Cyberattack on freight forwarder slows Clarus’ logistics

Date: Monday, March 28, 2022
Source: Supply Chain Dive

Dive Brief:

  • Clarus' ability to move and receive inventory has been slowed after one of its freight forwarders was victim to a cyberattack a few weeks prior to its March 8 earnings call, Executive Vice President and COO Aaron Kuehne said on the call.
  • Due to the cyberattack, the outdoor lifestyle products maker's business has been impacted "by anywhere from a half a month to a full month of receipts," Kuehne said. Clarus' disclosure comes as the threat of cyberattacks has grown amid Russia's invasion of Ukraine.
  • Clarus has a $270 million order book for its Outdoor segment in 2022, but it expects sales to be $237.5 million for the year. Kuehne said this "more tempered" guidance is partly due to logistics and supply chain headwinds, providing the cyberattack as an example.

Dive Insight:

Clarus didn't disclose the name of the affected freight forwarder in the call or in financial filings, but logistics company Expeditors determined Feb. 20 that it was victim to a cyberattack. Eight days later, the company said in a website update that it was handling shipments and providing services across most products.

On March 6, Expeditors said it continued to operate on backup systems. "Absent unforeseen circumstances, we currently expect that system resumption will continue this week and into the next few weeks ahead," the company said.

A lengthy recovery of a key logistics provider for Clarus — which Kuehne defined the unnamed company as in the call — would add to the many supply chain pressures it has encountered of late.

Clarus is experiencing elongated timelines to receive shipments amid widespread congestion and delays. From Southeast Asia to Salt Lake City, transit times have jumped from 45 days to about 120 days, Kuehne said. From Southeast Asia to Europe, transit times have increased from 60 days to 150 days.

"As a result of that, the way that you overcome that is to either frankly miss out on the sale or to increase the pipeline of inventory that you have floating on the water. And that's the position that we've been able to take," Kuehne said.

Clarus has also encountered other obstacles such as electronic components shortages, in particular microprocessors. In terms of securing raw materials, Clarus has "taken a pretty aggressive approach" to shore up commodities critical for its Precision Sports segment like copper and lead, Kuehne said. He added that it's "to the point where we have enough copper in hand, or committed to, to last us through the first nine months of 2022."

Cybersecurity has been highlighted as a priority for supply chains amid Russia's invasion of Ukraine. Gartner analysts Koray Köse and Sam New wrote that as of Feb. 15, they "have seen the largest ever cyberattacks on Ukrainian key infrastructures" that will spill over globally.

"Supply chain leaders in high-risk industries should brace for an increased number of attacks and prepare accordingly, for example, by creating incident response plans focusing on detect, protect and recover," the analysts wrote. "Security incidents are a matter of 'when,' not 'if.'"


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