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2019’s global hurricane season to be active, DHL Resilience360 reports about supply chain risks and safeguards

06/24/2019 By

Severe weather poses one of the greatest threats and the least predictable risks to global supply chains within our modern globalized economy. The summer hurricane season is a particularly problematic time because nearly half the planet, and a majority of the production capacity for many industries, are located in areas routinely struck by catastrophic weather — East Asia, the Northern Indian Ocean, and the Southeast and Gulf coasts of the United States.

DHL Resilience360 recently released Stormy Weather Ahead: A Global Outlook on the 2019 Season to compile information about the impacts that even small storms can have and discuss the short- and long-term implications of these systems on existing supply chains. And it offers ways to mitigate that risk.

While Resilience360 predicts a slightly below average number of hurricanes will affect the U.S. this season, an above-average year is anticipated for East Asia that could affect  production of consumer electronics sourced from China and Taiwan and more advanced technology products from Japan and nearby regions.

Several scientific and private organizations make predictions about the number of storms expected in a given season. For hurricanes in the U.S., Colorado State University scientists predict a slightly below average five storms for 2019 due to lower average temperatures in the Atlantic. Two of the five are expected to be at a strength of Category 3 or above. Accuweather and The Weather Channel predict up to seven storms this season, with 95% of major hurricanes occurring after Aug. 1 and their likelihood peaking on Sept. 10. In East Asia, Tropical Storm Risk predicted up to 17 typhoons for the entire region, with up to 10 at an intensity of Category 3 or higher, while the Hong Kong Observatory predicts as many as seven storms will approach Hong Kong within 300 miles this year. The Philippines National Meteorological and Hydrological Services anticipate two to four typhoons will enter its territory this season. No formal predictions are made for the North Indian Ocean, but the region has already experienced Cyclone Fani in May, the strongest storm to hit the region in 20 years, and the area typically weathers three or four storms between April and December.

In the Western Hemisphere, the greatest risks to property and supply chains is in Florida, where important centers of production for aerospace, automotive and industrial manufacturing equipment are located in or near coastal cities like Pensacola, Tampa and Miami, as well as substantial production and distribution centers for medical devices located around Palm Beach.

Resilience360 indicates that a disruption in any of these locations could affect supply chains nationally and internationally. Elsewhere in the Gulf, petrochemical production in Mobile, Houston and other coastal cities could impact fuel prices during the U.S. travel season, and several Caribbean islands serve as important logistics links to South America that could further slow deliveries and ripple through supply chains.

In East Asia, the Chinese Pearl River Delta region containing Guangdong, Guangzhou and Fujian provinces lie in a common typhoon route and produce a staggering quantity of the world’s electrical and industrial components. Disruptions from storms themselves can cause significant delays in just-in-time supply chains by constraining capacity at some of the world’s busiest air freight hubs, while aftereffects like flooding and power outages can further delay production for days or weeks.

Resilience360 identifies a number of short- and long-term steps businesses can take to mitigate the risks to their operations and supply chains during upcoming storm seasons.

To start, executives should monitor real-time weather updates and do research to have a sense of which key suppliers are in potential storm paths. Once potential vulnerabilities have been identified, stock up on inventory of supplies that could be disrupted, and set up emergency communication systems and safety plans that can substantially reduce danger to employees and property and speed up the process of getting things back to normal.

In the long term, businesses can test action plans ahead of time by making small adjustments to sourcing decisions to measure lead times and quality from alternative suppliers while laying the foundation of future relationships in times of need.

Procuring and learning to effectively use supply chain mapping tools can be a powerful way not only to identify areas of vulnerability within a supply chain, but also to diversify suppliers away from risk areas and more effectively balance costs with forward-thinking risk management.