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Global supply chains have faced many disruptions the past few years, and weather has been a huge part of those. In 2021 we had the Texas freeze, causing the worst unplanned blackout in U.S. history. It crippled Texas’ power grid, halting factory production and causing widespread transportation disruptions.
In 2023, we have seen heavy rains and flooding in California, a major transportation hub, disrupt shipments and cause an estimated 20%-30% decrease in deliveries in some areas. That same year, we saw droughts in Panama cause huge interruptions and delays of container ships going through the Panama Canal. Droughts in Taiwan, a major chip producer, coupled with extreme weather events elsewhere, have exacerbated the ongoing chip shortage, impacting various industries.
The first quarter of 2024 hasn’t been kind to global supply chains. Early winter storms likely caused lingering transportation disruptions. February saw record high temperatures in Texas and more floods in California. However, the biggest disruptions so far stem from lingering effects of 2023’s extreme weather. And things will not improve in 2024 as El Niño will further cripple supply chains around the world.
El Niño is a climate pattern in the Pacific Ocean that can significantly impact global weather patterns. Predictions for the 2024 El Niño suggest potential disruptions in several regions. In North America, it will cause warmer and drier conditions in California, which could further strain water resources and potentially impact agricultural production.
Conversely, some areas might experience increased flooding risks. Heavier rainfall could lead to landslides and flooding in countries like Peru and Bolivia, disrupting transportation infrastructure and agricultural yields. Increased typhoons and monsoons in Southeast Asia could damage infrastructure and disrupt manufacturing.However, drier conditions in Australia could impact crop yields. Increased drought conditions in East Africa could exacerbate food insecurity and humanitarian crises.
These weather events and El Niño’s potential influence can have cascading effects on supply chains.
Floods, snowstorms and hurricanes can disrupt road, air and maritime transportation, leading to delays and increased shipping costs. Power outages and extreme weather can force factories to halt production, causing shortages of raw materials and finished goods. Disruptions to agricultural production due to droughts or floods can lead to price hikes for food and other commodities. Extreme weather events that trigger humanitarian crises lead to a surge in demand for relief supplies, straining already stressed logistics networks.
As the year progresses, the combined effects of recent weather events and the potential impacts of El Niño pose significant challenges for global supply chains. Companies need to be proactive in their planning, implementing risk mitigation strategies and exploring alternative sourcing options to minimize disruptions and ensure business continuity. Technology solutions such as supply chain visibility and risk management solutions can help to better control and mitigate these weather disruptions.
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About the author
Bart De Muynck is an industry thought leader with over 30 years of supply chain and logistics experience. He has worked for major international companies, including EY, GE Capital, Penske Logistics and PepsiCo, as well as several tech companies. He also spent eight years as a vice president of research at Gartner and, most recently, served as chief industry officer at project44. He is a member of the Forbes Technology Council and CSCMP’s Executive Inner Circle.