A New Risk for Shippers: Heat Waves and Supply Chains

Supply chain risks have once again entered new territory—and this time, it’s thanks to heat waves and extreme weather. Temperatures around the world have broken new records, fueling a summer of wildfires, flooding, droughts, power disruptions, and evacuations.

Heat-wave-related supply chain challenges can be serious. In the face of unpredictable weather, shippers must circumvent delays, sudden price surges, and bureaucratic restrictions.

Supply chains in crisis

This summer’s heat waves pose far-reaching threats—and global and regional supply chains are already feeling the effects.

  • The Rhine River, a critical European shipping waterway, is experiencing a severe drought. Shippers are struggling to transport goods across the river, where levels have reached an alarming 77 centimeters—its shallowest point since 2007. To accommodate new water levels, many shippers are dialing back their freight, with some ships traveling at only 25% capacity. Others are shutting down operations altogether, citing rising freight rates and unmanageable transportation inefficiencies.
  • In France, where nuclear power plants produce 70% of the country’s electricity, rising water temperatures have upended day-to-day living. Powering reactors with warmer water can spell disaster for wildlife and the environment—a concern that prompted the closure of more than half of the nation’s nuclear reactors. Among reactors that remain in service, the country is cutting power when water temperatures exceed certain limits. 
  • The Chinese province of Sichuan—a major hub for lithium, solar panel, and electric vehicle production—is crucial to global giants like Tesla, Toyota, and Foxconn. Amid a record-breaking 70-day heat wave, officials are temporarily shuttering major factories and enforcing electricity usage limits. As the region’s manufacturers struggle to adapt to supply shocks, delays, and operational restrictions, businesses around the world must contend with the resulting ripple effects. 

Dynamic supply chain solutions

These obstacles are as unpredictable as ever. After all, heat waves and extreme weather are unavoidable—as are the broader supply chain disruptions that accompany them. How can businesses emerge victorious? 

Embrace technology

Extreme weather is more or less inevitable. With the right tools, however, businesses can prepare themselves for—and possibly avoid—potential disaster. Advanced forecasting technology, for example, equips businesses with the data and predictive capabilities they need to remain agile in the face of heat waves and other climate-related challenges. A transportation management system (TMS) is another crucial asset: it provides real-time visibility into every relevant aspect of the supply chain, enabling businesses to react decisively and flexibly in the event of a supply shock or delay.

Mitigate risk

When navigating climate-related challenges, an effective risk management strategy is essential. Supplier diversification, for example, is a tried-and-true tactic: by building reliable partnerships with suppliers in different regions, businesses can minimize unanticipated delays. In addition, maintaining backup inventory can serve as a stopgap solution to unexpected supply shortages. Lastly, effective scenario planning can boost organization-wide confidence and efficiency—especially when they’re most critical. 

Tools and strategies

The effects of extreme weather are profound, reverberating across every corner of the globe. Even so, businesses have reason to remain optimistic—assuming they embrace the right tools and strategies.

CTSI-Global’s advanced software—such as Honeybee TMS™, our proprietary TMS—gives companies the data-driven insights they need to navigate today’s supply chain challenges. No matter what lies ahead—or what the weather forecast may read—businesses can build more resilient supply chains, one winning solution at a time.