Hurricane-Proof Your Supply Chain: A Shipper’s Guide to Staying Resilient

Over the past four decades, hurricanes have notably increased in intensity, resulting in an average of $54 billion in annual damages and disrupting supply chains across the U.S. and beyond. According to the Environmental Protection Agency (EPA), eight of the 10 most active storm seasons on record have taken place since the mid-1990s, revealing that these powerful storms and the disruptions they cause are continuing to get worse.

Planning ahead to minimize the impacts of hurricanes on supply chains is critical for any supply chain company, especially those with operations in coastal regions. In order to remain functional and minimize the additional costs that may result from hurricanes, companies need to build resilient, flexible supply chains that can withstand the disruptions.

The Hidden Costs of Hurricanes

Apart from the physical destruction they cause, hurricanes often come with a number of hidden costs and lasting effects that can hinder supply chain operations. Lengthy downtime can result in detention charges and product spoilage, which lead to inventory shortages and delivery delays. Damage to roads and infrastructure, power outages and loss of communication networks can also take weeks or months to repair or restore, resulting in lost sales, additional costs and gaps in communication, making it critical to have alternate routes in place in advance. Increased insurance premiums and spikes in fuel costs due to disruptions to oil refinery and production can also result in higher transportation expenses that companies should be prepared to mitigate or absorb.

The costs of being unprepared for these events can be extreme, with lost inventory and canceled orders directly impacting the bottom line. The reputational hit resulting from missed deliveries or supply shortages can also create disappointed customers, who may choose to spend their money elsewhere. Hurricanes can create issues that may take weeks or months to recover from, so when it comes to supply chains, the cost of planning ahead is minimal compared to the cost of being unprepared.

Preparing for the Unexpected

While the impacts of hurricanes can be far-reaching, companies can take a number of steps to stay ahead of the curve when disaster strikes:

1. Create a robust contingency plan. Identifying regions that have the greatest risk for disruption and the suppliers that operate in those areas should be the first step toward planning for contingencies. Creating a documented disaster response strategy, sharing it across all partners and suppliers, and having backup routes and partners in place can help to mitigate potential delays in the event of delays. Make sure to map out all internal and external stakeholders, include responsibilities for each to keep details from slipping through the cracks, and make sure your plan aligns with your carrier and 3PL partnersto help expedite response times if things go awry.
   
   
2. Diversify your network. While having preferred partners in place helps to create lasting relationships, it can also leave companies vulnerable to risk in the event of disruptions. Having multiple suppliers and partners in areas that are most susceptible to risk can help ensure your freight and operations continue flowing smoothly in the event that any of them are forced to slow or halt their operations due to port closures, road closures or other events.
   
   
3. Create a strategic warehousing strategy. While it can be convenient to establish warehousing locations near ports where goods enter the country, those locations can also have the most risk when hurricanes strike. Having locations established outside but still accessible to high-risk areas or having emergency stockpiles located with on-demand or short-term warehousing partners can help prevent delays and keep operations and goods moving.
   
   
4. Monitor port, rail, road and infrastructure disruptions. The closure of a single port can have devastating effects on supply chains and can lead to or be compounded by road and rail closures or delays as well. Subscribing to real-time alerts from government transportation agencies and working with carrier and 3PL partners to plan alternate routes can help to minimize delays and keep goods moving.

Resilience to Weather the Storm

Because hurricanes are certain to impact nearly every supply chain at some point, the goal isn’t to avoid them altogether, but to recover as quickly as possible. Reviewing your supply chain strategy now and creating a plan to counter any unexpected disturbances can help to ensure your company is poised to bounce back with as little financial and operational impact as possible.

For assistance in evaluating and diversifying your supply chain strategy to minimize the potential loss associated with hurricanes, reach out to our experts today.