Cyber Security in Logistics: Protecting the Digital Supply Chain

Cyber crime is set to cost global economies $10.5 trillion by 2025 (that’s £8.2 trillion)

The logistics industry has been forced to adapt to an increasingly digital world. New technologies like AI and automation promise to streamline operations and enhance operations, but digitisation creates vulnerabilities as cyber criminals seek to exploit these advances for their own financial gain.

Sensitive information, like financial transactions and client data, is valuable to criminals. A single attack can cause significant disruption across supply chains by compromising systems and forcing downtime.

Balancing the benefits of digital transformation with the need for robust cyber security is one of the key challenges facing the logistics industry today. Organisations need to be aware of the threats facing them and what they can do to protect their operations and partners.

The Importance of Cyber Security in Logistics

The global logistics network forms an intricate, interdependent system where delays or interruptions in one part can ripple across the entire chain. Cyber attacks threaten this delicate balance. Ensuring robust cyber security measures to protect these digital supply chains is more than just a proactive approach – it’s an absolute necessity.

Operational Disruption

A cyber attack can cause significant operational disruption. When key software applications or digital tools become compromised, logistics firms may struggle to track inventory, manage transport, or even communicate effectively internally.

NotPetya was one of the most damaging and widespread ransomware attacks in history, causing around $10 billion in damages and affecting companies around the world, including FedEx’s European subsidiary, TNT Express and Maersk.

Maersk was effectively rendered inoperable after a single company computer was compromised in the Ukrainian port city of Odesa. From there, the ransomware spread throughout Maersk’s network. Its entire booking system was shut down, loading systems went offline, port facilities were closed and tens of thousands of truckloads of goods were turned away. Maersk couldn’t process shipping orders until its servers were rebuilt, causing global disruption for weeks.

Financial Losses

The average cost of a data breach in 2022 was $4.35 million.

The direct costs include response and recovery efforts, which can involve system repairs, data recovery, and possibly paying a ransom in the case of ransomware attacks. Indirect costs can be even higher, with losses stemming from interrupted operations, contractual penalties, or lost business opportunities.

The aforementioned NotPetya attack resulted in losses of around $300 million for Maersk.

Damage to Reputation

In a highly competitive industry like logistics, trust is paramount. Customers entrust logistics providers with their valuable goods and sensitive data, and a cyber breach damages this trust.

A loss of trust can lead to customers taking their custom elsewhere and potentially damage relationships with stakeholders and partners. The associated loss in business could compound financial losses suffered in the attack. Rebuilding this trust can take significant time and resources, with no guarantee of regaining lost custom.

Common Cyber Threats in Logistics

Phishing

Phishing attacks take the form of malicious emails disguised as coming from a legitimate source. Cyber criminals impersonate companies, charities, or even individuals, and typically try to get the victim to take a second action, such as downloading a malware file (disguised as something else) or clicking a link to a spoof website.

Phishing is the most common form of cyber crime. An estimated 3.4 billion spam emails are sent every day, and while many are caught by filters, plenty fool cyber defences to end up in the inboxes of unsuspecting victims. 83% of UK businesses that suffered a cyber attack in 2022 reported the type as phishing.

Malware

Malware is malicious software designed to infiltrate and damage or disrupt systems. This broad category includes viruses, worms and trojans. In logistics, malware can be used to interrupt supply chain processes, steal sensitive data, or provide a backdoor for future attacks.

Ransomware

Ransomware is a type of malware that encrypts a victim’s files, with the attacker then demanding a ransom to restore access. The logistics industry has seen a rise in such attacks due to the critical importance of timely information and operations.

DNV, a world-leading classification society, suffered a ransomware attack in early 2023 that targeted its ShipMaster software. ShipMaster allows shipping customers to monitor their fleets, checking technical, operational and compliance features. It’s used by more than 7000 vessels globally.

The ransomware attack forced DNV to shut its servers down. While ships could still use ShipMaster’s onboard, offline functions, full functionality was reduced. Around 1000 vessels were affected in the attack.

Insider Threats

Insider threats refer to security threats that originate from within an organisation. This includes employees who intentionally misuse their access and those who unintentionally cause a breach, for instance downloading malware from a phishing email.

In one example, an employee at Boeing risked the data of 36,000 of his coworkers after emailing a document containing the information to his spouse. This wasn’t a malicious act; the employee simply wanted help formatting the document. While the data wasn’t compromised, it’s still a lesson in how seemingly innocent actions can pose significant risks.

Best Practices for Enhancing Cyber Security in Logistics

Protecting logistics operations from cyber threats is complex. No single measure can provide complete security. Robust cyber security requires a comprehensive, layered approach that combines various strategies and measures.

Employee Training

Employee carelessness directly contributes to 48% of cyber attacks.

Employees are often the first line of defence against cyber threats, so they need to understand the importance of maintaining stringent cyber security practices. Effective training programs equip them with the knowledge to identify and respond to threats like phishing or suspicious behaviour.

If employees understand the benefit of using strong passwords, know how to handle data and can recognise suspicious emails and other forms of phishing, they become crucial assets in an organisation’s cyber security strategy.

Robust Cyber Security Policies

Developing and implementing robust cyber security policies is crucial in protecting digital supply chains. These policies should define acceptable and safe use of internal systems, outline procedures for identifying and reporting threats, and establish protocols for regular updates and patches to software systems.

Measures like Zero Trust ensure that employees only have access to the data and systems relevant to their jobs. If their account is compromised, Zero Trust policies minimise the damage criminals can do with that account.

Organisations should also include partner and supplier vetting when creating their cyber security policies. By 2025, an estimated 60% of organisations will use cyber risk as a factor when determining transactions and business engagements with third parties.

Encryption and Firewalls

Encryption is one of the strongest cyber security measures available – it’s even used by hackers as a way to ensure victims can’t access their data. Encryption scrambles data into unreadable code that can only be unlocked with a key. As such, it’s perfect for protecting valuable and sensitive data.

Firewalls monitor and control incoming and outgoing network traffic based on predetermined security rules, providing a first line of defence against threats. Firewalls are a basic form of defence but still have value.

Regular Security Audits

Regular security audits can help identify vulnerabilities before they can be exploited. This might include penetration testing, where an authorised simulated attack is carried out to evaluate the security of the system, or regular assessments of practices and procedures to ensure they align with current best practices.

Incident Response Plans

Unfortunately, it’s a matter of when, not if, an organisation will suffer an attempted cyber attack. Robust cyber security measures can prevent its success, but having an incident response plan to prepare for the worst case scenario is essential.

An incident response plan prepares an organisation to effectively manage a breach, minimising disruption and damage. This includes clearly defined roles and responsibilities, communication plans, and procedures for identifying and isolating the breach.

Cyber Security is Crucial for a Technology-Driven Logistics Industry

Cyber security has become an integral component of logistics infrastructure. As digitisation increases, so does the potential for cyber threats. The consequences of these threats are far from trivial – disruption and downtime can cripple organisations.

However, with proactive investment in cyber security measures and training, logistics organisations can safeguard their digital infrastructure and supply chains, ensuring continuity of operations and peace of mind.

Emerging technologies like AI and blockchain are opening up new frontiers in cyber security, helping to detect and prevent threats with greater speed and accuracy than ever before. At the same time, fundamental practices like employee training and incident response plans are more important than ever.

Cyber security is an ongoing process that requires vigilance, adaptability, and proactive planning. It’s clear that cyber security will play an essential role in the logistics industry as digital transformation takes place. Robust protection will ensure that the logistics industry is prepared for a digital future.

Would you like to learn more about Cyber Crime and preventive measures?

Book a call with the AAG IT team today and we will be happy to discuss this, and any other questions you have, in further detail.