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Extreme weather is predicted to be the biggest danger to supply chain operations in 2024.
In its 2024 risk report, everstream.ai said a US$1 billion weather-causes event happens every three weeks, on average, in the United States. In the 1980s these events only occurred every four months.
The report highlights the drought affecting the Panama Canal as an example of weather-related disruptions. “From 2024 onwards, very large tanker carriers (VLTC) may avoid the Panama Canal altogether due to increased waiting times. Other shipping operators will reroute cargo via the Suez Canal or the Cape of Good Hope,” the report suggested.
Winter storms are another weather risk. Global ocean temperatures begin 2024 at record highs, and, combined with a rising trend in disruptive winter weather (snow, ice, wind), this elevates the risk of more harmful storms. Changes in
precipitation distribution patterns will also create increased drought and flooding around the world.
Specific impacts
During the Canadian wildfires in June 2023, both Chicago and New York City struggled with poor air quality and low visibility. Deliveries in Chicago from June 26-28 and in New York City from June 5-7 were delayed by up to two days. Reduced visibility due to wildfire smoke caused decreases in the number of shipments in different areas from 50 to 75 percent.
The report calculated that Hurricane Ian, which hit Florida in 2022, resulted in a 75 percent drop in shipments compared to previous weeks. Deliveries that did make it saw an average increase in shipping times of 2.5 days.
The widespread deep freeze across Texas from Feb. 11-20, 2021, resulted in an average delivery delay of almost two days. And in Buffalo, N.Y., the Christmas freeze of Dec. 21-26, 2022, caused a 40 percent decrease in shipments from previous weeks.
Flooding and heavy rains in California, Nevada, and Utah in the spring of 2023 interrupted transportation across the entire region. The ongoing disruption caused a 20 to 30 percent decrease in shipments in the impacted areas.
And the cost of repairs after wildfires and extreme flooding in British Columbia in 2021 has been estimated at more than $5 billion, according to the federal government.
The report suggested that supply chain operations managers should minimize extreme weather risk by closely monitoring routes and shipments enroute for approaching disruption. Planning should include using predictive weather forecasts and disruption alerts, along with predictive ETAs.
Everstream’s annual outlook is based on historic, present, and future risk across more than 30 major categories. Using artificial intelligence and human expertise, Everstream predicts overall risk exposure, probability, severity and relevance.
