Transportation & Logistics Investing in Technology, Per Lloyd's

In its latest report, Lloyd's explores the biggest threats to supply chains in transportation and logistics—an industry that underpins $89 billion of global trade and has a market value of $9.7 trillion.

The report, On the Move: Rethinking transportation and logistics supply chains, found transportation and logistics faces escalating risks due to factors like talent shortages, green technology implementation, and climate-related challenges. As the industry strives to decarbonize and enhance efficiency, it plays a pivotal role in connecting emerging markets to global trade.

Supply chain disruption experienced during the COVID-19 pandemic and more recently in relation to ongoing geopolitical conflict has highlighted the fragility of supply chains to global impacts and the importance of building resilience into risk management solutions, Lloyd's said.

Global transportation and logistics, instrumental in the rapid globalization of supply chains, have witnessed a remarkable 4,100 percent growth in world trade volumes between 1950 and 2020, according to the report. Industry forecasts project a potential market value of $13.77 trillion by 2028, representing a compound annual growth rate of 6.23 percent. However, short-term threats such as the conflict in Ukraine, inflation, and global recession fears pose challenges, the report said.

In response to heightened supply chain risks, transportation and logistics companies are investing heavily in technology solutions, with 54 percent having overhauled their supply chains in the last 2 years, according to the report.

The report also underlines the need for cross-sector collaboration to drive product innovation and address challenges collectively. As governments, financial institutions, and regulators actively pursue a low-carbon economy, partnerships with the insurance industry are crucial to managing complex risks associated with supply chain transformations.

Delivered in collaboration with Willis Towers Watson, the report found that while over 90 percent of transport and logistics companies surveyed agree that insurance for supply chain risk is critical, 77 percent said a lack of access to supply chain insurance solutions and a lack of data to understand these risks was among the greatest challenges to their businesses.