Container shipping analyst Lars Jensen, the principal at Copenhagen-based Vespucci Maritime Consulting, warned that tensions between Russia and the Ukraine could spill out into cyberattacks on critical infrastructure, including ports.
Jensen warned the element of risk has risen drastically in the last weeks. “I cannot stress enough how seriously this should be taken.”
Jensen was addressing the Propeller Club of Northern California (PCNC) on February 8th.
Recalling the 2017 cyberattack that shut down the ocean carrier Maersk, Jensen said:
“Remember that in 2017 Maersk was brought down by a cyberattack. They were completely down for a week, and it took several weeks to get back up and running. Maersk was purely collateral damage of a Russian-backed cyberattack on the Ukraine. Several thousand companies got hit on that attack.”
Today the risk of damage could be far worse: “Fast forward to the situation right now with Russia on one side and NATO and the Ukraine on the other… In the last few weeks, authorities in Britain, Canada and the United States have warned that this is a significant risk against critical infrastructure. So, this threat has to be taken very seriously. U.K. authorities are reporting cyber activities that are very similar to those that preceded the cyberattacks of 2017.”
Jensen recalled that the impact of the 2017 cyberattack was not very damaging: “If we think back to 2017, the impact was actually quite small. Sure, it was large for Maersk. Maersk lost hundreds of millions of dollars, but for the overall global supply chain the impact was small. But the impact was that it wiped out the world’s largest carrier for more than a week. The reason the impact to the global supply chain was minimal was because we had plenty of buffer capacity in terms of ships and containers and terminal capacity.”
Today’s overstressed supply chain could make the impact of cyberattack far worse: “Fast forward now to 2022. We have zero, literally zero buffer. There are no more ships to be had. There are no more containers to be had. Ports are chockablock full. We are short on trucks and rail and chassis. Which means that the impact of a successful cyberattack on either a shipping line or even worse on one or more ports or terminals would be very severe.”
A port or terminal could be shut down for at least several days: “If you have a terminal with very good procedures, you might be back in operation in three or four or five days. But imagine a whole port being at a standstill for three or four or five days?”
Jensen said that while investing in technology is important to thwart cyberattacks, the most successful companies emphasize best practices as part of the culture within the organization. Also, the need for constant training is critical to a sound response.
In other news, Jensen noted the following 2021 events:
In looking at 2022, Jensen identified the following problems:
Jensen also noted: “the battle for logistics will eliminate thousands of supply chain participants by 2030.”
In a LinkedIn, he explained: “As I have been outlining on many occasions, we are witnessing a major battle for position within the logistics space. Recently the largest deals we have seen have been container carriers acquiring logistics assets.”
However, Jensen noted a new investment by digital logistics company Flexport: “This new funding round announced by Flexport providing them an additional investment of almost a billion USD serves to underscore that the battle for the logistics market has many diverse combatants.’
The main players “in this game are container carriers, existing “old” logistics companies/forwarders, “new” digital logistics companies/forwarders, terminal operators as well as diversified cargo owners (such as Amazon and Alibaba). This is a battle which began several years ago and is now heating up rapidly.” The pandemic has led “to an astronomical injection of capital into the logistics sector, and we will therefore see the battle take on a much larger scale in the years ahead through acquisitions and investments. It is still too early to call out the eventual winners and losers of this game by name, but the ones to likely face the strongest pressure will be the small- and mid-sized forwarders.”
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