According to one survey, weather-related shipping challenges cost trucking companies between $2 billion and $3.5 billion on average. In fact, overall weather-related shipping challenges add up to close to 3.5% of the U.S. GDP. Unless you have a plan for managing risks due to weather, just one hurricane or devastating snowstorm could upend your business.
Weather-Related Shipping Challenges Add Up to Big Bucks
Every business is vulnerable to weather variances – but freight brokerages are particularly vulnerable. While most delays caused by weather happen on the ground for trucking companies, freight agents can experience challenges even when operating a multi-modal transportation business.
Say your ground carriers are unable to fulfill a shipment because of a weather-related challenge. If your alternate is air transportation, those same challenges may impact air transportation, too. Almost three quarters of all flight delays are due to weather and nearly 85% of weather delays prevent planes from ever taking off.
Recent weather models show the increasing erratic nature of weather patterns are creating daily weather variances that make predicting weather-related challenges harder. Not to mention the practically annual unprecedented natural disasters recently:
- 2012: Hurricane Sandy in the U.S. shut down the Northeast corridor and disrupted ground and air travel for weeks.
- 2013: Massive tornado outbreak spans 15 states east to west from Arkansas to Mississippi and north to south from New Jersey to Florida, resulting in record flooding and damage preventing air and ground travel.
- 2014: Unprecedented winter storm spans 20 states completely clogging transportation routes in the Northeast.
- 2015: Record-breaking wildfires shut down California’s ports and airways burning over 10 million acres in the Western states and causing over a billion dollars in damages.
- 2016: NOAA reported that the U.S. experienced a dozen weather-related disasters.
It’s clear that no matter what region, what state, or what country you operate in, every freight agent needs several alternatives for managing weather-related challenges.
Understanding the Risks to Your Supply Chain Due to Weather
Did you know that last year, at least three ocean vessels sank because of hurricanes and tropical storms? Weather will affect or disrupt every mode of transportation. Evidence shows that these extreme weather events are going to grow increasingly more severe and happen more and more routinely for the foreseeable future.
If the roads are closed, planes are grounded, and you can’t get your cargo out of port, what do you do? As a freight agent how can you safeguard your deliveries against delays, cancellations, and mass transportation disruptions due to weather?
Here are 6 safeguards to mitigate your damages and avoid being caught without a viable alternate when disasters strike.
#1: Strategically Placed Warehouses and Distribution Centers
Many industries from retailers to pharmaceutical companies maintain an excess of goods in different locations to prepare for typical business fluctuations. If a retailer’s sale leaves shelves bare, they can access additional goods from nearby warehouses.
This concept is called “nearshoring” when it applies to freight logistics. Instead of having to ship a load cross-country, you have distribution centers strategically located so that if part of your supply chain is shutdown, your operations can still move forward.
#2: Broad Carrier Network Including Ground, Air, and Ocean
One of the best ways for a freight brokerage to avoid weather-related challenges is by having a broad carrier network across multiple modes of transportation. If the roads are shut down, do you have an air carrier in your network?
If flights are grounded, can you still ship via ocean? The broader and more diverse your carrier network, the easier it is to manage weather disruptions.
#3: Partner with Other 3PLs
Competition between third-party logistics providers (3PLs) for the same accounts prevents many freight agents from forming smart partnerships with other 3PLs. However, partnering with other 3PLs in regions where you don’t normally operate can save your bottom line if a disaster or weather-related event closes down your normal routes.
#4: Involve a 4PL Provider
What is a 4PL provider? A 4PL provider is an integrator that has the resources, capabilities and technologies to run complete supply chain solutions. They can provide reports on historical and predicted weather patterns and take over portions of your supply chain operations in the event of an outage.
#5: Utilize Data Analysis to Anticipate Weather-Related Challenges
If you are only analyzing data where you have historically shipped but you have since expanded to new territories, you are not getting a full picture of the challenges you face. Data analysis helps you proactively analyze weather-related risks wherever you operate so that you can predict disruptions.
#6: Optional Weather Insurance for Shipments
Offering weather insurance can protect the freight agent’s bottom line while giving customers a chance to protect themselves against weather-related challenges. There are global and national areas where weather challenges are highest. Offering weather insurance for those shipments is another way to safeguard against losses due to weather events.
With years of transportation industry experience, GlobalTranz is a valuable 3PL partner that empowers its freight agents with innovative technology, near real-time data and a team of logistics specialists who help mitigate risk from numerous supply chain challenges, including weather-related issues. Contact us now for more information.