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DHL analytics predict hurricane effects on supply chain

Steve Rogerson
June 4, 2019



DHL has developed an algorithm and improved weather tracking analytics to help companies avert supply chain disruptions from hurricanes.
 
In the run-up to the 2019 hurricane season, DHL's cloud-based risk management provider Resilience 360 has released a report on the potential supply chain impacts of these storms. The report examines the 2018 storm seasons in the northern hemisphere and provides an outlook on the 2019 season, including the typical storm paths in each region as well as vulnerable areas and industries.
 
Also included are recommendations for representatives from procurement, logistics and business continuity management for mitigating the impact of these storms on supply chains.
 
At the same time, Resilience 360 is launching its improved weather shape tracking and alerting capability. The algorithm analyses the projected path of a hurricane or cyclone and notifies users of possible impacts on their specific supply chains.
 
Using these capabilities, users will be able to get better analytics on affected locations and assess what this means for the company's ability to produce and deliver to its end customers.
 
"A minor hurricane that affects only a small region can nonetheless prove disastrous if it affects a crucial logistics hub or a critical supplier," said Tobias Larsson, CEO of Resilience 360. "Preparedness is key to avoiding costly interruptions. Despite the increasing complexity of supply chains, advanced technologies allow us to map out multi-tiered supply chains, including interdependencies up and down stream. This makes it possible to understand how changes at one node – such as cargo ships stranded at a port – could impact the entire supply chain. When businesses are able to visualise where problems could arise, they can also plan appropriately with back-up suppliers and rerouting when a storm is forecast to hit a key area."
 
Improvements in meteorological forecasts now allow scientists to predict a hurricane's path three to five days in advance, affording risk mitigation experts a critical window of time to respond before disruptions occur. 
 
For the 2019 hurricane season, DHL's risk experts have collected forecasts from the leading meteorological agencies to predict the number of tropical storms likely to occur in the Americas, north Indian Ocean and east Asia.
 
Scientists at the Colorado State University expect five hurricanes, a slightly below-average season in the Americas due to cooler ocean temperatures. However, other forecasters expect a total of seven hurricanes. The season in this region spans from June to November with a peak in mid-September.
 
In east Asia, the typhoon season began in May and will continue until October. In the absence of a regional outlook, two meteorological services offer localised forecasts. The Hong Kong observatory expects four to seven tropical cyclones to approach Hong Kong within 500km this year, while the Philippines' National Meteorological & Hydrological Services agency expects two to four in the Philippines area.
 
No official forecasts for the north Indian Ocean region are typically released. The area usually experiences three to four cyclonic storms per year within a season running between April and December with two peaks in May and November.
 
In the Americas, aerospace, petrochemical, automotive and pharmaceutical industries tend to lie in risk-prone areas in Florida and along the Gulf and East Coast as well as in Puerto Rico. Typhoon season in east Asia could threaten manufacturing hubs in China and Japan, automotive clusters further inland in China and electronics suppliers in south-western Japan. For the north Indian Ocean, more than 80 per cent of cyclones affect the eastern coast of India, affecting the petrochemical, pharmaceutical, automotive and other heavy industries.
 
Despite the difficulty of predicting exactly when and where storms will hit, businesses can take short- and long-term precautionary measures to mitigate the impact. In the short term, companies should create continuity plans, stock up on essential materials, and ensure methods of communication are available in the case of power outages.
 
In the longer term, visibility tools, diversifying the company's network and establishing long-term partnerships with logistics suppliers can strongly influence how seriously a supply chain is affected by a hurricane. DHL's risk management experts use mapping techniques, near real-time information from meteorological organisations, and the visibility and risk management tool Resilience 360 to identify potential storms and disruptions for specific supply chains.