Weather and Its Impact on the Supply Chain

It is no mystery to anyone that the winter weather of 2017 into 2018 has been very harsh, especially in the Northeastern regions.  While many people saw the effects that Hurricane Irma had on the supply chains of affected regions, many are now understanding that it is not only tropical weather that has the ability to interrupt or alter the supply line – rather, any extremely inclement weather has the capacity to have a negative impact on supply (Blatherwick, 2017; Garenstein, n.d.).  This impact on the supply lines essentially comes down to only a few items that are of concern: routing, lead time reduction, capacity, and chain reactions of delays causing further delays (Derks, 2014). 

Routing

The routing in question will often depend on the specific need of the client.  Oftentimes, these needs will be to weigh cost against time and standard movements against unexpected movements.  Most shipments are either done through an established lane or through a spot quote for a shipment.

Lane Shipments

Routes are often moved through lanes, whether this is by truck, rail, ocean, or air.  While many of these lanes have agreed upon times for pickup and cost, there are times that a lane might get shut down due to restrictions brought about by weather (Reuters, 2018).  In fact, in the Northeast part of the United States, the poor weather has interrupted supply lines, making it difficult for transportation to get into and out of specific areas, which has caused a fuel shortage, resulting in decreased supply that has led to further transportation restrictions (Reuters, 2018).  When events such as this occur, companies may be required to spend more resources on obtaining a specific spot quote to attempt to move products at a higher cost to meet deadlines. 

Spot Quote Shipments

When a company with an established lane is required to utilize a spot quote to move a product due to a lane closure due to weather, the effect is often a loss of some type of the shipper (Hudson, 2004).  In the event where companies see more spot quotes entering due to lane closures, this limits capacity, increases demand and raises prices.   All of this occurs while still delaying services, and that is if a spot quote can be acquired for shipment (Hudson, 2004; Weather – the greatest, 2018).  Regardless, the end result of needing to get a spot quote is that whether by an increased cost of delivery, or the inability to deliver, this is going to be harmful to the shipper. 

Capacity Limitations

Capacity is the supply when shipping is concerned (Derks, 2014), and when lanes and spot quotes do not offer enough capacity to meet demand, then not only will prices go up, but it is inevitable that there will be items that are unable to be shipped in a timely manner (Derks, 2014; How bad weather, n.d.).  These limitations often result in times when vehicles have to move as soon as there is the slightest break in the weather, which may cause some items to be left behind if another supplier did not successfully bring goods to a transfer point in a timely manner (Reuters, 2018).  This limitation typically results in drastically reduced lead times. 

Reduced Lead Times

As the limitations for capacity drop, the number of options for transportation decrease, and need to beat the weather conditions come to pass, the lead time that shippers are able to offer clients is greatly reduced (Blatherwick, 2017; Garenstein, n.d.; Hudson, 2004).  This reduction in lead time often means that the client might not be able to have the item ready for pickup as quickly as the shipper requires it.  This often will cause a company to not be able to ship something and get it to where it needs to be in a timely manner, as a reduced lead time may significantly reduce capacities that are available.

Delays and Chain Reactions

Everything listed up to this point revolves around the inability for an item to get from one point to another for various reasons.  The inability for items to move may result in those items missing a transition at a later point due to further decreases lead times or the inability of a vehicle to arrive at a specific location to pick up the items in question due to inclement weather at the destination point (Reuters, 2018).  In short, a delay at one location may result in a delay or a hold at another location, thus further slowing down supply chains and transit times.  This causes the supply chain and expected delivery times to be wildly skewed, and oftentimes highly unpredictable.

Winter Weather 2017-2018

Allport Cargo Services (2018) and Reuters (2018) indicate that all of the concerns mentioned herein have occurred during the winter storm and extreme cold in the United States for the current winter; supply lines have been shut down, it is difficult to get into and out of certain locations, capacities have dropped, prices have increased, and lead times have dropped as shippers attempt to get as many items delivered as close to on time as possible.  The effect of the bomb-cyclone that has pummeled the Northeast down to the Carolinas (Reuters, 2018) is that supply lines have been interrupted, and this has caused there to be issues in the parts of the country that have not been directly affected by the weather, as the chain reaction of the inability of item movement carries through to any lane or carrier that will be dependent upon timely delivery.

Summary

Weather, be it a tropical storm, extreme cold, a bomb cyclone, flooding, or any other extreme condition can and will have a direct impact on supply chains.  This was experienced this past fall due to hurricanes, and this is being experienced again due to extreme winter weather.  The best way for those clients that require carrier movements to prepare for movements that may need to occur is to realize that the problems listed herein are of a concern.  Asking the carrier what plans they have in place to circumvent any winter weather concerns, and what their expected lead time increase is at this time, is the best way for the clients to ensure that items are delivered in as timely a manner as possible. 

Understanding the impact of weather on the supply chain is an intelligent step for those that wish to ship items, especially with the weather being what it has been. Proper planning, while not foolproof, will assist in ensuring that items arrive at their location as close to on-time as possible.

           

Contributor: Stephen Hull

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About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance.  Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China and Prague, Czech Republic. For more information, visit www.allynintl.com.

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References

Blatherwick, A. (2017). Four steps to better understand the impact of weather on retail forecasting. RIS: Retail Info Systems. Retrieved from https://risnews.com/four-steps-better-understand-impact-weather-retail-forecasting

Derks, M. (2014). Managing weather’s impact on transportation capacity and costs. Logistics Viewpoints. Retrieved from https://logisticsviewpoints.com/2014/03/04/managing-weathers-impact-transportation-capacity-costs/

Garenstein, D. (n.d.). How does weather affect the supply chain?. AZCentral. Retrieved from https://yourbusiness.azcentral.com/weather-affect-supply-chain-27783.html

How bad weather storms affect the supply chain. (n.d.). LTX. Retrieved from http://ltxsolutions.com/bad-weather-storms-affect-supply-chain/

Hudson, S. (2004). Effects of weather on the supply chain. Supply Chain Resource Cooperative. Retrieved from https://scm.ncsu.edu/scm-articles/article/effects-of-weather-on-the-supply-chain

Reuters. (2018). The ‘bomb cylcone’ has put a freeze on the power supply in parts of the east coast. Fortune. Retrieved from http://fortune.com/2018/01/04/bomb-cyclone-grayson-power-outages/

Weather – the greatest supply chain risk? (2018). Allport Cargo Services. Retrieved from https://allportcargoservices.com/weather-the-greatest-supply-chain-risk/