NEXT WAVE OF RISK
Geopolitics becomes the baseline risk
• 87 % agree the greatest threats to their logistics strategy will stem from geopolitical instability and trade volatility.
• External outlooks point in the same direction: more sanctions, shifting trade blocs and security incidents along key corridors.
Rising compliance and stakeholder pressure
• 83 % expect logistics-related ESG requirements to increase in importance for investors and customers.
• Larger chemicals BCOs express stronger conviction, indicating that pressure is already felt in global portfolios.
Disruption moves into the boardroom
• Over 8 in 10( 82 %) expect logistics to become a more strategic focus in board decisions over the next three years.
• Risk is no longer treated as an operational issue alone; it is shaping investment and market access decisions.
Figure 4 – Next wave of risks & routes to resilience
ROUTE TO RESILIENCE
Digitisation as the main lever
• 86 % say the greatest return on logistics investment will come from supply chain digitisation; 38 % strongly agree.
Case study: Low water on the Rhine & German chemicals, 2022
• Large chemicals BCOs are more likely to strongly agree( 42 %) than SMEs( 30 %), signalling a scale advantage in data and tools.
Resilience tied to customers and ESG
• 86 % believe logistics improvements will have the greatest impact on customer retention.
• As ESG expectations tighten, reliable, transparent logistics is seen as part of licence to operate as well as a service promise.
Capital shifting towards AI and automation
• In the next 12 months, 55 % expect logistics and supply-chain investment to increase; over 3 years this rises to 78 %.
• Investment in AI, automation and digitalisation accelerates faster: 75 % expect spend to rise within a year, 89 % within three, with almost half anticipating a significant increase.
In the summer of 2022, prolonged heat and drought pushed water levels on the Rhine to near-record lows. Barges carrying chemicals and feedstocks into Germany’ s industrial heartland could only sail partloaded; some vessels could not operate at all. BASF and other producers along the upper Rhine warned that sustained low water could force output cuts if supplies could not reach major sites such as Ludwigshafen.
Freight charges for liquid cargoes on the Rhine jumped from around € 20 / tonne to about € 110, sharply increasing logistics costs for chemicals producers. 6 Moody’ s noted that higher transport costs and possible production cuts at river-dependent plants could weigh on earnings, while economists estimated that disruption to Rhine traffic could shave up to 0.5 % off German GDP.
BASF, which lost about € 250 million in the crisis, responded by investing in a low-water tanker, giving it a dedicated way to keep product moving through the same corridor during disruption in 2022. integrated model, including ports, multimodal corridors, specialist warehousing and customs support, will help chemical customers reduce risk and maintain control across complex, high-sensitivity flows.
Current spending already points in that direction. Beneficial cargo owners( BCOs) in chemicals said that they are investing in the following:
• Warehousing & storage: 54 %
• Inbound logistics: 49 %
• Sustainability & ESG: 49 %
• Risk management and resilience planning: 46 %
• Domestic transport & last mile: 45 %
• Supply chain or production logistics technology: 40 %
• Customs & regulatory compliance: 39 %
• Production input or factory-level logistics: 38 %
Figure 2 shows which are the most cost-effective means of investing to reduce costs in logistics and transportation.
The disconnect
On paper, the sector looks confident. 89 % of cargo owners say they are confident in their ability to scale efficiently over the next three years; 82 % agree they can respond quickly to unexpected changes; and 78 % believe they recover from major disruptions quicker than competitors and are more resilient than most companies in the sector.
The lived experience tells a different story, however. In the past three years, 69 % of chemical BCOs have had to escalate multiple disruption incidents to senior leadership, crisis or executive teams. A further 28 % have escalated at least one issue. There is a disconnect here( Figure 3).
In total, 97 % have seen logistics problems reach the boardroom. That level of escalation is hard to square with the self-image of fast, resilient operations. It suggests that disruption is being normalised as a leadership issue rather than managed out of the system.
56 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981