patterns. 

Canal closures and major shipping route disruptions create serious delays and cost increases. These disruptions highlight the vulnerability of global logistics networks to chokepoints where large volumes of trade are concentrated in narrow geographic areas.  

Predictable cascading disruptions: 

• Increased transit and delivery times 
• Greater demand for alternative shipping lanes 

Figure 2: Mapping your facilities, carriers, lanes and other transportation nodes allows you to monitor risks and make risk-optimization decisions regarding shipments 

Equipment and Capacity Risks 

Equipment Failure 

Predictability: Not Predictable 

Equipment failures represent a category of risk that can not only strand shipments but also compromise product integrity. Refrigerated container failures can cause complete product loss rather than just delays. This makes this type of risk particularly critical for companies shipping temperature-sensitive products such as food, beverages, and pharmaceuticals. 

The complexity of modern logistics equipment means that failures can occur in various components, from refrigeration systems and tracking devices to the basic structural integrity of containers and trailers. The increasing sophistication of logistics equipment has improved operational efficiency but has also created new potential points of failure that require specialized maintenance and monitoring capabilities. 

Predictable cascading disruptions: 

• None 

Container Loss 

Predictability: Not Predictable 

Container loss and damage represent another significant infrastructure-related risk that creates both direct product losses and secondary delays for replacement shipments. The increasing size of container ships has exacerbated this risk, as larger vessels create more complex loading and unloading operations that increase the potential for handling errors. 

Predictable cascading disruptions: 

• None 

Capacity Constraints 

Predictability: Predictable 

Equipment shortages and capacity constraints can affect logistics operations during peak demand periods or when specialized equipment has limited availability. The global nature of logistics operations means that equipment shortages in one region can affect operations in other regions as equipment is redistributed to meet demand. Equipment shortages can develop rapidly and persist for extended periods, creating ongoing challenges for logistics planning and execution. 

Predictable cascading disruptions: 

• Increased delivery times 
• Spoilage of temperature-sensitive shipments 
• Price hikes 
• Higher than expected detention and demurrage charges 

Reducing Costs by Managing Logistics Risk 

There are tangible financial benefits to managing risk. You can make significant savings by expenses related to expedited deliveries, temperature-controlled shipping, late fees, and port storage costs.  

Logistics professionals have long faced pressure to control costs while still protecting the flow of goods. But the cheapest shipping option may not be the best choice if a predictable disruptive event means that you incur unplanned costs or financial losses.  

To get an idea of how much a disruption costs, you might evaluate these elements: 

• Expedited shipping expenses 
• Worth of products damaged or lost during transportation 
• Cost of inventory required to replace damaged or lost items 
• Late delivery penalties 
• Unexpected port fees 
• Expenses for shipping replacement products 

Logistics risk intelligence allows you to see further by predicting looming threats, act faster when disruptions are unavoidable, and think bigger to gain a competitive advantage in an increasingly disruptive logistics environment. 

See Everstream in Action 

If you would like to see how we can help you predict your problem shipments before disruption happens, contact Everstream Analytics for a demo