Extreme weather is nothing new. Typhoons, earthquakes, floods, fires, and volcanic eruptions have always threatened lives and livelihoods across the globe. Increasingly intense weather (and an increasingly intense conversation around climate change), however, have made natural disasters top of mind for supply chain professionals.
While U.S.-based organizations have come to expect annual disruptions to their supply chains, the last several years have proven especially costly.
2018 was the deadliest and most destructive wildfire season California has ever seen. This January, Illinois experienced subzero temperatures that set a new record for the state. More recently, the Midwest has seen many of its primary and secondary rivers flood. Extremely cold weather left behind more ice than usual only to melt following an onslaught of rain. Nebraska, in particular, has seen the most destruction in its history. So what’s next? What does all this have to do with shipping and the domestic supply chain?
The first question’s easy to answer. North America’s hurricane season runs from June through November – so, let’s start there. When hurricanes form out in the Atlantic Ocean and head towards North America, they take three primary paths. The first makes its way toward the United States through the Gulf of Mexico, the second takes aim at South Florida, and the third makes its way up America’s East Coast and typically makes landfall anywhere along the Atlantic Coast as far north as New York or New Jersey.
It’s easy to see why hurricanes worry American procurement teams. The three most typical paths touch major ports including Houston, Miami, Charleston, Wilmington, Norfolk and even sometimes ports farther North. This is where we start to answer the second question. These ports not only risk seeing vessels arrive with late or damaged cargo, but the outbound trucking traffic from these areas face challenges as well. In the lead-up to a hurricane, ports are bombarded with intense rain. To beat the worst storms, many companies rush to get their freight out of the Atlantic and Gulf regions. This means tons of trucks headed in the same direction with no freight to bring back home.
Even when hurricanes aren’t in the forecast, shippers have to prepare for unexpected shifts in supply chain patterns. Inclement weather could mean an influx of a particular product or an equally challenging shortage. Something as benign as an unusually rainy season could mean surpluses of spring and summer products. There are not many people looking to buy patio furniture and grills when rain and below average temperatures are consistently in the forecast. These same patterns can impact electronics OEMs as well. Conditions are understandably more dire as weather gets worse. During a hurricanes, huge spikes in supplies and food to affected areas cause additional shifts to the status quo. It’s not every day that a company needs to send 1,000 generators to a city or a region coping with mass power outages, but it obviously does happen. Organizations in the typical hurricane paths can’t afford not to consider the possibility.
When extreme weather conditions threaten the U.S., there are a number of short and long-term planning options to consider. Shippers can simply move their freight out of a region early if something like a hurricane is imminent. In other cases, like an earthquake, companies won’t enjoy the privilege of a warning. In high-risk regions (like America’s West coast), an organization might take the precaution of engaging a diverse range of suppliers across a broad geography. When the East coast is disrupted by hurricanes, organizations can negotiate to have freight brought in through the West coast to prevent surcharges and delays. More tech-enabled companies might even take the especially innovative step of investing in predictive analytics. With the power to forecast the weather and adjust as necessary, they’ll effectively mitigate and navigate around risks.
The most important thing to remember when planning for future weather disasters is that disruptions won’t just affect a single region and they’ll far longer than the event itself. A hurricane, for example, might make landfall in Florida on a Friday in September. Supply chains throughout the adjacent states, however, will feel the effects for weeks and months. Is your organization prepared for disaster response and recovery?