Trax Technologies

Top 5 Supply Chain Risks for 2025: Key Insights from Everstream Analytics' Annual Report

Key Takeaways

Climate Risks and Resilience: Everstream Analytics' 2025 Risk Report highlights the growing impact of climate-related flooding, with severe consequences for infrastructure, particularly in regions like the U.S., India, and Indonesia.

Geopolitical and Trade Tensions: Geopolitical instability, including tensions in the Middle East and Asia-Pacific, poses significant risks to global shipping routes and supply chain stability, with potential disruptions from new tariffs.

Cybersecurity in Supply Chains: The report underscores the increasing threat of cyberattacks targeting supply chain sub-tiers, particularly in the electronics and manufacturing sectors, requiring stronger security measures.

Raw Materials Challenges: Scarcity of critical raw materials, driven by global trade restrictions and rising demand, is a growing concern, with companies turning to direct mineral purchasing agreements to secure supplies.

Compliance and Forced Labor Risks: Stricter regulations on forced labor in supply chains are increasing, particularly in sectors like agri-food, requiring businesses to adopt advanced monitoring and compliance measures.

 

In its comprehensive 2025 Risk Report, Everstream Analytics presents a detailed analysis of the most significant threats facing global supply chains in the coming year. The report, leveraging Everstream's vast database of supply chain disruptions, provides critical insights for supply chain managers to better understand, quantify, and mitigate emerging risks.

Everstream Analytics, a leader in supply chain risk management, combines artificial and human intelligence with predictive analytics to deliver actionable insights for global supply chain operations. Their trusted solution integrates with procurement, logistics, and business continuity platforms to provide complete visibility and accurate predictions for supply chain risk management.

In today's increasingly complex global business environment, understanding and preparing for supply chain risks has become paramount. The report assigns risk scores to each identified threat, helping organizations prioritize their planning and mitigation efforts for the year ahead.

Risk 1: Climate Change and Flooding (Risk Score: 90%)

The report identifies climate-related flooding as the most significant supply chain risk for 2025, with an unprecedented risk score of 90%. According to Everstream's analysis, flooding accounted for 70% of all weather-related risks in 2024, significantly outweighing other natural disasters such as wildfires (15%), tornados (9%), and tropical cyclones (3%).

The impact on infrastructure and business operations has been particularly severe. A notable example cited in the report is Hurricane Helene's unexpected devastation across the Appalachian Mountains in the United States. Despite accurate rainfall predictions (2-5 cm), the region's infrastructure proved insufficient to handle the precipitation, affecting more than 50 electronics, automotive, and aerospace manufacturers, along with medical device and healthcare companies.

The regional analysis reveals concerning patterns, with the United States, India, Mexico, and Indonesia experiencing the highest numbers of flooding incidents in 2024. The report attributes this trend to rising global ocean temperatures, which have reached their highest levels in recent centuries. This warming creates higher evaporation rates and increases atmospheric moisture, leading to more frequent and powerful flood events through atmospheric rivers, tropical storms, and convective storms.

Everstream's experts predict that these conditions will persist or worsen in 2025, potentially leading to even more frequent and disruptive flood events. While flooding can cause widespread destruction, the report notes some unexpected benefits, such as improved water levels in key global shipping waterways like the Panama Canal and the Mississippi River.

Risk 2: Geopolitical Instability and Tariffs (Risk Score: 80%)

According to Everstream Analytics' report, international political and economic relations are experiencing significant destabilization, earning this risk category an 80% risk score. The analysis highlights multiple global hotspots that threaten to disrupt supply chain operations in 2025.

The Middle East remains particularly volatile, with the report citing ongoing tensions in the Red Sea region. The analysis shows a concerning pattern of Houthi attacks on vessels, which has significantly impacted maritime shipping routes. Even if traffic along the Suez Canal route returns to normal levels in 2025, Everstream predicts weeklong processing delays, container backlogs, and increased congestion at European seaports due to sudden volume changes.

In Asia-Pacific, the report identifies growing concerns over cross-strait relations between China and Taiwan. While a full-scale invasion appears unlikely, Everstream's data shows Chinese military exercises have increased threefold throughout 2024, potentially disrupting transportation through major seaports and airports in northeastern China, western Taiwan, and Hong Kong.

The incoming U.S. administration's proposed tariff changes present additional challenges, including:

  • A global baseline tariff of 10%-20%
  • A 60% tariff on Chinese imports
  • A 100% tariff on goods from de-dollarizing countries

Risk 3: Cybersecurity Threats (Risk Score: 75%)

The report reveals an alarming trend in cybersecurity vulnerabilities, particularly through supply chain sub-tiers, warranting a 75% risk score. Everstream's analysis shows that most cyberattacks in 2024 were concentrated in the Electronics and Manufacturing sectors, with attacks becoming increasingly sophisticated and targeted.

Industry-specific data from the report shows concerning patterns:

  • Manufacturing and electronics companies experienced the highest number of cyberattacks in 2024
  • The U.S. led with 471 documented attacks, followed by Germany (81) and the United Kingdom (74)
  • Third-party logistics providers (3PLs) faced disproportionate impacts compared to transit hubs

A significant case study highlighted in the report involves Pennsylvania-based sub-tier pharmaceutical supplier Cencora, whose security breach in early 2024 affected at least 11 global pharmaceutical companies, including GlaxoSmithKline, Novartis, AbbVie, and Genentech. This incident led to prescription delays and compromised patient data, exemplifying the cascading effects of sub-tier vulnerabilities.

The report warns that cybercriminals are increasingly exploiting common programming errors and vulnerabilities in sub-tier supply chains to gain access to larger corporations. These vulnerabilities include issues with improper input validation, buffer overflows, and various other technical weaknesses. According to World Economic Forum predictions cited in the report, global financial losses from cyberattacks are expected to reach $10.5 trillion by 2025.

Risk 4: Raw Materials Scarcity (Risk Score: 65%)

Everstream Analytics' report identifies growing concerns over the availability and access to critical minerals and metals, assigning this risk a 65% score. The analysis reveals an increasingly complex landscape where both countries and companies are responding to global mineral scarcity by securing and restricting supplies.

The report highlights significant trade restrictions implemented in 2024:

  • China tightened export controls on critical metals including antimony, gallium, and germanium
  • The UK banned aluminum imports from Belarus
  • Chile imposed anti-dumping tariffs on Chinese steel
  • Turkey implemented duties on steel imports from China, Russia, India, and Japan
  • The U.S. and Canada coordinated tariffs on steel and aluminum, particularly targeting Chinese imports through Mexico

A notable trend identified in the report is the surge in direct mineral purchasing agreements between companies and mines. Lithium, essential for battery production, dominated these agreements at 38% of all direct purchases, followed by graphite (11%) and nickel (8%). This shift represents a strategic move by companies to secure stable supply chains for critical materials.

Risk 5: Forced Labor Regulations (Risk Score: 60%)

The report's analysis of forced labor risks reveals growing regulatory pressure and compliance challenges, earning a 60% risk score. According to Everstream's data, companies face increasing scrutiny as more nations implement strict regulations on forced labor in supply chains.

Key regulatory developments highlighted in the report include:

  • America's Uyghur Forced Labor Prevention Act (UFLPA)
  • EU's Corporate Sustainability Due Diligence Directive (CS3D)
  • Mexico's Forced Labor Regulation
  • Canada's Fighting Against Forced and Child Labour in Supply Chains Act

Industry impact analysis shows the agri-food sector as particularly vulnerable, accounting for 37% of all forced labor-related incidents tracked in 2024. The report provides concerning statistics about commodity concentration in high-risk regions:

  • 92% of global vanilla production
  • 83% of palm oil production
  • 72% of cocoa production
  • 38% of soy production

The financial implications of non-compliance are significant. The report cites U.S. Department of Labor statistics showing a sharp increase in enforcement:

  • FY2021: 747 violations with $3 million in penalties
  • FY2023: 955 violations with penalties exceeding $8 million

Everstream's analysis suggests that traditional supplier surveys alone are no longer sufficient for risk assessment. Companies must now implement more sophisticated monitoring systems and work closely with tier 1 suppliers to identify and manage sub-tier risks before facing regulatory enforcement or reputational damage.

Safeguard Against Risk With Trax

As Everstream Analytics' 2025 Risk Report clearly demonstrates, supply chain risks are becoming increasingly complex and interconnected. For freight audit solutions providers like Trax Technologies, these insights are particularly valuable in helping clients navigate the challenging landscape ahead.

The five major risks identified - climate disruptions (90%), geopolitical instability (80%), cybersecurity threats (75%), raw materials scarcity (65%), and forced labor compliance (60%) - all have direct implications for freight costs, payment processing, and supply chain visibility. Understanding these risks is crucial for accurate freight audit and payment operations.

For example, the report's findings about increased flooding risks and geopolitical tensions affecting shipping routes directly impact freight rates and transit times. This underscores the importance of having robust freight audit systems that can adapt to rapid rate changes and route diversions. Similarly, the identified cybersecurity threats highlight the need for secure payment processing and data protection in freight operations.

As the report suggests, companies must move beyond traditional monitoring approaches to adopt more sophisticated risk management tools. Trax's global freight audit solutions align with this recommendation by providing the detailed visibility and analytics needed to track and manage supply chain costs effectively in this high-risk environment.

The report's emphasis on sub-tier supplier risks and compliance challenges also reinforces the value of comprehensive supply chain visibility and accurate payment processing. As regulatory requirements become more stringent, particularly around forced labor, having detailed audit trails and transparent payment processes becomes increasingly critical.

Looking ahead to 2025, organizations will need to leverage both predictive insights like those provided by Everstream Analytics and robust freight audit and data management solutions to navigate these complex supply chain challenges successfully. The combination of risk awareness and precise financial controls will be key to maintaining resilient and compliant supply chain operations.

Attribution: This article is based on Everstream Analytics' 2025 Risk Report, which provides a comprehensive analysis of global supply chain risks and trends for the coming year.