According to a recent New York Times analysis of weather station data, the United States has been seeing record high and low temperatures since 1994. Not everyone buys the idea of climate change, but there’s little doubt that there’s been an increase in extreme weather events in recent years. At 8.3% of the nation’s nearly 8,000 weather stations there were record highs reported – the most any year has seen since 1944.
When it comes to climate change’s effects on the freight industry, it’s always been easy to plan around weather patterns. These days, seasonality has become nothing short of unpredictable.
“The classic way to capture seasonal trends is basically just to take the historic average surge in June or the historic average lull in January and project that forward,” said Aaron Terrazas, director of economic development at Convoy. “But in a world of extreme weather, that average surge is less and less meaningful. Any of those destructions that are not tied to a fixed calendar are just so hard to estimate and cause such wild destruction in the freight system, as we’ve seen over and over again.”
In terms of dealing with that destruction, calendar shifts around potential weather patterns may need to become a new conversation over the next year so freight planners can assess risk. When building new warehouses or distribution centers, it’s important to have weather plans in place. What used to be one hurricane every few years has now become preparing for two-week outages every season, which affects not only warehouse facilities, but roads and bridges as well.
Overall, with the times changing, Terrazas said that what makes sense to do now won’t always be relevant for the long term. In fact, the freight industry will need to start discussing a weather premium being built into their contracts.
The annual contract procurement process and conventional routing guides are designed to protect shippers against idiosyncratic risk – the risk associated with a particular carrier failing – but do not protect against the system-wide risks like weather events that are becoming more and more common according to Terrazas
“I think the weather risks, and coming to terms with these weather risks, are going to have to have the whole industry rethinking how much they are willing to pay for protection from hurricanes, or a road being flooded, and what happens when everything fails at once,” Terrazas said.