While it’s nowhere near as critical as the shortages of baby formula that have distressed families since March, the predicted shortage of sriracha hot sauce reflects how badly extreme heat waves are already disrupting supply chains this summer. “There is an unprecedented shortage of our products … caused by several spiraling events, including unexpected crop failure from the spring chili harvest,” stated Huy Fong Foods, maker of the most popular sriracha hot sauce.
Even though we’re only one week into summer 2022, excessive heat is already damaging agricultural production across the globe, from mangos and wheat in India to cattle in Kansas and chilis in New Mexico. In Europe, extreme heat has hammered much of the continent since mid-June, breaking records in France. And in China, flooding combined with abnormally high temperatures pounded many provinces with what Bloomberg called a “Climate Double Whammy.”
The science of attributing extreme weather events to climate change is becoming increasingly sophisticated and more widely accepted by governments. For example, China’s official “blue book” on climate change, updated last summer, concludes that “extreme events such as high temperature and heavy rainfall have increased and intensified,” and will continue with global warming.
Of all the extreme weather phenomena, “scientists are most certain about the connections between climate change and heat waves,” according to Wall Street Journal Science Reporter Daniela Hernandez. “Heat-related data goes back millions of years [derived from] ice cores, tree rings and corals that can give scientists proxy readings on temperatures and atmospheric conditions.”
Experts predict that heat waves will become commonplace: June 2021 was the hottest June in 127 years of record-keeping for the United States and brought a host of unexpected woes including power outages.
As covered in prior Resilinc blog posts (read: Extreme weather is risk business for supply chains), the challenges that climate change presents to supply chain managers are severe and intense—yet quantifying the value of different strategies to make supply chains more resilient to changing climates remains a complex challenge. For example, one of the most threatened regions in the world is also one of the most important for global supply chains: Shenzhen, Guangzhou and Dongguan. Located on China’s Pearl River Delta, these export hubs are highly exposed to coastal flooding exacerbated by rising seas. China’s blue book authors are confident that sea levels are rising faster along China’s coasts than on average around the globe. So, the combinations of more intense precipitation, more frequent extreme heat events, and rising sea levels portend significant increases in vulnerability in this region.
Yet, given Pearl River Delta manufacturers’ vast capabilities and efficiencies—not to mention the unparalleled logistics infrastructure, shifting supply networks elsewhere to avoid climate-related weather shocks would come with high costs.
Also, factoring into the equation is the added resiliency that Pearl River Delta suppliers will gain as governments build new drainage systems and other flood management infrastructure. In response to flooding earlier this month, the Pearl River Water Resources Commission ordered local governments to implement “intensified monitoring, forecasting and early warning, and proper water storage and diversion,” according to the Chinese news site ENCS.
Flood protection measures can and are being taken by individual businesses, but it’s difficult for supply chain managers to assess the effectiveness of such risk mitigation efforts. The foundation of risk monitoring is, of course, developing a comprehensive multi-tier map of supplier networks. Without that, it’s impossible for managers to assess what suppliers, logistics nodes, and shipping routes are at elevated risk from climate change and initiate risk mitigations.
With thorough supply chain mapping, supplier risk scoring, and monitoring apps like Resilinc’s WeatherWatchAI, supply chain managers can more closely monitor weather and flooding risks and prioritize mitigation measures to tighten the supply chains that are increasingly vulnerable to climate change.