Extreme weather expected to be top logistics disruptor for supply chains in 2024
Extreme weather events outpaced environmental regulations and trade wars between the U.S. and China, which came in second and third, respectively, according to Everstream Analytics' annual 2024 Risk Report released Wednesday.
2023's weird weather recap
In 2023, we experienced an array of extreme weather conditions, including hurricanes, dust devils, wildfires, smoke and drought.
Weather-related incidents such as hurricanes, winter storms, wildfires and floods are expected to be the top factor in why supply chains face major disruptions next year.
Extreme weather events outpaced environmental regulations and trade wars between the U.S. and China, which came in second and third, respectively, according to Everstream Analytics' annual 2024 Risk Report released Wednesday.
The report is based on a comprehensive database of known and predicted events, which is driven by a combination of human intelligence and AI technology.
In the 1980s, the U.S. experienced weather events resulting in at least $1 billion in damages every four months (adjusted for inflation). Today, a billion-dollar event occurs every three weeks, according to Everstream.
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Aerial view of a destroyed neighborhood in Rolling Fork, Mississippi, after a tornado touched down in the area March 27, 2023.
(CHANDAN KHANNA/AFP / Getty Images)
Everstream first highlights that the Panama Canal is experiencing its worst drought since 1950. The situation is expected to persist for the first four to five months of 2024 due to the dry season starting in late December.
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Shipping companies are opening up their pocketbooks in desperate attempts to get their cargo through the Panama Canal in a timely manner, as the canal faces an unprecedented drought, causing its lowest water levels since the mid-1900s.
In response, the canal has put in place restrictions on the height of drafts and limits on the number of vessels that can pass through each day. These restrictions are gradually increasing and are necessary due to the lack of water.
"More restrictions mean longer waiting times, with bulk carriers, freighters and tankers bearing the brunt," the company said in their report. "From 2024 onwards, very large tanker carriers (VLTC) may avoid the Panama Canal altogether due to increased waiting times. Other shipping operators will reroute cargo via the Suez Canal or the Cape of Good Hope."
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A person tries to use a snowblower to clear snow from their driveway, over a foot deep, during a noreaster in Rutland, Massachusetts on March 14, 2023.
(JOSEPH PREZIOSO/AFP / Getty Images)
Winter storms will also worsen delays and cancellations for supply chains.
"Global ocean temperatures begin 2024 at record highs, and, combined with a rising trend in disruptive winter weather (snow, ice, wind), this elevates the risk of more impactful storms," Everstream notes.
Changes in precipitation distribution patterns are expected to cause increased droughts and flooding throughout 2024, due to the wide range of extremes in precipitation, according to Everstream.
Hurricane Ian’s first landfall on the Florida coast was one of the most disruptive weather events of 2022, the company notes about past weather events.
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"From Sept. 28–30, the storm resulted in a 75% drop in shipments compared to previous weeks. Deliveries that did make it saw an average increase in shipping times of 2.5 days," they added.
Outside of the Southeast, extreme weather events have also caused delivery delays in different regions of the US.
For instance, in Texas from February 11-20, 2021, a widespread deep freeze caused an average delivery delay of almost two days.
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A year later, in Buffalo, New York, the Christmas freeze that lasted from December 21-26 resulted in a 40% decrease in shipments compared to the previous weeks.
In June 2023, when the Canadian wildfires broke out, poor air quality and low visibility became a challenge for both Chicago and New York City. As a result, deliveries in Chicago from June 26 to 28 and in New York City from June 5 to 7 were delayed by up to two days, as reported by Everstream.
Property and homes razed by a wildfire in Celista, British Columbia, Canada, on Saturday, Aug. 19, 2023.
(Cole Burston/Bloomberg / Getty Images)
"Reduced visibility due to wildfire smoke caused decreases in the number of shipments in different areas from 50%–75%," the company said.
In addition, flooding and heavy rains last spring caused transportation disruptions in California, Nevada and Utah, resulting in a 20% to 30% decrease in shipments in the affected areas.