By Nick Lung    Photo：CANVA

Global supply chains have faced many disruptions over the past few years, with weather being a large part of them. In 2021, Texas was hit by a freeze that caused the worst unplanned power outages in U.S. history. It crippled Texas' power grid, halted factory production and caused massive transportation disruptions. In 2023, heavy rains and floods occurred in California, a major transportation hub, causing transportation interruptions.

Transportation volume in some areas is expected to decrease by 20%-30%. That same year, we saw a drought in Panama causing significant disruptions and delays for container ships transiting the Panama Canal. Drought in Taiwan, a major chip producer, coupled with extreme weather events elsewhere, has exacerbated the ongoing chip shortage, affecting various industries.

Because of climate change, the global supply chain will not have an easy time in the first quarter of 2024. Winter storms and snow have caused traffic disruptions for a long time. Texas is experiencing record-breaking heat, and California is experiencing its highest floods on record. All of this disruption can be attributed to the continued impact of extreme weather in 2023. The situation will not get better in 2024, and it is possible that global supply chains will be further weakened.

Climate change has widespread impacts on supply chains. Some of the major impacts include:

Natural Disasters: Climate change is causing an increase in the frequency and intensity of natural disasters such as hurricanes, floods, droughts and forest fires. These disasters can directly damage production bases, logistics networks and warehousing facilities, causing supply chain disruptions and delays.
Resource scarcity: Climate change may lead to unstable resource supplies, especially for industries that rely on natural resources, such as agriculture and fisheries. Droughts and water shortages caused by climate change may affect crop growth and yields, thereby affecting the food supply chain.
Transportation and Logistics: Climate change may cause traffic disruptions and transportation difficulties. For example, heavy rain may cause road closures, strong winds may affect ship navigation, and heavy snow may cause flight cancellations. These weather events may affect the efficiency and reliability of logistics.

Energy costs: Climate change can cause energy prices to fluctuate, especially for businesses that rely on fossil fuels. This may increase production and logistics costs and affect the economics of the supply chain.
Regulation and policy changes: The government may introduce stricter environmental regulations and climate policies to slow down climate change.

These regulations and policies may put forward new requirements for enterprises' production methods, supply chain management and product design, requiring enterprises to make adjustments and investments.

Taken together, the potential impact of these weather events could have a knock-on effect on the supply chain. Floods, snowstorms and hurricanes can disrupt road, air and sea transportation, causing delays and increased transportation costs. Power outages and extreme weather can force factories to halt production, leading to shortages of raw materials and finished goods.

Disruptions to agricultural production due to drought or flooding can lead to higher prices for food and other commodities. Extreme weather events triggering humanitarian crises have led to surges in demand for relief supplies, putting pressure on already-strained logistics networks. The combined impact of the potential impacts of recent weather events over time creates significant challenges for global supply chains. Logistics companies and importers need to proactively plan, implement risk mitigation strategies and explore alternative sourcing options to minimize disruption and ensure business continuity.

Technology solutions such as supply chain transparency and risk management solutions can help better control and mitigate these weather disruptions.

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