Unpredictable and damaging weather conditions threaten to upend global supply chains every season.
Supply Chain Brain
Mark Derks, SCB Contributor
June 9, 2022
Reports from Climate.gov show that escalating temperatures have increased the frequency and severity of extreme weather-related events. In the last 20 years, there were 7,348 major natural disasters around the world, resulting in 1.23 million deaths and $2.97 trillion in global economic losses. Erratic weather patterns have brought intense heatwaves, droughts, snowstorms and wildfire conditions that have exacerbated current infrastructures, going beyond what resources can withstand.
The global economy is supported by supply chains that are at the mercy of complex weather systems. Regardless of the forecast, it’s important that shippers and consumers adjust expectations to match what has become an unpredictable freight cycle, often with unavoidable disruptions at every link in the supply chain. Many do not understand the weather’s effect on inventory availability and shipment status, particularly if they’re not experiencing obstructive weather conditions first-hand. Shippers and carriers alike should establish a weather-related plan of action that can offset unexpected delays and help keep parties informed quickly in preparation for a catastrophic event.
Insulating against disturbances to the supply chain through critical weather strategies has proved effective in cutting down delays and costly overages.
Because blizzards, floods, tornadoes and hurricanes are more common today than ever before, it’s inevitable that your business will be affected, either directly or indirectly, at some point.
Because blizzards, floods, tornadoes and hurricanes are more common today than ever before, it’s inevitable that your business will be affected, either directly or indirectly, at some point. With such disruptions come reductions in workforce, tightened capacity, fewer logistics options, increased risks and increased costs.
Shippers need to consider developing a critical-weather supply chain strategy that includes:
- Ensuring early replenishment of inventories wherever and whenever possible;
- Developing a weather-related routing guide that provides deeper access to capacity and local providers;
- Developing relationships with FEMA-related third-party logistics providers and carriers;
- Selecting 3PLs and carriers based on their ability to adapt during times of inclement weather and natural disaster, and understand their strategy;
- Increasing open and advanced communications between organizations; and
- Making weather disruptions and disasters a part of overall business continuity planning.
Hurricanes are among the biggest natural threats to the global supply chain. A recent study and subsequent article published in the journal Science Advances and highlighted on CNN showed that even as the U.S. and Europe worked for decades to reduce air pollution, scientists found an unexpected and challenging consequence: an increase in tropical storms in some regions. There’s a global shift in the distribution of tropical cyclones that can be felt in the movement of materials and goods that reverberate on each continent.
Hurricanes affect all kinds of freight, including essential commodities going into an impacted area, as well as regular items coming out of the disaster zone. In that case, capacity will disappear for at least two to four weeks to make room for hurricane-related goods. Outside of disaster-related areas, capacity will likely decrease, meaning shippers won’t be able to move as many products. Therein lies the fragility of our supply chain: it becomes overburdened when capacity is eliminated from the normal freight cycle, leaving unaffected shippers in need of outbound freight and associated reloads.
Third-party logistics providers can help with finding capacity through truckload, less-than-truckload, reefer, flatbed and local or regional carriers. Carriers have choices in how they might get involved in hurricane and disaster-relief efforts. The most common are the use of drop trailers, power sourcing and drivers, all of which are removed from the normal market. Shippers should be aware of which carriers or 3PLs are FEMA-certified, since that capacity will likely be out of market while bringing in commodities to affected areas.
For carriers, product seasonality is predictable but natural disasters are not.
In fact, Stanford University says climate change could be shifting the limits of weather predictability and pushing reliable 10-day forecasts out of reach.
In fact, Stanford University says climate change could be shifting the limits of weather predictability and pushing reliable 10-day forecasts out of reach. Regardless, carriers have gotten much better at being aware of extreme weather conditions and adapting service and pricing communications with shippers.
Carriers can take the following steps to help guide emergency weather programs:
- Institute a “weather watch” awareness protocol;
- Develop a proactive and prescriptive strategy that addresses the needs of customers;
- Communicate objectives clearly to customers and employees;
- Recommend that customers get an early start on inventory replenishment and stockpiles ahead of hurricane season, be a part of their continuity plans, and ask them not to solely rely on your organization for capacity;
- Keep drivers safe and moving to help ensure their personal and physical safety; and
- Take advantage of reverse logistics opportunities, which provide another revenue stream.
Weather events happen whether you’re prepared or not. Even if a “Black-Swan”-type storm should occur well outside your operational range, you can almost certainly expect repercussions to your own supply chain. Preparation is critical to minimizing the disruption and keeping operations flowing as smoothly as possible. By collaborating with supply chain partners and making sure they accept your disruption-prevention plans, you can strengthen your working relationships. Even if your operations are based in a location that doesn’t have “scheduled” weather events (hurricanes, tornadoes, wildfires and the like), it pays to have a contingency plan and the appropriate infrastructure in place.