We can’t control the weather, and that can really mess up business operations.
The Business Continuity Institute’s Supply Chain Resiliency Report 2018 showed that severe weather has skyrocketed to the number two reason for global supply chain disruptions. The number one reason is unplanned IT or telecommunications outage, which the authors pointed out can be caused by many things, including adverse weather. Weather is currently the number one reason for supply chain disruptions in Australia and Asia specifically, and the second reason in Europe, North America, and the Caribbean and Latin America. In the next 5 years, the report published that adverse weather is expected to have an even stronger negative impact on supply chains.
According to the US Federal Highway Administration, 12% of truck delays are caused by severe weather. Weather related events overall cost trucking companies up to $3.5bn a year, and there doesn’t appear to be an end to weather related losses in sight.
What can you do as a broker to plan for severe weather?
We’ve done our research and compiled the best practices here. Take heed, because a storm’s a-comin’.
Let your drivers take point on this one. More than once has a tornado unexpectedly come out of nowhere. If your driver experiences any of the warning signs listed in FreightWaves article “A Trucker’s Guide to Staying Safe While on the Road During Severe Weather,” don’t insist they stay on the road. While common, tornadoes are incredibly dangerous and can flatten cities. Over-communication is preferred here. Alert the shipper to a delay and, if necessary, schedule a new drop off time with the receiver.
The devastation caused by hurricanes can never be underplayed. We usually have sufficient warning when a tropical storm evolves into a hurricane, so plan accordingly with your shippers. Keep your drivers away from the danger zone and schedule deliveries comfortably before or just after the storm has passed.
It’s often crucial to get supply chains moving into these struck areas as soon as possible. Not only do hurricanes and tropical storms disrupt supply chains, they can take a severe toll on cities. Work with your shippers to move critical supplies into areas of need to help with recovery efforts.
LDI is headquartered in Buffalo, NY, so we can tell you a thing or two about the hazards of snow. When snow falls faster than plows can clear it, cars skid off the roads, trucks jackknife across all lanes, and vehicles get buried in the full-stop traffic.
Familiarize yourself with the regions that get hit with blizzards. Kept an eye on regions that don’t usually get hit with winter storms, as they most likely don’t have processes or resources in place to handle snow or ice, which can create issues for your drivers. If you’re regularly working out of ports, keep tabs on what’s happening with air and rail.
Verify your trucks have chains, are fueling up regularly, and temperature controlled trailers are functioning properly. Communicate a “safety first” policy with your driver or dispatcher and insist that you need to be alerted about unexpected stops. If the highways are shutting down due to storms or avalanches, get your drivers off the roads!
Advise caution to your drivers. Set Google Alerts to ping you about any road closures on your routes, as portions of corridors can be shut down at a moment’s notice. If you’re a multimodal broker, listen for any closures at the ports. Stay in contact with the carrier to be on top of any changes or other delays. Have the driver or dispatcher keep you in the loop and report to shippers and/or receivers. Verify with receivers that the docking bays are clear or that any flooding will be pumped away, especially in near-freezing weather.
While not weather related, we’ll include it here. Unfortunately, fires are a guaranteed threat in certain regions of North America. Twenty two percent of companies surveyed by the BCI expect fires to disrupt their supply chain operations for the next twelve months. When that timeline is expanded to the next 5 years, 28 percent of companies expect fire to disrupt their supply chain.
Brian Aoaeh, a supply chain venture capitalist, pointed to the catastrophic destruction of the California Camp Fire of 2018 and the havoc it wrecked on manufacturers and producers in the region. It’s crucial to have business continuity plans in place to protect a business to the best of leadership’s ability, and as their freight broker, you should be aware of those plans. If your customers are too close to the flames in times of crisis, contact them early to organize the logistics of evacuation of critical freight.
Even areas a safe distance from fires can be hazardous because of the smoke. Keep your eye on the weather and set Google Alerts for any road closings or air quality alerts along your driver’s route and plan accordingly.
What You Can Offer Customers:
Verify they have business continuity plans in place.
Do shippers have an idea of what they are going to do if they are affected by adverse weather? Fire? Is top-level leadership on board with a business continuity plan? Do they understand how you fit into it?
The best place to ask these questions are during a contract renewal. Another good time is to schedule a review meeting for this specific topic.
Discuss insurances with your customer.
While not sexy, it will show your customer you mean business. LDI has our insurances in place (refer to the LDI Knowledge Base). Our carrier onboarding process verifies our carrier partners also have their insurance in order.
Verify your customer has insured their inventory as well.
Offer your customer All-Risk Cargo Insurance for extended coverage at a small additional cost to better protect their shipments. Check the exclusions that apply when you choose the Cargo Shield coverage while building the load.
The more flexible and creative you are in regards to getting goods to the final destination in adverse conditions, the happier your shippers will be.
If you don’t currently work with air and rail, look into expanding your brokerage to a multimodal model. Roads may be closed, but ports might be open, and vice versa.
Keep a literal rainy day fund.
The weather has become more severe over the years and it’s expected to continue indefinitely. It’s nearly impossible to update infrastructure fast enough to be weather resilient. If you have the means, don’t knock the idea of keeping a rainy day fund to help bolster your own margins for rough lanes. This should cover your costs if proper planning, insurance, or something else fails.
For more mentorship about freight brokerage best practices, join the LDI freight agent program. You’ll receive our proprietary software, business development training, and more.