Adapting to the effects of climate change with integrated logistics

It is no secret that globally we are in a period of extreme instability. While nearly one-third of Pakistan was recently underwater due to devastating flooding, across the world wildfires burn out of control and droughts threaten swaths of the United States of America all the way down to Mexico. As the effects of climate change continue to unfold, supply chains are under pressure in new and unpredictable ways. So how can companies stay resilient throughout these unprecedented times? The answer may lie in the implementation of integrated logistics.

Impacts of climate change on supply chains

Extreme weather can ground airfreight, delay rail, or reroute trucks and ships -- leading to disruptions within the supply chain that lead all the way down to the consumer. Additionally, the availability of raw materials is very likely to be impacted by climate change; due to disruptions caused by flooding, droughts, and hurricanes.

A study by the McKinsey Global Institute Analysis found that the risk of severe disruption to heavy rare earths production, due to extreme precipitation, may increase two to three times by 2030. With the increased risk of landslides in mines, flooding in treatment facilities, and delays in transport to and from mining sites; climate changes' affects are likely to create at least a 20% drop in heavy rare earth output. This one example illustrates how the raw materials that make up the very genesis of some supply chains' production could disrupt manufacturing and delivery from beginning to end.

Additionally, we can already see the impacts of drought in supply chains around the world. Back in 2019 the Economist reported that the Panama Canal, which allows shipments to shorten the 13.000-kilometre journey around South America to just 77 kilometres, was forced to reduce weight by lowering cargo capacity on ships due to drought decreased water levels. Additionally, back in 2018 and again now in 2022, droughts in Europe have caused transport performance to drop ten to thirty percent on average on both the Rhine and Danube Rivers due to low water levels and the lack of availability of raw materials.

What are integrated logistics solutions?

At its essence, integrated logistics is achieved when all aspects of a company and its supply chain are coordinated and working as one. This supply chain and business organisational model creates greater efficiency, visibility, and agility through the streamlining and coordination of all processes, flows, and resources. Changes in demand and the challenges associated with an exceptionally globalised world of trade has meant that more and more companies are moving towards integrated logistics solutions to ease their movement of goods. Integrated logistics has many benefits, especially within an increasingly unstable world affected by climate change.