Data sovereignty principles for the logistics and supply chain industries

Alona Chumak

In an increasingly digitalized world, data has become a critical part of the logistics and supply chain industry, fueling innovations, driving efficiencies, and revolutionizing operations. However, as organizations harness the power of data to gain competitive advantage, they are also faced with a critical challenge: data sovereignty and compliance.

Data sovereignty means that data is subject to the laws and governance structures of the country in which it is located. However, the global nature of operations, evolving regulatory landscapes, and increasing cybersecurity threats make navigating the concept of data sovereignty a complex endeavor.

This article delves into the fundamental principles of data sovereignty compliance tailored specifically for the logistics and supply chain industry. We also explore how embracing these principles can empower organizations to manage their data assets effectively, mitigate risks, and capitalize on opportunities.

Context of data protection for logistics companies

Logistics companies handle a vast amount of data that includes personal information such as names, addresses, phone numbers, email addresses, and even details about interests and spending patterns. Cybercriminals see this as an opportunity to steal such data, making logistics companies a prime target for data breaches.

To prevent such incidents, these companies need to prioritize data protection. The main aim of data protection for the logistics/transport industry is to set acceptable standards for information management and ensure that clients’ personal information is securely collected, stored, and processed. These regulations apply to all companies operating in the Logistics and Supply Chain industries. Companies can reduce the likelihood of a data breach by complying with these standards and keeping their clients’ data safe.

Logistics and supply chain data protection and sovereignty laws

Data sovereignty laws are, in principle, data protection laws. This is because they aim to ensure adequate security of people’s personal information. For specifics, data sovereignty laws are regulations mandating that all personal data stored within a location are subject to the data protection laws applicable in that location. For instance, if some data is stored in Europe, those data will be subject to the GDPR (General Data Protection Regulation), which is the prevailing data protection law in Europe.

Having established this basis, we will review applicable data protection and sovereignty laws in the global Logistics and Supply Chain industries. They also represent data residency requirements by country. They are as follows:

  1. The General Data Protection Regulation (GDPR).
  2. California Consumer Privacy Act (CCPA).
  3. China’s Personal Information Protection Law (PIPL).
  4. UAE’s Personal Data Protection Law (PDPL).

The General Data Protection Regulation (GDPR)

The GDPR is a comprehensive data privacy regulation applicable to all organizations that collect, store, or process the personal information of European Union (EU) residents. It aims to protect EU citizens’ data and privacy by regulating how organizations collect, process, store, and transfer their data. Please note that this privacy regulation also applies to companies outside the EU that collect, process, or store the personal data of EU residents.

Although the GDPR is also a data protection law for insurance, here are a few points in the GDPR that organizations operating in the Logistics and Supply Chain Industries should look out for:

The General Data Protection Regulation (GDPR) states that logistics and supply chain companies must have a lawful basis for obtaining, storing, or processing customers’ personal information. They are not allowed to collect the personal data of customers without a valid reason supported by law. This principle ensures that companies cannot indiscriminately collect personal data and must have a legitimate reason for doing so. Such reasons can be for the performance of a contract, compliance with legal obligations, etc.

According to this principle, a logistics company should only obtain the necessary personal information needed from the client to perform their service, such as the delivery or retrieval of products, etc. 

As the name suggests, the GDPR mandates all companies operating in the logistics and supply chain industries to ensure adequate security for all client’s data in their custody at all times. Consequently, they are expected to implement appropriate technical and organizational measures to ensure the security of clients’ data.

The GDPR does not forbid data transfers outside the European Union. However, it places strict requirements that must be fulfilled before a supply chain company can transfer clients’ data outside the EU. These requirements include using appropriate safeguards, standard contractual clauses, or binding corporate rules. The goal of having at least one of these safeguards is to ensure that the transfer of the personal data of EU residents is adequately protected.

Data subject rights simply refer to the rights of data subjects. Data subjects are the individuals whose data is collected by companies for business purposes. The GDPR emphasizes the rights of data subjects across all industries, and organizations are expected to respect these rights, regardless of the industry in which they operate. These rights include the following:

  1. Right to know the purpose of the data being collected.
  2. Right to restrict processing of their data for certain purposes.
  3. Right to access their personal information at any time.
  4. Right to edit or permanently delete the personal data being held by an organization.
  5. Right to object to the use of their data, etc.

The GDPR mandates all supply chain and logistic companies to notify clients of a data breach within 72 hours after such a violation has occurred. This will afford data subjects the time to take appropriate measures to secure themselves from any possible consequences.

Failing to comply with these data privacy laws for supply chain companies or any other regulations listed above will attract stiff penalties. Penalties under the GDPR could be as high as €20 million or 4% of the organization’s global annual turnover.

California Consumer Privacy Act (CCPA)

The California Consumer Privacy Act is a state-level data protection act designed to protect the data rights of residents of California, USA. Due to the unique nature of federalism practiced in the US, states have the authority to create data privacy laws protecting residents of the states. These laws are also binding on every company that collects, processes, or stores the personal information of California residents, whether they are based in the United States or not.

Since the CCPA is directed at safeguarding consumer data, it also applies to the logistics and supply chain industries. The clients of logistics and supply chain companies are also consumers. Here are a few points for logistics and supply chain companies to note as regards compliance with the CCPA:

The CCPA mandates logistics and supply chain companies to disclose their data collection practices completely. That is how they collect clients’ personal data, what it is used for, how it is processed, and how it is stored. This may include disclosing how shipment information is collected, processed, and shared with carriers and logistics partners in the logistics and supply chain industry.

The CCPA ensures that the rights of data subjects are fully protected. These rights include the following:

  1. Rights to access personal data.
  2. Right to request the edition of your personal information at any time.
  3. Right to request the permanent deletion of your personal information.
  4. The right to refuse the sale of your personal information to third parties.

The CCPA prevents logistics and supply chain companies from discriminating against consumers who exercise their rights as secured by the CCPA. Consequently, supply chain companies cannot discriminate against clients who restrict their use of their personal data. They also cannot deny goods or services, charge different prices, or provide a lower level of service to consumers who exercise their CCPA rights, including the right to opt out of the sale of personal information.

Compliance with the CCPA requires logistics and supply chain businesses to implement robust data protection policies, provide mechanisms for consumers to exercise their rights under the law, and ensure that third-party data-sharing practices comply with requirements. Failure to comply with the CCPA will result in significant fines and penalties imposed by the California Attorney General’s office.

China’s Personal Information Protection Law (PIPL)

The PIPL is a data privacy law promulgated by the Chinese government to protect the personal data of Chinese residents. Enacted in November 2021, the PIPL contrasts with the GDPR as it places strict restrictions on the transfer of the data of Chinese residents outside China. Special authorizations must be received before such activity can be completed. This results from their focus on data residency in the supply chain, data residency in logistics, and other aspects of their economy.

Regarding the Supply chain and logistics industries, here are some provisions of the PIPL that you should be aware of as a business leader in the Supply chain industry:

Supply Chain and logistics companies are mandated to inform data subjects about the reason for collecting their data, what purpose it will be used for, and how it will be stored. Failing to do this may attract penalties from the authorities.

The purpose of being transparent about data collection is to obtain the consent of the data subject. Data subjects can accept or refuse access to their personal information, and the company must respect their decision.

The supply chain or logistics company must provide adequate protection for the data it collects from clients. They are expected to implement appropriate security measures to ensure the safety of clients’ personal information in their custody.

The principle of data minimization posits that you should collect only as much data as required to perform the task at hand. For instance, in the logistics industry, a company should only collect as much information as necessary to deliver the product to the client. This is a major requirement of the PIPL for logistics and supply chain companies.

The PIPL mandates logistics and supply chain companies to maintain the rights of clients whose data is collected in the process of carrying out their business. The rights of these clients are as follows:

  1. Right to access.
  2. Right to rectify or edit personal information.
  3. Right to permanently erase personal information, etc.

As hinted in the opening paragraph, the process for data transfers outside China is strict, and logistics and supply chain companies are mandated to comply with these requirements whenever they need to transfer the personal data of Chinese residents outside China.

To learn more about the Chinese PIPL, click here to review our article, which discusses it in more detail.

UAE’s Personal Data Protection Law (PDPL)

Also known as Decree-Law No. 45 of 2021, the PDPL is a comprehensive data privacy law in the United Arab Emirates. Like the GDPR, its goal is to protect the personal information of UAE residents. It does this through regulating the collection, processing, storing, and transfer of the personal data of UAE residents. Some of its provisions apply to the supply chain and logistics sector. We will review some of those provisions below:

The PDPL requires logistics companies to seek the consent of data subjects before collecting, processing, storing, or transferring their personal information.

It also mandates supply chain and logistics companies to be transparent in their practices with data subjects. Data subjects should know what the logistics or supply chain company wishes to do with their data at the time.

Supply Chain and Logistics companies are expected to put adequate measures in place to avoid unauthorized access, breaches, or loss.

Logistics and Supply Chain companies are mandated to only collect as much data as necessary for the completion of the services they are providing for the client. The goal of this requirement is to limit the volume of personal data in the custody of companies. Thereby reducing the volume of personal data that is potentially exposed.

By taking these steps, logistics and supply chain companies can demonstrate their commitment to data protection.

Main challenges regarding data protection in the logistics industry

As critical as data security is, some factors continue to pose a challenge to compliance in the Logistics industry. We will review a few of those factors below:

The logistics industry involves multiple stakeholders, including manufacturers, suppliers, carriers, warehouses, and customers. Managing data across this complex ecosystem can be challenging, particularly when data is transferred between different entities and systems.

Logistics activities entail the transportation and storage of goods, often involving the exchange of sensitive data like shipping addresses, product specifics, and tracking codes. These circumstances present potential vulnerabilities to data breaches and unauthorized access, particularly during transit and storage phases.

Several logistics operations entail the cross-border transportation of goods, often involving the transfer of personal data across various legal jurisdictions. Addressing the legal and regulatory frameworks governing such cross-border data transfers, including data sovereignty and localization laws, presents a multifaceted and demanding task.

Supply chains are progressively expanding globally, featuring intricate networks of suppliers and subcontractors across multiple tiers. Safeguarding data protection and security across the entirety of the supply chain, including subcontractors and third-party service providers, poses challenges, given the constrained visibility and control over these entities.

Logistics companies must comply with various data privacy regulations, such as the GDPR in the EU, the CCPA in California, and China’s PIPL. Compliance with these regulations could pose a challenge sometimes, as Data Sovereignty laws in logistics and Data sovereignty laws in the Supply chain may differ across different locations. This will make it a challenge for some companies to maintain compliance.

These are a few of the challenges facing data compliance in these industries. The next section will show you how InCountry can help your company comply with applicable data privacy in supply chain laws.

How InCountry helps logistics companies stay compliant with data protection laws

Staying compliant with data privacy in logistics laws poses significant challenges, especially for companies operating globally where data accompanies products across borders. At InCountry, we recognize this complexity and have developed a tailored solution to address it effectively: Data Residency-as-a-Service.

Our innovative Data Residency-as-a-Service cloud-based platform empowers logistics and supply chain businesses to seamlessly adhere to data privacy laws by enabling data storage in all mandated jurisdictions while ensuring universal accessibility. With this solution, companies eliminate the need for constant data transfers, securely storing information in compliance with legal requirements while maintaining uninterrupted access from anywhere in the world.

Get in touch already; let’s discuss your data privacy needs and show how much value we can contribute to your business!