Tips to Keep Your Supply Chain Running During Extreme Weather Events

In recent years, extreme weather has presented serious and costly challenges for supply chains worldwide. By 2024, the frequency of billion-dollar weather events in the United States alone has increased, occurring every three weeks on average—a stark contrast to once every four months in the 1980s​. These extreme events—from hurricanes and wildfires to droughts and floods—can paralyze transport networks, disrupt operations, and create widespread delays that ripple through global supply chains.

As Daniel Swan, a senior supply chain analyst, notes, “The impacts of extreme weather events are no longer isolated disruptions; they are now predictable annual events that businesses must prepare for with robust contingency plans”​. Despite advancements in logistics and technology, extreme weather is still a top threat to supply chain resilience. The drought affecting the Panama Canal in 2024 is a prime example, where limited vessel transit has impacted global shipping, leading to delivery delays and increased transportation costs for businesses around the world​.

In the face of this growing risk, proactive strategies are more critical than ever. By identifying vulnerabilities, investing in resilient infrastructure, and collaborating across industry networks, businesses can mitigate the impacts of weather-related disruptions and maintain consistent operations.

1. Understanding the Impact of Extreme Weather on Supply Chains

Extreme weather affects nearly every part of the supply chain, from sourcing raw materials to last-mile delivery. Some of the most common and disruptive impacts include:

• Transportation Interruptions: Extreme weather often halts or severely delays road, rail, sea, and air routes. In 2024, Hurricane Helene led to the temporary closure of key Gulf Coast ports, impacting freight movement and creating a backlog of cargo that took weeks to clear​. Road closures from flooding or landslides, as seen recently in California, can significantly disrupt the logistics network and affect both regional and international shipments.
• Workforce Shortages: Extreme weather can prevent workers from reaching their workplaces, leading to labor shortages. This was notably evident in the U.S. during the winter storms of early 2023, where dangerous travel conditions halted operations at major logistics hubs, delaying orders across multiple states​.
• Inventory and Storage Damage: Warehouses and storage facilities are also vulnerable to weather-related damage. Floods, hurricanes, and wildfires can destroy goods, especially perishable ones, impacting inventory and leading to product shortages. In recent California wildfires, for instance, several warehouses in high-risk areas experienced total or partial damage, pushing companies to adjust distribution strategies to avoid delays.

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Case Studies of Recent Disruptions

• Panama Canal Drought: The drought at the Panama Canal, which started in 2024, has had a lasting impact, resulting in vessel restrictions and transit delays. The canal is a critical chokepoint for shipping, and the drought-driven bottlenecks have increased costs and forced companies to seek alternative routes or adjust shipping schedules.
• Winter Storms in the U.S.: Early 2024’s winter storms disrupted logistics, leading companies like FedEx to activate contingency plans. These storms caused significant road closures and airport delays, affecting critical delivery routes across the Midwest and Northeast​.

2. Assessing Vulnerabilities in Your Supply Chain

To build resilience against weather disruptions, businesses must first identify where their supply chains are most vulnerable. Here’s how:

• Identify Critical Points: Use risk assessment tools and heat maps to evaluate high-risk areas in the supply chain. For example, if a supplier or warehouse is located in a hurricane-prone region, this area should be flagged as a risk point.
• Evaluate Supply Routes: Reviewing transportation routes for susceptibility to severe weather, like those in flood-prone or wildfire-prone areas, can help companies develop backup strategies and avoid highly vulnerable routes.
• Supplier Locations: Assess the location of key suppliers, focusing on their exposure to weather risks. Working with suppliers in diverse geographic locations can help minimize disruptions if one area experiences extreme weather.
• Warehouse and Inventory Locations: Assess whether your storage facilities are at risk for flooding, wildfires, or other weather-related events. For example, if warehouses are in low-lying areas prone to floods, it may be worth relocating to minimize risk.
• Supplier Communication: Frequent check-ins with suppliers and regular reliability assessments can also help identify and address potential issues before they become critical.

3. Implementing Preventative Strategies

Once vulnerabilities are identified, businesses can take the following preventative steps:

• Diversify Suppliers and Routes: Reducing reliance on a single supplier or transportation route minimizes the chance of complete disruption. Companies should establish partnerships with suppliers across different regions to spread the risk. For example, during the California wildfires, companies with alternative suppliers outside the region managed to maintain more consistent operations.
• Invest in Visibility & Weather Forecasting Tools: Real-time weather monitoring and predictive analytics can provide advance warning of potential disruptions. Tools that forecast weather impacts allow businesses to act proactively, such as rerouting shipments to avoid storm-affected areas or adjusting inventory to prepare for delays.
• Set Up Alerts for Key Supply Points: Automated alerts for severe weather forecasts along major routes help companies react quickly to potential disruptions.

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4: Building Resilient Infrastructure

To withstand extreme weather, companies must invest in infrastructure capable of adapting to environmental stressors.

• Hardened Warehousing: Protecting assets in storage is vital to ensuring consistent supply chain performance. Designing or retrofitting warehouses to resist specific weather risks is one approach that companies like Prologis and Amazon have invested in, especially in high-risk areas prone to floods or hurricanes. Modern warehouses can incorporate flood-resistant materials, reinforced foundations, and even seismic isolation for earthquake-prone regions. This proactive investment can mean the difference between continuity and weeks of disruption during extreme events.
• Inventory Management Adjustments: Adjusting inventory practices can prevent stockouts and ensure consistent production during periods of high weather risk. For example, many companies now prioritize maintaining higher stock levels of critical items, especially during hurricane and wildfire seasons. In regions affected by seasonal flooding, businesses are implementing buffer stock strategies that allow for some delay in replenishment while still meeting customer demand. This approach helps mitigate the risk of empty shelves or halted production lines.
• Backup Power and Water Supplies: Extreme weather often disrupts utilities, with power outages becoming particularly common during severe storms. Backup generators and water tanks are becoming standard features in resilient facilities. For instance, when Winter Storm Uri hit Texas in 2021, companies with independent power sources managed to continue operations while others faced extended shutdowns​. With ongoing investments in alternative energy sources, like solar and battery storage, companies can ensure minimal interruption to their facilities.

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5: Establishing Contingency Plans and Policies

A comprehensive contingency plan is essential to ensure supply chain continuity and rapid response in emergencies.

• Crisis Management Team: A dedicated crisis management team is the foundation of effective emergency response. This team oversees all aspects of supply chain disruptions, ensuring that each department knows its role and responsibilities during extreme weather. For example, during the recent California wildfires, crisis teams were instrumental in coordinating efforts to reroute shipments and communicate with stakeholders about delays.
• Roles and Responsibilities: Clearly defined roles within the crisis management team are crucial for effective response. This structure includes delegating responsibilities for tracking weather updates, assessing supply chain impacts, managing customer communications, and overseeing on-ground logistics.
• Communication Channels: Fast, reliable communication channels ensure all stakeholders—internal teams, suppliers, and customers—stay informed during disruptions. Technology such as dedicated emergency management software or secure communication platforms can facilitate real-time updates. Toyota, for instance, uses automated alerts to keep its suppliers and partners updated, helping them react quickly to potential supply chain risks.
• Emergency Protocols: Businesses need robust protocols to manage orders, customer expectations, and potential delays. In the event of a hurricane or wildfire, this might include rerouting orders or prioritizing shipments based on urgency. By developing these protocols in advance, companies can minimize customer impact and maintain trust even when unexpected delays arise.
• Customer Communication: Pre-drafted communication templates for notifying customers about delays or disruptions are invaluable. Keeping customers informed maintains transparency and goodwill, even when service is temporarily affected. Some companies also offer real-time order tracking updates during weather disruptions to improve customer experience.
• Expedited Shipping Options: When necessary, having pre-negotiated options for expedited shipping can help minimize delay. During Hurricane Harvey in 2017, companies that had established agreements with alternative carriers were able to maintain partial delivery services despite significant flooding in Texas​.

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6: Collaborating with Industry Partners

Strong collaboration across the industry can significantly bolster supply chain resilience.

• Industry Consortiums and Government Programs: Participation in consortiums or industry groups focused on disaster preparedness offers valuable resources and insights. Organizations like the Resilient Supply Chain Consortium and the Business Continuity Institute provide tools and guidance on effective disaster response and supply chain risk management. By engaging with these groups, companies gain access to shared resources and collective expertise.
• Sharing Resources and Data: Industry leaders are increasingly sharing data and resources to help companies respond more effectively to weather disruptions. For example, Walmart and Target have worked collaboratively on weather forecast sharing, enabling both companies to better predict and prepare for supply chain impacts.
• Leverage Government Resources: Government agencies often offer disaster aid programs and public infrastructure support. For example, the U.S. Federal Emergency Management Agency (FEMA) offers a Business Continuity Planning Suite that provides templates and resources to help companies create actionable emergency plans. Additionally, local governments can provide real-time weather alerts, flood-risk data, and support with recovery logistics after a disaster​.

Conclusion

Building a resilient supply chain is a multi-step process that requires proactive planning, infrastructure investment, and collaboration with industry partners. As weather patterns grow increasingly unpredictable, businesses that invest in supply chain resilience are not only safeguarding their assets but also positioning themselves for long-term growth in a challenging environment.

To make your supply chain more resilient, start by evaluating your infrastructure, establishing contingency plans, and connecting with industry networks. For more insights and tailored consulting on supply chain resilience, sign up for our newsletter or contact our team. Together, we can build a supply chain that withstands the storms ahead.

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