Supply chain challenges have dominated international headlines, and much of the focus has been on the fallout from the COVID-19 pandemic and the lingering consequences of the public health crisis.
However, climate change poses a more fundamental threat to global supply chains, as extreme weather events, sea-level rise, unpredictable weather patterns and new compliance regulations all conspire to restrict the ability of suppliers to move goods between markets.
Sea-level rise could impact critical transportation hubs
Sea-level rise poses serious risk to ports and other transportation centers located on or near major waterways. In a recent report, the National Oceanic and Atmospheric Administration (NOAA) projected that sea levels could rise by roughly one foot by 2100, a significant increase that could cause serious damage to transportation infrastructure located near the world’s rivers, oceans and lakes.
As Yale Environment 360 points out, ports are critical distribution centers to a much wider (and more complicated) network of suppliers, vendors and manufacturers. When transportation centers near critical waterways are unable to deliver goods beyond their central distribution points, manufacturers located further inland are unable to source the raw materials needed to deliver finished products.
Changing weather patterns might hurt global food supply
Many Americans don’t realize that much of the food they consume travels along highly integrated supply routes before reaching their plates. In 2021, the United States imported roughly 15% of its food supply, according to the U.S. Food and Drug Administration (FDA).
Climate change could have serious impacts on the global production of food that might severely disrupt those supply chains. Agriculture depends on the relative predictability of the climate, but as weather patterns like rainfall and temperature become increasingly unpredictable, farmers are finding it more difficult to produce a high enough crop yield to meet global demand.
Furthermore, climate change is disrupting the natural habitats of many plant and animal species, fundamentally altering the ability of livestock and foodstuffs to thrive. Even where the ability to produce at normal levels remains sustainable, food quality could ultimately take a hit as drought, flooding and extended frost periods take their toll.
Red tape may place additional burdens on suppliers
As the public becomes increasingly concerned about the impact of climate change, government bodies are responding by introducing new compliance regulations to promote more sustainable business practices.
While effective, these restrictions also create additional bureaucratic hurdles that producers, suppliers and manufacturers must navigate to transport raw materials and bring finished products to market.
Even as stakeholders adjust to the new regulatory environment and relieve bottlenecks, the added costs of doing business will likely be pushed down to customers, adding further costs to other stakeholders along the supply chain.