Maritime News |Supply Lines
Climate change and extreme weather events will present ongoing challenges for global supply chains in the coming years, even as pandemic-related bottlenecks ease.
The impacts in 2021 alone of Hurricane Ida, a typhoon near Chinese ports, the Texas freeze, British Columbia flooding and freak December tornadoes across the U.S., make it clear that global trade is struggling to cope with much more than a health crisis.
As temperatures creep higher, nature is likely to be a more frequent, intense and random disrupter. (Check out the full story here.)
“It’s not the next big supply-chain crisis. It’s the next big supply-chain crises, plural,” said Jason Jay, director of the sustainability initiative at the MIT Sloan School of Management.
In addition to warming temperatures and a growing frequency of extreme weather events, companies will have invest in climate change mitigation efforts including the transition to green energy and regulations on environmental due diligence.
Plant Closures
Those changes create cost pressures and can lead to accidental disruptions, as was seen in China this year when he closure of coal plants led to an energy crisis, said Ethan Harris, head of global economic research at Bank of America.
A first step companies can take to mitigate the impact of extreme weather is to map their supply chains to better understand exactly where risks lie, whether that’s a supplier on the Gulf Coast subject to hurricanes or a transport hub susceptible to flooding.
“Companies don’t even know that the locations of their first-tier suppliers let alone who their suppliers are buying from,” Jay said. “And many times these supply chains are four or five steps deep.”
While the disruptions from climate change won’t happen everywhere at once, as was the case with the pandemic, the severity of the impact will only increase over time. Many companies aren’t prepared.
“Assumptions of a stable climate are built into every aspect of our daily lives in ways we don’t appreciate,” said Mekala Krishnan, partner at the McKinsey Global Institute who specializes in climate risk.
—Olivia Rockeman in New York
| Charted Territory |
Maersk is no longer the world’s largest container line. The Danish carrier has been overtaken by MSC in terms of capacity, according to data compiled by Alphaliner and published on Wednesday. MSC’s fleet can carry 4.3 million standard 20-foot containers, 1,888 more than Maersk, giving both a market share of 17%. Maersk, which first entered containerized trade in 1975, has held the top spot for decades. The carrier has been a pioneer in the industry, often breaking records by building the biggest ships. More recently, it has invested in vessels that can sail on carbon-neutral methanol.
Source : Bloomberg
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