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Impacts of Climate Change on Supply Chains

Updated: May 9

Climate change brings with it severe and prolonged meteorological phenomena such as hurricanes, floods, droughts, frosts, and wildfires. These events have intensified year after year, becoming increasingly common. In addition to affecting vast populations, they disable or destroy logistical infrastructures and production centers, disrupt travel, cut off key resources or products, and break the flow of the supply chain.

Various disruptions within the supply chain caused by climate change directly impact the delivery of goods, manufacturing, and production, leading to an increase in material costs and product prices.

Infrastructure damage

Meteorological events can cause damage to logistical infrastructures such as ports, airports, distribution centers, and warehouses. This can hinder or make transportation and the distribution of goods partially or entirely impossible, halting supply chains.

Rising sea levels

The 2022 State of the Climate Report published by the World Meteorological Organization (WMO) indicates that the last eight years have been the warmest, recording record-breaking increases in sea levels and ocean temperatures. This alters coastal infrastructure, increasing risks for supply chains in the medium and long term.

Production interruptions and inventory loss

Extreme events caused by climate change, such as floods, storms, or droughts, can disrupt the production of raw materials or goods in certain regions. This can also affect the storage of products and their availability in the market.

Cost increase

The cost of producing, transporting, and delivering essential goods will increase as the risks generated by meteorological events impact the supply chain. Given that climate change poses imminent disruption risks, supply chains must begin preparing to become resilient and adaptable to this phenomenon.

The impacts of climate change have started to increase costs in the supply chain, as companies must invest in mitigation and adaptation measures. It is expected that these costs will continue to rise in the coming years.

Sustainability pressure

Consumer demand has a growing interest in sustainability, making a response to it a necessary part of adapting business models, as well as a strategy for maintaining a good reputation.

How can supply chains become less vulnerable to the impacts of climate change?

Implementing strategies to reduce risk and improve the resilience of supply chains to climate change allows companies to take a proactive approach to address vulnerabilities and be better able to reduce future impacts without significant operational disruptions.

In this regard, here are some measures that companies can adopt to mitigate the impact of climate change on their supply chains:

• Climate risk assessment: Companies should consider climate change risks when planning their operations. This may include assessing potential climate risks, contingency planning, and implementing mitigation measures.

• Reduce transportation: Companies can reduce greenhouse gas emissions by minimizing transportation, which may involve using more efficient modes of transportation such as maritime or rail transport, or using lighter and more efficient packaging.

• Diversify supply sources and work with sustainable suppliers: Working with multiple suppliers reduces dependence on areas vulnerable to extreme weather events. Also, ensuring that the production process adheres to proper carbon emission standards and uses sustainable materials.

• Incorporate sustainability into the supply chain: By focusing their development strategies on sustainability, companies can contribute to industry transformation.

• Measure and reduce carbon emissions: Investing in technology can help companies improve the efficiency and resilience of their supply chains through extensive data analysis. SPARX offers specialized tools for your supply chain.

Unfortunately, it is estimated that climate change will have greater repercussions in the future, thereby posing increasing risks to supply chains. In this sense, companies must begin adopting measures that allow them to reduce the vulnerability of their supply chains and improve their sustainability. SPARX logistics has developed a team of experts in sustainable supply chains; contact us, and let's transform your operations together.



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