Act now to protect your supply chain against severe weather

Reuters

There can’t be many times in human memory when travel, shipping and the trade and commerce supply chain have been jolted as badly by severe weather and extreme climate events as in recent months.

In China this past summer, scorching heat forced power cuts and factory shutdowns. Apple, Foxconn, Toyota, Volkswagen, Tesla and others suspended operations, cancelled orders or took other emergency measures. 

Punishing climate-related events contributed to India’s decision to ban rice exports and caused the destruction of much of Spain’s olive crop.

• UAE invests in battle against severe flooding
• Middle East economies feel the heat from climate change
• Saudi Arabia to build 59 logistics centres by 2030

In the US, water levels fell so low along the Mississippi and tributaries that farmers and others were left without routes to market for agricultural and industrial goods. Dry weather and snarled transport are expected to push US wheat exports to their lowest levels in 50 years.

Meanwhile floods left millions homeless in Pakistan and displaced 1.4 million in Nigeria overnight.

The Middle East is particularly susceptible to the impacts of climate change and extreme heat and has been experiencing even more scorching summers, extended droughts and severe weather occurrences.

The volatility and extremes are exerting a substantial toll on the local economy, infrastructure and food security.

Reuters

Businesses operating in the Middle East must be proactive in adapting to these shifting climate patterns. That means investing in climate-resilient infrastructure, diversifying supply chains and committing to lowering carbon emissions.

Governments in the region must also help lead the way in mitigating the effects of climate change with regulation, incentives and their own investments.

Priorities should include promoting renewable energy, enhancing water management strategies and safeguarding coastal zones against the rising threat of flooding.

At some point post-Covid supply chains may come back into some sort of equilibrium.

But don’t expect an end to severe weather and ruinous climate events.

This past summer was the second-warmest on record for the northern hemisphere. The world has not experienced a year cooler than the 20th century average since 1976. 

And climate migration has already begun. Increasing numbers of manufacturers, hospitals, airlines and other businesses are looking to put critical infrastructure and operations on higher ground to avoid coastal flooding and storms.

It would be foolish not to give serious scrutiny to your business and any vulnerability it might have to climate extremes.

Here are some questions to ask as you do:

1. Do you need to “harden” buildings and infrastructure?
   Do you require a new home for essential operations to safeguard against flooding, high winds, catastrophic storms, rising sea levels or drought-driven fires?
2. Are you too water-dependent?
   Do you rely too much on hydropower or on inland river transportation? What’s your back-up?
3. Are extreme high temperatures putting employees at risk?
   How are you safeguarding them? What about your vehicles, equipment, raw materials and finished products?
4. How well do you truly understand your supply chain?
   Have you mapped your T1, T2 and T3 suppliers (see box below)? Do you know where they get their inputs? How vulnerable are your sourcing and transport? Do you have built-in redundancy?
5. Do you have a handle on carbon taxes?
   Do you know where you might face higher taxes simply by moving the same goods across the same borders? Or where carbon taxes could come into play when you are sourcing from and selling into new markets?
6. What if you have to move?
   Can you afford to shift locations of key operations? Do you have a new location in mind? Can you find the right employees there? What kind of reputational damage would you face if you left, or shrunk your footprint in a community where you have roots?
7. What’s your plan if suppliers or carriers negate agreements through force majeure? 

Finally, are you committed to change? Are you “all in” on the battle to reduce emissions and work toward a safer, cleaner world?

Tarek Sultan is CEO of global supply chain and infrastructure company Agility