It’s Time to Build Weather Resistance into Supply Chains


Build it and they will come. The Panama Canal’s $5 billion expansion, completed in 2016, was expected to nearly double cargo traffic and pull shipping from the Suez Canal. Overall tonnage climbed a sharp 22% the first 12 months after completion. Those ships did come.

Unfortunately, the rain was a no-showOpens a new window .

Last year at Gatun Lake, the canal’s main source of water, rainfall was 20% below the historic average, while 2019 was the fifth-driest year in 70 years. And there was a double weather whammy: The canal also reported a 10% increase in evaporation levels at the lake due to warmer temperatures.

In short, the waterway lacked water just as the expanded system was thirsty for more. Which is why the canal authority imposed so-called freshwater charges earlier this month and cut the number of booking slots. It also ordered water-saving measures such as halting power generation at the lake’s hydroelectric plant and introduced water-saving basins as a “long-term solution to water.”

In the United States, our inland waterways need that kind of fix, too.

Last year saw heavy rains and months-long flooding on the Mississippi, with other major rivers closed to commercial traffic. So far this year, record rains generated flood warnings and advisories over a 500-mile stretch from Mississippi to Illinois. The issue is years of infrastructural neglect that will cost multiples of billions and a good stretch of time to put right.

Weather the storm

The severe droughts, prolonged floods, record temperatures and powerful hurricanes that the country is increasingly experiencing sometimes sound almost biblical in nature. It’s certainly concentrating our minds on the weather.

For the first time ever, climate-related issues occupied the top-five long-term risks identified by the latest World Economic Forum’s Global Risks surveyOpens a new window of its stakeholders. Extreme weather headed the pack.

Adverse weather was responsible for more than one-third of global supply chain disruptions last year, according to the Supply Chain Resilience reportOpens a new window from the Business Continuity Institute. For the Americas, the situation was even more acute with over half of disruptions due to severe weather conditions. And the survey’s business respondents weren’t expecting things to get better anytime soon: More than 40% said adverse weather was a concern for the coming year.

So, how do we deal with that kind of weather outlook?

First off, get hold of the historical data so you can build long-term flexibility into your operations. One obvious port of call is the website of NOAA’s National Centers for Environmental InformationOpens a new window that provides sector-specific climate resources for transportation, agriculture and coastal areas.

Make it local

As far as extreme weather is concerned, while those events are usually forecast well in advance, they’re mostly regional in scope. That leaves a gap at the local level that a number specialist providers are looking to plug.

Leading fleet-technology provider Omnitracs, for one, has an app that keeps track of individual truck trajectories and, using data from sources such as road cameras and drones, provides micro-weather updates straight to drivers’ cabs.

With supply chains spanning road, rail, ports and airports, the exposure footprint can be huge. If the current coronavirus outbreak teaches us anything, it’s about the importance of building in contingencies to ensure resilience, from establishing secondary suppliers for critical components through to setting up replacement transportation lanes.

The ultimate fallback is insurance to cover any business interruption loss. However, according to the Business Continuity Institute’s survey, 45% of organizations experiencing supply chain disruptions weren’t able to determine how much of their losses were insured, while nearly 30% actually decided against insurance coverage. This indicated, the report said, that “more work needs to be done to bridge the assessment gap.”

And clearly, that means talking even more about the weather.